Massive announcement by Nirmala Sitharaman, middle-class gets new income tax structure
The Income Tax announcement will provide a relief to the middle-class and boost consumption and demand.
In a massive relief to the middle class, union finance minister Nirmala Sitharaman on Saturday announced an increased income tax exemption limit during her eighth Budget speech. She announced that those with salaries up to ₹12 lakh per annum will pay nil income tax.
"The middle class provide strengths to the economy. In recognition of their contribution, we have periodically reduced the tax burdens. I am now happy to announce that there will be no income tax up to an income of ₹12 lakhs," Sitharaman said.
Nirmala Sitharaman also spelt out the details of the revised income tax slabs.
"I propose to revise tax rate structures as follows: 0 to ₹4 Lakhs - nil, ₹4 Lakhs to ₹8 Lakhs - 5%, ₹8 Lakhs to ₹12 Lakhs - 10%, ₹12 Lakhs to ₹16 Lakhs - 15%, ₹16 Lakhs to ₹20 Lakhs - 20%, ₹20 Lakhs to ₹24 Lakhs - 25% and above ₹24 Lakhs - 30%. To taxpayers up to ₹12 Lakhs of normal income other than special rate income such as capital gains, a 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.
Also read: Income tax new slab calculations: Who will pay zero tax?
Full details on the income tax slabs under new regime
For salaried employees, this nil tax limit will be ₹12.75 lakh per annum, after taking into account a standard deduction of ₹75,000. Higher exemptions and rejigs have been effected under the new income tax regime.
The finance ministry also explained salary-wise tax liabilities. Those who have salaries up to ₹12 lakh will pay nil tax. Those with a yearly salary of ₹16 lakh will save ₹50000. Those who earn ₹20 lakh, will save ₹90000 in income tax.
Nirmala Sitharaman said that the new tax structure will boost consumption.
"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," Sitharaman said in her Budget speech.