India's Finance Minister Nirmala Sitharaman has given a big relief to taxpayers in the union budget that was presented ahead of next year's Lok Sabha elections. Now, the taxable income limit has been raised to INR 7 lakhs.
Economic experts had expressed the need to increase the income tax exemption limit from INR 2.50 lakhs to INR 5 lakhs. There was no change in the tax slab for the past few years. The government is trying to increase the tax base. Therefore, there has been a huge increase in the number of income tax return filers.
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Currently, those with income up to INR 5 lakh do not pay any income tax in both old and new tax regimes. The Finance Minister increased the rebate limit to INR 7 lakh in the new tax regime. Thus, persons in the new tax regime, with income up to INR 7 lakh will not have to pay any tax.
The new personal income tax regime with six income slabs starting from INR 2.5 lakh has been changed to five and has increased the tax exemption limit to INR 3 lakh. The new tax rates are:
| Income | Tax |
|---|---|
| 0 to 3 lakhs | 0 |
| 3-6 lakhs | 5 |
| 6-9 lakhs | 10 |
| 9-12 lakhs | 15 |
| 12-15 lakhs | 20 |
| More than 15 lakhs | 30 |
For the salaried class and the pensioners including family pensioners, each salaried person with an income of INR 15.5 lakh or more will thus stand to benefit by INR 52,500.
Finance Minister proposed to reduce the highest surcharge rate from 37 per cent to 25 per cent in the new tax regime. This would result in reduction of the maximum tax rate to 39 per cent.
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Under Rule 87A of Income Tax, the government provides tax relief of INR 12,500. Taxable income is less than INR 5 lakhs and will not have to pay any tax.
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