In a massive relief for the middle class of the country, Finance Minister Nirmala Sitharaman announced an array of changes that would positively impact their finances, with the most significant being no income tax payable up to the income of Rs 12 lakh.
The rebate goes up to Rs 12.75 lakh taking into account standard deductions, under the new tax regime, said the Finance Minister.
From new income tax slabs to their impact on the salary class, here is all you need to know about the changes in income tax.
New Tax Slabs
The first major change is the revised slab rates for the new tax regime. The previous budget had made amends in the slab rates but this budget's announcement unlocks larger benefits for taxpayers.
As per the latest changes, there will be no tax for income from Rs 0 to Rs 4 lakh, 5% tax for income at Rs 4 lakh to 8 lakh and 10% tax for income up to Rs 8 lakh to Rs 12 lakh.
There will be 15% tax for income of Rs 12 lakh to Rs 16 lakh and 20% for income of Rs 16 lakh to Rs 20 lakh. There will be a 25% tax on income of Rs 20 lakh to Rs 24 lakh. Any income above Rs 24 lakh will be taxed at 30%.
Earlier, the limit of income for 0 income tax payment was Rs 7 lakh. The government has said the increase in this limit will be benefitting around one crore assessees who were earlier required to pay tax varying from Rs 20,000 to Rs 80,000. They will now be paying nil tax.
Here's the table that breaks down the tax benefit of each income category of tax payers:
Standard Deduction
The standard deduction was raised to Rs 75,000 during the previous budget. So, a salaried tax payer will now not have to pay any tax if the person's income before standard deduction is less than or equal to Rs 12,75,000.
Capital Gains
With all these advantages unlocked, rebate is not available on income from capital gains or lotteries or any other income on which special rate has been provided in the Act. It is available only on the tax payable as per slabs under section 115BAC.
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