New Delhi: Finance Minister Nirmala Sitharaman gave relief to taxpayers in the new tax regime. The rebate limit for those opting for the new tax regime has been increased to Rs 7 lakh. Earlier it was 5 lakh rupees.
But if income is more than Rs 7 lakh, then people will not get the benefit of this rebate. They have to pay tax. However, the Finance Minister has also announced new slabs for those earning more than Rs 7 lakh. Income up to Rs 3 lakh will now be tax free for them.
Under the old tax regime, annual income up to Rs 2.5 lakh will be tax-free. If the income is between 2.5 to 5 lakhs, then people will have to pay 5% tax on 5 lakh – 2.5 lakh = Rs 2.5 lakh.
However, by taking advantage of Section 87A of the Income Tax Act, taxpayers will still be able to save tax on annual income up to Rs 5 lakh.
The government collects income tax at the rate of 5% on income from 2.5 lakh to 5 lakh, but waives this tax under Section 87A of the Income Tax Act.