The Finance Minister has announced a significant change in the income tax slabs, aiming to provide relief to salaried employees. The new tax slabs are structured to benefit taxpayers across various income brackets. Here’s a breakdown of the new tax regime and the benefits it offers.
New Tax Slab Rates
The revised income tax slabs are as follows:
- 0-3 lakh. No tax
- 3-7 lakh. 5%
- 7-10 lakh 10%
- 10-12 lakh 15%
- 12-15 lakh. 20%
- More than 15 lakh 30%
According to the Finance Minister, these changes will provide a benefit of Rs 17,500 to salaried employees. This adjustment aims to increase disposable income and encourage spending, contributing to economic growth.
Comparison with the Previous Tax Regime
In the previous tax regime, the slabs were:
- Up to Rs 3 lakh No tax
- Rs 3 to 6 lakh. 5%
- Rs 6 to 9 lakh. 10%
- Rs 9 to 12 lakh. 15%
- Rs 12 to 15 lakh. 20%
- More than Rs 15 lakh . 30/
The primary change in the new tax regime is the extension of the 5% tax rate up to Rs 7 lakh, compared to the earlier Rs 6 lakh. This shift means that individuals earning between Rs 6 and 7 lakh will now benefit from a reduced tax rate, resulting in significant tax savings.
Impact on Salaried Employees
For salaried employees, the new tax slabs bring substantial relief. Those earning up to Rs 7 lakh will see a reduction in their tax liability, providing them with additional disposable income. This change is expected to boost savings and consumption, positively impacting the overall economy.
Reduced Corporate Tax
In addition to revising the personal income tax slabs, the Finance Minister has also proposed reducing the corporate tax rate from 40% to 35%. This reduction aims to make India more competitive on a global scale, attracting more businesses and encouraging existing ones to expand.
Conclusion
The changes in the income tax slabs and the reduction in corporate tax are significant steps towards making the tax system more taxpayer-friendly. By increasing the threshold for the 5% tax rate and reducing corporate tax, the government aims to stimulate economic activity and provide relief to both individuals and businesses. Taxpayers should assess their financial situation under the new regime to maximize their benefits and plan their finances accordingly.
