GD Topic - Union Budget 2024: Are the New Income Tax Slabs a Win for the Middle Class?

Candidates taking MBA entrance exams for admission in top B-schools must prepare well for the Group Discussion Round. This round plays a major role in the MBA admission process. Read the article below to find details on the new income tax slabs under the Union Budget 2024 and their impact on middle-class people.

Union Budget 2024: New Income Tax Slabs

Management of Business Studies is one of the most pursued postgraduate courses. The MBA admission process includes entrance exams like CAT, XAT, SNAP, NMAT, and MAH MBA CET. Once the entrance exam is over, selected candidates will be eligible for the Group Discussion Round. Candidates who will achieve a good score in the Group Discussion Round will be able to participate in the next stage of the MBA admission process.

Students planning to gain admission at top B-schools like IIM, XLRI Jamshedpur, SBIM Pune, etc., must prepare well for the GD/PI round. To do well in the DP round, one must work on their speaking and reasoning skills, maintain eye contact with the group during discussion, use relevant points to prove their statement, listen attentively, avoid interrupting others, and work on their body language.

Check Out: Top MBA Colleges in India

Union Budget 2024: Changes in Income Tax Slab under New Tax Regime

The Union Finance Minister of India, Nirmala Sitharaman, presented the Union Budget for FY 2024-25 on 23^rd July 2024. This was her seventh consecutive budget presentation. This budget holds much importance for the nation as it was the first budget formulated after the 2024 general elections. The Union Budget 2024 will lay down an outline for the government's work for the next five years.

Our Hon’ble Prime Minister Narendra Modi has praised this budget. According to him, the Union Budget 2024 caters to all sections of society. It will help India achieve the vision of a “Viksit Bharat” by 2047, marking 100 years of independence. However, former Finance Minister P. Chidambaram criticized the budget, stating, “This budget fails to assure the people of India how inflation would be controlled in this country, and this budget gives too little room for improving the condition of unemployment.”

Many experts praised different aspects of this budget. While others criticized the Union Budget 2024, stating that it missed certain opportunities and gave insufficient attention to some sections of society. One of the aspects of the Union Budget 2024 that faced immense criticism is the Revised Income Tax Slabs under the New Tax Regime. According to some experts, the new income tax slabs are not favorable for middle-class people. However, according to Finance Minister Nirmala Sitharaman, “Over two-thirds of taxpayers have already adopted the new regime.”

To understand whether or not this statement is valid, let’s first understand the meaning of income tax and income tax slabs.

What is Income Tax?

Income Tax is the direct tax imposed on an individual's or an entity's income during a financial year. The income tax is directly paid to the government. The amount of tax to be paid per person or company depends on the income tax slab applicable to their income.

Income Tax Slabs are the different tax rates applied to different income brackets. This system of charging different tax rates ensures that as the taxable income of a taxpayer increases, the tax rate also increases. This practice ensures that high-income earners contribute a larger portion of their income in taxes.

Income Tax Slabs: Old Regime vs. New Regime (Effective from FY 2024-25)

Budget 2024: New Income Tax Slabs (Old vs New Tax regime)

Key Changes under the New Tax Regime (FY 2024-25)

The Finance Minister of India, Nirmala Sitharaman, announced the following changes in the new tax regime under the Union Budget 2024.

1. Increased Standard Deduction: From ₹50,000 to ₹75,000
2. Higher Tax Rebate: Applicable for incomes up to ₹7,00,000.
3. Revised Income Tax Slab: Lower tax rates for certain income brackets.
4. Family Pension Deduction: Increased from ₹15,000 to ₹25,000.
5. Enhanced NPS Deduction: Employer contribution to NPS increased from 10% to 14% in the case of private companies, PSUs, and private banks.

Also Read: GST Rate Changes After the 55th GST Council Meeting: Simplification or Complexity?

Is the New Income Tax Slab Beneficial for the Middle Class?

To determine whether the revised income tax slab is beneficial for the middle class, we have to evaluate the impact of the tax rates across income levels. To do so, let’s take an example and determine the net taxable income and tax amount to be paid under the Old Tax Regime and New Tax Regime.

Tax under the Old Tax Regime

Notes:

• The tax has been calculated without Surcharge and Cess.
• *Extra Deductions include HRA Exemption, Loss on House Property, Interest on Home Loans, Deductions under Section 80C, Deductions under Section 80D, and NPS contribution from employer (up to 10% of Basic + DA)

Tax under the New Tax Regime

Note: *NPS Contribution is not mandatory. Therefore, in this example, we will take NPS as zero.

With the above example, we can see that individuals earning up to ₹7,00,000 pay no tax, under the old tax regime as well as the new tax regime, due to the higher standard deduction and tax rebate. This provides relief to individuals selecting the new tax regime, as they do not have to invest to save tax, giving them more disposable income. It will also provide them with additional financial flexibility for savings and essential expenditures.

Individuals earning more than ₹7,00,000 will have to pay tax under the old and new tax regimes. Individuals earning between ₹7,00,000 and ₹10,00,000 might find the old tax regime better. While individuals earning more than ₹10,00,000 might prefer the new tax regime due to the lower tax amount. The old regime is better for those who either claim higher HRA or have overall deductions more than the benefits of the new regime.

Top GD Topics for MBA Admission Process

Below listed are some of the important GD Topics for reference.

• Importance of Statue of Unity 
• Citizenship Amendment Act - What and Why 
• Making Aadhaar mandatory is not a good idea- for or against 
• Implications of CAA-NCR 
• Cashless Economy – Is India ready for it? 
• All you need to know about Right To Information
• How can we control banking frauds to reduce NPAs? 
• Statue of Unity - Symbol of Pride or Wastage of Public Money? 
• Rural vs Urban India 
• Environment and us 
• Self Motivation 
• First impression is the last impression 
• Funding Democracy: Are Electoral Bonds a Boon or Bane?
• Quick Commerce: A Step Toward Progress or a Wasteful Luxury?
• Crime Against Women in India: Who Bears the Responsibility?
• Innovation Vs Invention: What does the world need?
• PM Internship Scheme: How Effective is it in Enhancing Youth Employability?
• Job Reservation in Private Sector: A Boon or a Barrier?
• Bharatiya Nyaya Sanhita (BNS): Reforming Criminal Law for Better or Worse?
• Electric Vehicles (EVs) in India: Dream or Reality?
• India’s Historic Performance at the Paris Paralympics 2024
• Global Innovation Index 2024: India Jumps from 81st to 39th Rank in 9 Years
• UCPMP 2024: Strengthening Ethical Standards in Pharmaceutical Marketing
• Global Food and Hunger Crisis: India Ranks 105 at Global Hunger Index 2024
• Making India a Semiconductor Powerhouse: The SEMICON India Programme
• Monkeypox Outbreak: A Wake-Up Call for Better Disease Surveillance