The Union Budget 2024-25, presented by Finance Minister Nirmala Sitharaman on July 23, has introduced significant changes across various sectors, with a strong emphasis on employment, skilling, and tax reforms. Here’s a breakdown of the key announcements and what they mean for you, including insights into choosing between the new and old tax regimes.
Focus on Employment and Skilling
Prime Minister’s Package
To combat unemployment and enhance skills, the government announced a substantial Rs. 2 lakh crore packages. This initiative targets creating job opportunities and providing skill training to over 4 crore young people in the next five years.
Employment Linked Incentives
The budget introduces three key schemes to encourage job creation and support both employees and employers:
- Scheme A: First Timers
New employees registered with the Employees’ Provident Fund Organisation (EPFO) will receive a one-month salary (up to Rs. 15,000) in three installments, with a maximum salary cap of Rs. 1 lakh per month. - Scheme B: Job Creation in Manufacturing
This scheme provides incentives based on EPFO contributions, focusing on the first four years of employment in the manufacturing sector. - Scheme C: Support to Employers
Employers can get reimbursed up to Rs. 3,000 per month for two years for each additional employee they hire, helping reduce the financial burden.
Skill Development
The government aims to skill 20 lakh young people over five years and upgrade 1,000 Industrial Training Institutes (ITIs), creating a more skilled and job-ready workforce.
Changes in Income Tax for FY 2023-24 (AY 2024-25)
A major highlight of this budget is the option for taxpayers to choose between two tax regimes: the new regime and the old regime. Here’s what you need to know:
New Tax Regime
The new tax regime offers lower tax rates but does not allow most exemptions or deductions, such as those for home loans, insurance, or savings under Section 80C.
Here’s a table with the provided tax slab information:
| Income Range | Tax Rate |
|---|---|
| Up to ₹3,00,000 | 0% |
| ₹3,00,001 – ₹7,00,000 | 5% |
| ₹7,00,001 – ₹10,00,000 | 10% |
| ₹10,00,001 – ₹12,00,000 | 15% |
| ₹12,00,001 – ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
Old Tax Regime
The old regime includes various exemptions and deductions, allowing taxpayers to reduce their taxable income. While the slabs are higher, the potential for tax savings is greater due to these benefits.
For individuals below 60 years:
| Income Range | Tax Rate |
|---|---|
| Up to ₹2,50,000 | 0% |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
For Senior Citizens (60-80 years):
| Income Range | Tax Rate |
|---|---|
| Up to ₹3,00,000 | 0% |
| ₹3,00,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
For Super Senior Citizens (80+ years):
| Income Range | Tax Rate |
|---|---|
| Up to ₹5,00,000 | 0% |
| Above ₹5,00,000 | 20% |
Choosing Between the New and Old Tax Regimes
One of the most significant decisions for taxpayers is choosing between the new and old tax regimes. Here’s a quick guide:
- Salaried Individuals: You can switch between the new and old regimes each financial year, allowing flexibility to choose based on your current financial situation.
- Individuals with Business Income: If you opt for the new tax regime, you have the option to switch back to the old regime only once in your lifetime. After that, you must stick with the new regime.
Key Points for Employers
The Union Budget 2024-25 includes several provisions beneficial to employers:
- Incentives for Job Creation: Companies creating new jobs, especially in manufacturing, can benefit from reimbursements for EPFO contributions, making it easier to hire more people.
- Focus on Skilling: The emphasis on skilling 20 lakh youth means a larger pool of qualified candidates for businesses.
- Reduced Compliance Burden: EPFO reimbursement helps reduce financial strain on employers.
Key Income Tax Changes for Employees
For salaried employees opting for the new tax regime, some notable benefits include:
- Increased Standard Deduction: The standard deduction has been increased from Rs. 50,000 to Rs. 75,000, offering greater tax relief.
- Enhanced Deduction for Family Pension: The deduction has been increased from Rs. 15,000 to Rs. 25,000, providing more support to families receiving a family pension.
Final Thoughts
The Union Budget 2024-25 offers a range of measures designed to stimulate economic growth, create jobs, and ease the financial burden on individuals and businesses. Whether you’re deciding between tax regimes or looking at new employment incentives, this budget has something for everyone. For more detailed information, you can visit the official budget website.
Please note that in the OfficePortal HRMS, we’ve set the new tax regime as the default option for all employees. However, if you prefer to switch to the old tax regime, you’ll need to get approval from your employer. This ensures that the transition is seamless and complies with the company’s tax management policies.