Union Budget: No Income Tax on Annual Income Up to Rs 12 Lakh, See Revised Tax Slab
In a major move to provide relief to the middle class, Finance Minister Nirmala Sitharaman announced that individuals earning up to Rs 12 lakh annually will no longer have to pay any income tax under the new tax regime.
In a major move to provide relief to the middle class, Finance Minister Nirmala Sitharaman announced that individuals earning up to Rs 12 lakh annually will no longer have to pay any income tax under the new tax regime. The revised exemption limit and rejigged tax slabs aim to reduce the financial burden on salaried employees and boost consumption, savings, and investments.
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Revised Tax Slabs and Exemptions for Salaried Employees
For salaried employees, the nil tax limit will be raised to Rs 12.75 lakh per annum, factoring in a standard deduction of Rs 75,000. Sitharaman emphasized that the changes would significantly reduce taxes for the middle class, leaving more disposable income in their hands.
The new tax structure also introduces a progressive tax rate system, with no tax on income up to Rs 12 lakh (Rs 1 lakh per month on average). The updated tax slabs are as follows:
- Nil tax for income up to Rs 4 lakh
- 5% tax for income between Rs 4 lakh and Rs 8 lakh
- 10% tax for income between Rs 8 lakh and Rs 12 lakh
- 15% tax for income between Rs 12 lakh and Rs 16 lakh
- 20% tax for income between Rs 16 lakh and Rs 20 lakh
- 25% tax for income between Rs 20 lakh and Rs 24 lakh
- 30% tax for income above Rs 24 lakh
Impact on Taxpayers
Under the new structure, individuals with an annual income of Rs 12 lakh will see a tax reduction of Rs 80,000. Similarly, those with an income of Rs 18 lakh will benefit from a tax cut of Rs 70,000, while taxpayers earning Rs 25 lakh will enjoy a tax reduction of Rs 1.10 lakh.
The reforms are designed to benefit a large number of taxpayers, providing them with greater financial flexibility and stimulating economic growth through increased household consumption.
