Finance Minister Nirmala Sitharaman announced in her budget speech that taxpayers with salaries up to Rs 12 lakh would not be required to pay tax in the new tax regime.
The Union Minister also announced changes in the tax slabs.
The new tax regime offers zero income tax for earnings up to Rs 12 lakh (Rs 12.75 lakh for salaried taxpayers with standard deduction of Rs 75,000).
What this effectively means is that people earning a salary of up to Rs 12,75,000 will not have to pay tax.
Manmeet Kaur, Partner at Karanjawala & Co, said, “The Government aims at Democracy, demography and demand recognising the middle class. Minimum tax slab raised to Rs 12 lakhs from Rs 7 lakhs in new regime + Rs 75000 standard deduction. Aims to boost both consumption and savings/investments.”
The government has introduced new tax slabs that aim to substantially reduce taxes for the middle class and are designed to leave more money in their hands, boosting household consumption, savings, and investment.
The tax slabs and rates are as follows:
0-4 lakh rupees: Nil
4-8 lakh rupees: 5%
8-12 lakh rupees: 10%
12-16 lakh rupees: 15%
16-20 lakh rupees: 20%
20-24 lakh rupees: 25%
Above 24 lakh rupees: 30%