BENGALURU: In a big relief to individual taxpayers, Finance Minister Nirmala Sitharaman announced an increase in the income tax rebate limit from the existing Rs 5 lakh to Rs 7 lakh under the new tax regime.
She also reduced the number of tax slabs. While tax for income till Rs 3 lakh is nil; income above Rs 3 lakh-Rs 6 lakh will be taxed at 5%; income above Rs 6 lakh-Rs 9 lakh will be taxed at 10%; Rs 12 lakh-Rs 15 lakh will be taxed at 20%; and income above Rs 15 lakh will be taxed at 30%.
Nirmala Sitharaman said that in 2020, the new personal income tax regime with six income slabs was introduced starting from Rs 2.5 lakh. Now, she has proposed to change the tax structure in the new tax regime by reducing the number of slabs to five.
Also, salaried individuals with an income of Rs 15.5 lakh or more will benefit by Rs 52,500. The Budget also proposed to reduce the highest surcharge rate from 37% to 25% in the new tax regime and this will result in the reduction of the maximum tax rate to 39%, said Sitharaman.
Sandeep Agrawal Director & Co-founder Teamlease Regtech said this (new tax regime) will result in around 25% reduction in tax liability for individuals with income up to Rs 9 lakh and around 20% reduction in tax liability for individuals with income up to Rs 15 lakh.
Professor Anil Sood, who did the math for The New Indian Express' shadow budget, said all the changes in Income Tax rates are for encouraging the New Tax Regime.
Salary earners have a greater relief in the form of increased standard deduction limit and leave encashment, he added. (THE NEW INDIAN EXPRESS)