Finance Minister Nirmala Sitharaman
In the new tax regime, the revised tax rate structure is Rs 0-4 lakh (zero tax), Rs 4-8 lakh (5 per cent), Rs 8-12 lakh (10 per cent), Rs 12-16 lakh (15 per cent), Rs 16-20 lakh (20 per cent), Rs 20-24 lakh (25 per cent), and above Rs 24 lakh (30 per cent).The tax deduction at source (TDS) rates will be rationalised and the limit for tax deduction for senior citizens will be doubled to Rs 1 lakh
New Delhi: In a big boost to the Indian middle class, Finance Minister Nirmala Sitharaman on Saturday announced that there will be no income tax payable for incomes up to Rs 12 lakh, and Rs 12.75 lakh for salaried taxpayers (including standard deduction).
In the new tax regime, the revised tax rate structure is Rs 0-4 lakh (zero tax), Rs 4-8 lakh (5 per cent), Rs 8-12 lakh (10 per cent), Rs 12-16 lakh (15 per cent), Rs 16-20 lakh (20 per cent), Rs 20-24 lakh (25 per cent), and above Rs 24 lakh (30 per cent).
“The new tax structure would substantially reduce tax for the middle class,” announced FM Sitharaman.
Nil tax for individuals earning up to Rs 12 lakh annually under new regime
Individuals earning up to Rs 12 lakh annually will not have to pay any income tax under the new tax regime as FM gave relief to middle class by raising exemption limit and rejigging slabs.
For salaried employees, this nil tax limit will be Rs 12.75 lakh per annum, after taking into account a standard deduction of Rs 75,000.
Higher exemptions and rejigs have been effected under the new income tax regime.
“I am now happy to announce that there will be no income tax payable up to income of Rs 12 lakh (i.e. average income of Rs 1 lakh per month other than special rate income such as capital gains) under the new regime,” the finance minister said.
“The new structure will substantially reduce the taxes of the middle class and leave more money in their hands, boosting household consumption, savings and investment,” Sitharaman said in her Budget speech.
As per the rejig, for people earning more than Rs 12 lakh per annum, there will be nil tax for income up to Rs 4 lakh, 5 per cent for income between Rs 4 and 8 lakh, 10 per cent for Rs 8-12 lakh, 15 per cent for Rs 12-16 lakh.
A 20 per cent income tax will be levied on income between Rs 16 and 20 lakh, 25 per cent on Rs 20-24 lakh and 30 per cent above Rs 24 lakh per annum.
A tax payer in the new regime with an income of Rs 12 lakh will get a benefit of Rs 80,000 in tax. A person having income of Rs 18 lakh will get a benefit of Rs 70,000 in tax.
A person with an income of Rs 25 lakh gets a benefit of Rs 1.10 lakh.
Sitharaman said that the tax deduction at source (TDS) rates will be rationalised and the limit for tax deduction for senior citizens will be doubled to Rs 1 lakh.
FM Sitharaman also proposed to extend the time limit to file the updated return from two years to four years.
Sitharaman also announced rationalisation of TDS (Tax Deduction at Source) regime to ease compliance burden.
she said tax proposals are guided by income tax reforms for middle class, TDS rationalisation, and easing compliance burden.
The government will also be introducing a new Income Tax (I-T) bill in Parliament next week.
The threshold to collect TDS on remittances under the Liberalised Remittance Scheme (LRS) would be increased to Rs 10 lakh from Rs 7 lakh and an annual limit of Rs 2.4 lakh for TDS on rent has been raised to Rs 6 lakh.
Delay for payment of TCS up to the due date would be decriminalised, according to the Finance Minister, adding that TCS on remittances, if a loan was taken for education, has been waived.
The Union Budget also proposes to exempt withdrawals from National Savings Scheme (NSS) accounts on or after August 2024 from tax.
The Budget Session of Parliament, which commenced on Friday, will be conducted in two phases – the first started on January 31 and will conclude on February 13, while the second phase will begin on March 10 and end on April 4.