New income tax slabs: How Sitharaman’s Budget announcement impacts your pocket
Finance Minister Nirmala Sitharaman announced new personal income tax rates in her Budget speech on Saturday. “People earning till ₹5 lakh need not pay any income tax. For those who have an income between ₹5 lakh and ₹7.5 lakh, will now pay 10 per cent tax; those earning between ₹7.
Finance Minister Nirmala Sitharaman on her way to present the Budget in Parliament on Saturday. (Sonu NMehta/HT Photo)
“People earning till ₹5 lakh need not pay any income tax. For those who have an income between ₹5 lakh and ₹7.5 lakh, will now pay 10 per cent tax; those earning between ₹7.5 lakh and ₹10 lakh will pay an income tax of 15 per cent. For income between ₹10 to ₹12.5 lakh, the new tax rate is 20 per cent and for income between ₹12.5 lakh and ₹15 lakh, the revised tax rate will be 25 per cent,” said the Finance Minister.
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“There is no change for those earning above ₹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 ₹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 ₹2.5 lakh - Nil
• From ₹2,50,001 to ₹5,00,000 - 5 per cent of total income
• From ₹5,00,001 to ₹10,00,000 - 20 per cent of total income
• ₹10,00,001 and above - 30 per cent of total income
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“A person earning ₹15 lakh per annum and not availing any deductions will now pay ₹1.95 lakh tax in place of ₹2.73 lakh,” said the Finance Minister.
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“A person earning ₹15 lakh per annum and not availing any deductions will now pay ₹1.95 lakh tax in place of ₹2.73 lakh,” said the Finance Minister.
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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.
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