Finance Minister Nirmala Sitharaman has made major changes in the tax slabs under the New Tax Regime. Along with this, the limit of standard deduction has also been increased. Standard deduction has now been increased from Rs 50,000 per annum to Rs 75,000 per annum. Whereas in the new tax regime, there is already tax exemption on annual income up to Rs 7 lakh.
Therefore, if someone’s annual income is Rs 7 lakh 75000 and he chooses the New Tax Regime, then now he will not have to pay a single rupee tax, because the standard deduction has been reduced to Rs 75000 annually. Earlier this deduction was Rs 50 thousand annually. That means earlier no tax had to be paid on annual income of Rs 7.50 lakh. Now this exemption has increased by Rs 25,000 to Rs 7.75 lakh annually.
How much tax will have to be paid if the annual salary exceeds Rs 7.75 lakh?
If a person’s salary or annual income is more than Rs 7.75 lakh and he chooses the new tax regime, then he will have to pay 10% tax as per the revised tax slab.
Now how much tax will have to be paid on income more than Rs 10 lakh?
According to the new tax slab under the new tax regime, if someone’s income is more than Rs 7 lakh and Rs 10 lakh, then he will have to pay 10% tax. Whereas on income above Rs 10 lakh and above Rs 12 lakh, 15% tax will have to be paid. 15% tax will have to be paid on income above Rs 10 lakh and Rs 12 lakh.
How much tax on Rs 12 to 15 lakh?
Whereas if a taxpayer earns more than Rs 12 lakh annually and chooses the new tax regime, then he will have to pay 20% tax. Whereas if someone’s income is more than Rs 15 lakh then 30 percent tax will have to be paid.
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.