Union Finance Minister Nirmala Sitharaman has changed income tax slabs for salaried individuals and standard deduction limits. The changes in the personal tax slabs and standard deduction will help individuals to save ₹17,500 according to the finance minister.
Here’s how much income tax you will have to pay if you earn ₹10 lakh.
For an individual earning an income of ₹10 lakh, one will have to pay as little as ₹45,000 in taxes, and will get to keep around ₹9,55,000 according to Siddharth Maurya, Founder & Managing Director of Vibhavangal Anukulakara Private Limited.
The rate remains zero for salaried individuals earning less than ₹3lakh. The slab of ₹3 lakh to ₹6 lakh has been changed to ₹3 lakh to ₹7 lakh. The rate of taxation, that is 5%, remains the same. Similarly, the other new slabs are ₹7 lakh to ₹10lakh at 10%, ₹10 lakh to ₹12 lakh at 15%, ₹12 lakh to ₹15 lakh at 20% and income above ₹15 lakh at 30%.
The government changed the standard deduction limit to ₹75,000 from ₹50,000. Standard deduction is a provision by which a fixed amount is deducted from the gross income of salaried individuals and pensioners before arriving at their taxable income.
According to the finance minister’s budget presentation, salaried individuals will save ₹17,500 due to the proposed changes.
“As a result of these changes, a salaried employee in the new tax regime stands to save up to ₹17,500. Apart from these, I am also making some other changes.” Nirmala Sitharaman said while addressing the budget session on July 23.
The government will forgo ₹7,000 crore annually according to the budget proposals tabled by the finance minister.
“Revenue of about ₹37,000 crore will be forgone while revenue of about ₹30,000 crore will be additionally mobilised. Thus, the total revenue foregone is about ₹7,000 crores annually,” Sitharaman said.
Sitharaman also proposed to review and simplify the Income Tax Act, 1961.
“I announce a comprehensive review of the Income Tax Act 1961. This will reduce disputes and litigation. It is proposed to be completed in 6 months.” FM Sitharaman said in her budget presentation.
