Income up to Rs 7 lakh would now be tax-free versus the earlier threshold of Rs 5 lakh. With high inflations eating into people’s earnings, the government’s announcement comes as a relief for the middle-class.
Two years ago, the government had introduced a new personal tax regime and tax-payers could choose between the old and new regime. Ms Sitharaman today announced that the new regime unveiled this year would now become the default. She added that tax-payers would though still be able to request for the old tax structure, which allows for exemptions as the new regime has no scope for exemptions, though it has a higher tax-free ceiling of Rs 7 lakh.
The number of tax slabs have been reduced from six to five. The Centre has also increased the tax exemption limit from Rs 2.5 lakh to Rs 3 lakh.
The highest tax rate in personal income tax, which currently stands at 42.74 per cent, has now been reduced to 39 per cent. “Salaried person with an income of Rs 15.5 lakh or more will thus stand to benefit by Rs 52,500,” Ms Sitharaman said in her Budget speech today.
She also proposed reducing the highest surcharge to 25 per cent from 37 per cent in the new tax regime.
