Enhanced Rebate & Standard Deduction: What You Need to Know
Enhanced Rebate & Standard Deduction: What You Need to Know
Introduction
Two major updates in the New Tax Regime for FY 2024-25 are the increase in the rebate under Section 87A and a higher standard deduction for salaried individuals. These changes are designed to provide tax relief to the middle class.
What’s New?
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Section 87A Rebate Increased
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The rebate limit under Section 87A has been raised to ?60,000.
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This ensures that individuals with taxable income up to ?12 lakh will not have to pay any income tax.
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Standard Deduction Enhanced
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The standard deduction for salaried individuals has been increased from ?50,000 to ?75,000.
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This additional deduction helps reduce the net taxable income, making it easier to qualify for the Section 87A rebate.
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Illustration
A salaried individual earning ?12.75 lakh annually can now benefit from:
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?75,000 standard deduction
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?60,000 rebate
Which results in zero tax liability under the New Tax Regime.
Conclusion
This is a major incentive to switch to the New Tax Regime, especially for those without significant deductions under the Old Regime. It simplifies the process and maximizes take-home salary.
