Finance Minister Nirmala Sitharaman announced some relief to middle-class Taxpayers. Nirmala Sitharaman announced an income tax rebate limit increase from Rs 5 lakh to Rs 7 lakh under the new tax regime. She added that the new tax regime will now be the default.
The FM also reduced the number of tax slabs in the new tax regime. They are as follows: Tax for income of Rs 0-3 lakh is nil; income above Rs 3 lakh and up to Rs 5 lakh is to be taxed at 5%; income of above Rs 6 lakh and up to Rs 9 lakh is to be taxed at 10%; income above Rs 12 lakh and up to Rs 15 lakh to be taxed at 20%; and income above Rs 15 lakh to be taxed at Rs 30%.
That means a person earning up to 7 Lakh rupees per annum can be tax-free under the new regime with the help of the rebate announced.
Also, an individual with ₹9 lakh annual income will pay ₹45,000 tax which is 5 percent of the salary – a reduction of ₹15,000 from the present ₹60,000.
But opting new Tax regime means you will have to forgo all the benefits under Section 80 which you avail in Old Tax Regime.
This is the last budget before the 2024 General Elections and so Narendra Modi rightly threw a carrot to the middle-class.