Latest budget declares New income tax slabs
Sitharaman proposed new income tax slabs and lower rates. These income tax rates are optional and are available to those who are willing to forego some exemptions and some deductions. In order to provide significant relief to the individual taxpayers and to simplify the Income-tax law, Sitharaman propose to bring a new and simplified personal income tax regime wherein income tax rates will be significantly reduced for the individual taxpayers who forgo certain deductions and exemptions. Under the new regime, an individual shall be required to pay tax at the reduced rate of 10% for income between Rs 5 lakh to Rs 7.5 lakh against the current rate of 20%. For income between Rs 7.5 lakh to Rs 10 lakh he will pay at the reduced rate of 15% against the current rate of 20%. Similarly for the income between Rs 10 lakh to Rs 12.5 lakh the taxpayer will pay at the reduced rate of 20% against the current rate of 30%. The income between Rs 12.5 lakh to Rs 15 lakh will be taxed at the reduced rate of 25% against the existing rate of 30%. Income above Rs 15 lakh will be continued to be taxed at the rate of 30%. Those earning up to Rs 5 lakh shall not pay any tax either in the old regime or in the new regime. In the new tax regime, substantial tax benefit will accrue to a taxpayer depending upon exemptions and deductions claimed by him. For example, a person earning Rs 15 lakh in a year and not availing any deductions etc. will pay only Rs 1,95,000 as compared to Rs 2,73,000 in the old regime. Thus his tax burden shall be reduced by 78,000 in the new regime. He would still be the gainer in the new regime even if he was taking deduction of Rs 1.5 lakh under various sections of Chapter- VI-A of the Income Tax Act under the old regime. The new tax regime shall be optional for the taxpayers. An individual who is currently availing more deductions & exemption under the Income Tax Act may choose to avail them and continue to pay tax in the old regime.
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