Salaried employee can save up to Rs 17,500 under new tax regime while filing income tax return due to the increase in the standard deduction.
This enhancement helps to reduce the taxable income, resulting in significant tax savings for employees.
How much standard deduction has been increased?
Standard Deduction has been increased from Rs 50,000 to Rs 75,000 for FY 24-25.
Income Tax Slabs under New Tax Regime For FY 2024-25
| Tax Slab | Tax Rate |
| Up to 3 Lakh | No Tax |
| 3 Lakh to 7 Lakh | 5% of above 3 Lakh |
| 7 Lakh to 10 Lakh | 10% of above 7 Lakh |
| 10 Lakh to 12 Lakh | 15% of above 10 Lakh |
| 12 Lakh to 15 Lakh | 20% of above 12 Lakh |
| More than Rs 15 Lakh | Income exceeding 15 Lakh * 30% |
How the amount INR 17,500 can be saved with this new change?
For understanding the same let us take an example.
Vinay’s income is Rs 15,00,000 with a standard deduction Rs 50,000 for FY 23-24.
Same like Vinay, Anant’s income for FY 24-25 is Rs 15,00,000 with a standard deduction Rs 70,000 for FY 24-25.
Solution :
Assume a 30% tax bracket (ignoring cess and surcharge)
| Particulars | Vinay’s Income For FY 23-24 | Anant’s Income For FY 24-25 |
| Gross Salary | 15,00,000 | 15,00,000 |
| Less: Standard Deduction | (50,000) | (75,000) |
| Taxable Income | 14,50,000 | 14,25,000 |
| Less: Deductions like 80C etc. | N.A | N.A |
| Tax Payable (before cess) | 2,25,000 | 2,07,500 |
Form this example, we can see that Anant in the new tax regime saves (2,25,000 – 2,07,500) = Rs 17,500 more than Vinay.
Click here for changes in slab rate For FY 2024-25 and AY 2025-26.