Finance Minister Nirmala Sitharaman, presenting the Budget for the seventh consecutive year on Tuesday, announced key updates to the tax regime. The Modi government has introduced a new tax bracket that provides full exemption for income up to Rs 3 lakh. Additionally, the standard deduction has been raised from Rs 50,000 to Rs 75,000, aiming to benefit taxpayers across the board.
In her speech, Finance Minister Nirmala Sitharaman announced that the government will review the Income Tax Act, 1961 over the next six months. She outlined plans to simplify the income tax system and increase the availability of officers to address significant tax cases. Additionally, the government revealed that it will eliminate angel tax to foster a more supportive environment for startups.
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New Tax Slabs Announced:
- Rs 0-3 lakh: 0%
- Rs 3-7 lakh: 5%
- Rs 7-10 lakh: 10%
- Rs 10-12 lakh: 15%
- Rs 12-15 lakh: 20%
The new budget offers income tax relief by introducing a 5% tax rate on income between Rs 3 lakh and Rs 7 lakh under the revised tax regime. The tax slabs have been adjusted accordingly. Additionally, the standard deduction in the new tax system has been increased to Rs 75,000 from Rs 50,000. However, there are no changes to the existing tax system.