In a major announcement on income tax changes, the government has revealed five significant changes to the personal income tax regime, aimed at benefiting the hard-working middle class.
In detail:
- Increase in rebate limit from 5 lakhs to 7 lakhs.
- Reduction in the number of slabs from 6 to 5 with an increased tax exemption limit to 3 lakhs.
Tax rate structure: 0-3 lakhs – Nil, 3-6 lakhs – 5%, 6-9 lakhs – 10%, 9-12 lakhs – 15%, 12-15 lakhs – 20%, above 15 lakhs – 30%
- Standard deduction benefits for the salaried class and pensioners.
- Reduction in the maximum surcharge rate from 37% to 25%.
- Increase in tax exemption on leave and cash payment for non-government salaried employees from 3 lakhs to 25 lakhs.
- New tax regime to become default, but option to opt for old tax regime.
- Resulting in a revenue loss of 35,000 crores with 37,000 crores in direct taxes and 1000 crores in indirect taxes being foregone, and 3000 crores mobilized.
| Income | Tax |
| 0-3 Lakh | Nil |
| 3-6 Lakh | 5% |
| 6-9 Lakh | 10% |
| 9-12 Lakh | 15% |
| 12-15 Lakh | 20% |
| Above 15 Lakh | 30% |
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