New income tax slabs: How Sitharaman’s Budget announcement impacts your pocketUpdated: Feb 01, 2020 13:39 IST
Finance Minister Nirmala Sitharaman announced new personal income tax rates in her Budget speech on Saturday.
“People earning till Rs 5 lakh need not pay any income tax. For those who have an income between Rs 5 lakh and Rs 7.5 lakh, will now pay 10 per cent tax; those earning between Rs 7.5 lakh and Rs 10 lakh will pay an income tax of 15 per cent. For income between Rs 10 to Rs 12.5 lakh, the new tax rate is 20 per cent and for income between Rs 12.5 lakh and Rs 15 lakh, the revised tax rate will be 25 per cent,” said the Finance Minister.
“There is no change for those earning above Rs 15 lakh per annum. They will be taxed at 30 per cent,” Sitharaman added.
With this announcement, Sitharaman introduced new income tax slabs - of income upto Rs 7.5 lakh per annum and 12.5 lakh per annum. The new rates will come into effect from April 1, 2020, when the new financial year kicks in.
Currently, a taxpayer pays tax according to following slabs:
• Up to Rs 2.5 lakh - Nil
• From Rs 2,50,001 to Rs 5,00,000 - 5 per cent of total income
• From Rs 5,00,001 to Rs 10,00,000 - 20 per cent of total income
• Rs 10,00,001 and above - 30 per cent of total income
“A person earning Rs 15 lakh per annum and not availing any deductions will now pay Rs 1.95 lakh tax in place of Rs 2.73 lakh,” said the Finance Minister.
She also made it clear that the tax amount will depend on the exemptions and deductions being availed under the old regime. The new personal income tax regime is optional for taxpayers, she said.