Announcing the Union Budget 2024-25 for the Modi 3.0 regime, Union Minister Finance Nirmala Sitharaman declared significant relief for family pensioners. She increased the deduction on family pension for pensioners from Rs 15,000 to Rs 25,000. Likewise, the standard deduction for salaried people and pensioners has been increased from Rs 50,000 to Rs 75,000.

Sitharaman said the deduction on family pension will provide relief to about 4 crore salaried individuals and pensioners. However, it will be available only in the new tax regime.

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What Is Standard Deduction?

It is deducted from the salary without requiring proof of investment. Other deductions will require individuals to show proof; the standard deduction does not require showing any document to claim the rebate.

What Is A Family Pension?

Since the pension comes at regular intervals, it is also treated as a salary; hence, the standard deduction can be claimed on the pension income. In case the pensioner has died and a family member is receiving the pension amount, the government also provides a standard deduction on the family pension. However, the deduction limit on their family pensions differs from those of the salary class and pensioners.

Standard Deduction In Budget 2024-25:

In the 2023-24 Budget, the new tax regime allowed a standard deduction of Rs 50,000; this year, it increased to Rs 75,000. This deduction has been extended to family pensioners as well. Earlier, the standard deduction limit for family pensioners was Rs 15,000, which has now been increased to Rs 25,000 in the budget. For a family pension, the tax liability is either one-third of the pension income, whichever is less. So, the lower amount is eligible for a standard deduction.

According to the budget announcement, this increase in the standard deduction will be a relief to around four crore individuals, including salaried individuals and pensioners. Besides this, the budget has changed the tax slab rates in the new tax regime.

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Here are the previous and the updated slab rates:

Earlier Slab Rates:

Up to Rs 3 lakh, irrespective of age – zero tax

• Rs 3 lakh to Rs 6 lakh – 10 per cent
• Rs 6 lakh to Rs 9 lakh – 15 per cent
• Rs 9 lakh to Rs 12 lakh – 15 per cent
• Rs 12 lakh to Rs 15 lakh – 20 per cent
• Above Rs 15 lakh – 30 per cent

Updated Slab Rates

• Rs 0-3 lakh – Nil
• Rs 3-7 lakh – 5 per cent
• Rs 7-10 lakh – 10 per cent
• Rs 10-12 lakh – 15 per cent
• Rs 12-15 lakh – 20 per cent
• Above Rs 15 lakh – 30 per cent

As per the budget, the change in the new tax regime would mean savings of Rs 17,500 for taxpayers.