New Delhi (NVI): Finance Minister Nirmala Sitharaman announced a significant cut in the tax rates for the salaried class in her Budget speech today. But the reduction in rates will only be implied if a taxpayer opts for foregoing exemptions and deductions.
“The new tax regime shall be optional for the taxpayers,” the finance minister said while delivering her budget speech in Parliament today.
“An individual who is currently availing more deductions and exemptions under the Income Tax Act may choose to avail them and continue to pay tax in the old regime,” she said.
Under the new proposed regime, the income tax slabs will be as folows:
– For incomes of up to Rs 5 lakh per year, there will be no income tax.
– For incomes between Rs 5 lakh and Rs 7.5 lakh per year, the income tax to be paid will be 10 per cent.
– For incomes between Rs 7.5 lakh and Rs 10 lakh per year, the income tax to be paid will be 15 per cent.
– For incomes between Rs 10 lakh and Rs 12.5 lakh per year, the income tax to be paid will be 20 per cent.
– For incomes between Rs 12.5 lakh and Rs 15 lakh per year, the income tax to be paid will be 25 per cent.
The finance minister said the proposal for the new tax regime will lead to a revenue sacrifice of Rs 40,000 crore per annum for the government.
“We have also initiated measures to prefill the income tax return so that an individual who opts for the new regime would need no assistance from an expert to file his return and pay income tax,” she said.
“There are at least 100 tax exemptions in the existing tax regime, which will be reduced by 70 under the new tax regime. The remaining will be reviewed and examined in due course,” she added.
