Finance Minister Nirmala Sitharaman highlighted one of the major changes in the budget, which includes adjustments in tax slabs under the new regime and an increased standard deduction to Rs 75,000. These changes are expected to provide taxpayers with annual savings of Rs 17,500.
The move will benefit taxpayers by saving Rs 17,500 annually. Additionally, since a reduction in your tax also lowers the health and education cess, saving another Rs 700 (4% of Rs 17,500), the total savings amount to Rs 18,200.
Who All Have Benefitted After The Change In Tax Slab Under New Tax Regime
The increase in the standard deduction amount and the tax slab under the new tax regime will benefit the middle class taxpayers as those with income of Rs 7.75 lac per annum can now make their tax liability nil.
There is no tax payable on income up to Rs 3 lakh. For income between Rs 3 lakh and Rs 7 lakh, the tax rate is 5%. This means that at an income of Rs 7 lakh, your tax liability would be Rs 20,000. However, you are entitled to a rebate of Rs 25,000 under Section 87A, resulting in no actual tax due. Adding the standard deduction of Rs 75,000, you remain exempt from taxes up to an income of Rs 7.75 lakh.