Giving big relief to taxpayers, Finance Minister Nirmala Sitharaman has increased the limit of standard deduction. It has been increased from Rs 50 thousand to Rs 75000 annually. This change has been made under the new tax regime.
Change in tax slab also
Finance Minister Nirmala Sitharaman has made a big announcement regarding income tax. Along with standard deduction, changes have also been made in the tax slab. This change has happened in the new tax slab rate. Now if the income is more than Rs 15 lakh, 30 percent tax will be applicable.
According to the new tax slab under the new tax regime, if someone’s income is more than Rs 7 lakh, then he will not have to pay any tax on annual income of Rs 3 lakh. Whereas, 5 percent on annual income of Rs 3 to 7 lakh, 10 percent on annual income of more than Rs 7 lakh and up to Rs 10 lakh, 15 percent on annual income of more than Rs 10 lakh and up to Rs 12 lakh, 15 per cent on annual income of more than Rs 12 lakh and up to Rs 15 lakh. 20 percent tax and 30 percent tax will be applicable on annual income more than Rs 12 lakh.
Revised tax slab under the new tax regime
- 0% tax on Rs 0-3 lakh
- 5% tax on income above Rs 3 lakh and Rs 7 lakh
- 10% tax on more than Rs 7 lakh and Rs 10 lakh
- 15% tax on income above Rs 10 lakh and Rs 12 lakh
- 20% tax on more than Rs 12 lakh and Rs 15 lakh
- 30 percent tax on annual income more than Rs 15 lakh
Note- In this, the standard deduction has been increased from Rs 50 thousand per year to Rs 75000 per year. This means that even if your annual income is Rs 7.75 lakh, you will not have to pay any tax under the new tax regime.
When did the changes happen?
The BJP government had increased the standard deduction to Rs 40,000 annually in the 2018 budget. After this, in the interim budget of 2019, the standard deduction limit was increased to Rs 50,000 per year. There was no change in the standard deduction since then. Now it has been increased to 75000.