For salaried employees, this nil tax limit will be Rs 12.75 lakh per annum, after taking into account a standard deduction of Rs 75,000
New Delhi: Individuals earning up to Rs 12 lakh annually will not have to pay any income tax under the new tax regime as Finance Minister Nirmala Sitharaman on Saturday gave relief to middle class by raising exemption limit and rejigging slabs.
For salaried employees, this nil tax limit will be Rs 12.75 lakh per annum, after taking into account a standard deduction of Rs 75,000.
Higher exemptions and rejigs have been effected under the new income tax regime.
“I am now happy to announce that there will be no income tax payable up to income of Rs 12 lakh (ie average income of Rs 1 lakh per month other than special rate income such as capital gains) under the new regime,” the Finance Minister said.
“The new structure will substantially reduce the taxes of the middle class and leave more money in their hands, boosting household consumption, savings and investment,” Sitharaman said in her Budget speech.
As per the rejig, for people earning more than Rs 12 lakh per annum, there will be nil tax for income up to Rs 4 lakh.
Between Rs 4-8 lakh — 5 per cent (tax)
Between Rs 8-12 lakh — 10 per cent
Between Rs 12-16 lakh — 15 per cent
Between Rs 16-20 lakh — 20 per cent
Between Rs 20- 24 lakh — 25 per cent
Above Rs 24 lakh – 30 per cent
The total tax benefit of slab rate changes and rebate at different income levels can be illustrated with examples.
A tax payer in the new regime with an income of Rs 12 lakh will get a benefit of Rs 80,000 in tax (which is 100% of tax payable as per existing rates).
A person having income of Rs 18 lakh will get a benefit of Rs 70,000 in tax (30% of tax payable as per existing rates).
A person with an income of Rs 25 lakh gets a benefit of Rs 1,10,000 (25% of his tax payable as per existing rates), according to Budget documents.
Further the tax deduction at source (TDS) rates will be rationalised and the limit for tax deduction for senior citizens will be doubled to Rs 1 lakh.
She also proposed to extend the time limit to file the updated return from two years to four years.
