New Delhi: “Just as living beings live expecting rains, citizens live expecting good governance”. With these words, Union Finance Minister Nirmala Sitharaman on Saturday proposed an across-the-board change in tax slabs and rates to benefit all taxpayers, especially the middle class. Approximately Rs 1 lakh crore will be made available in the hands of the taxpayers by virtue of changes in slab, rates and rebate.
Reaffirming the government’s commitment to the philosophy of “trust first, scrutinise later”, the Union Budget reposed faith in the middle class and continued the trend of giving relief in tax burden to the common taxpayer.
“There will be no income tax payable up to income of Rs 12 lakh (average income of Rs 1 lakh per month other than special rate income such as capital gains) under the new regime. This limit will be Rs 12.75 lakh for salaried taxpayers, due to the standard deduction of Rs 75,000,” announced FM Sitharaman, bringing cheers to more than 1 crore more people.
“Tax rebate is being provided in addition to the benefit due to slab rate reduction in such a manner that there is no tax payable by them,” she added.
The maximum rebate available is Rs 60,000 which is there for a taxpayer having income of Rs 12 lakh on which tax is payable as per the new slabs.
Any individual earlier was required to pay a tax of Rs 80,000 (in the new regime) for an income of Rs 12 lakh. Now he will be required to pay nil tax on such income.
The new slabs proposed are: for people with total income between Rs 0-4 lakh, the rate of tax will be zero per cent; for those between Rs 4-8 lakh, the tax rate will be 5 per cent; for people between Rs 8-12 lakh, the tax rate will be 10 per cent.
For people with income between Rs 12-16 lakh, the tax rate will be 15 per cent; for those between Rs 16-20 lakh, the tax rate will be 20 per cent; and for those between Rs 20-24 lakh, the tax rate will be 25 per cent.
For people with income above Rs 24 lakh, the tax will be 30 per cent.
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, said the Finance Minister.
While underlining taxation reforms as one of the key reforms to realise the vision of Viksit Bharat, FM Sitharaman stated that the new income-tax bill will carry forward the spirit of ‘Nyaya’.
The new regime will be simple to understand for taxpayers and tax administration, leading to tax certainty and reduced litigation.
“The tax proposals detail just how the government under the guidance of Prime Minister Narendra Modi has taken steps to understand and address the needs voiced by our citizens,” FM Sitharaman stressed.
The benefit of such nil tax liability is available only in the new tax regime. This new tax regime is the default regime. To avail of the benefit of rebate allowable under proposed provisions of the new tax regime, only a return is to be filed, otherwise no other step is required to be taken.
Presently, for assessment year (AY) 2024-25, about 8.75 crore people have filed their ITRs. All such assesses who were paying tax in the new tax regime will benefit from the change in rates and slabs.
In a press conference later in the day, the Finance Minister said that as many as 1 crore more people will pay no income tax after the increase in rebate to Rs 12 lakh announced in the Budget.
FM Sitharaman also said that the new Income Tax Bill will be presented in Parliament next week and will be referred to a Standing Committee.
(IANS)
