Representative image for tax.
Credit: iStock Photo
Finance minister Nirmala Sitharaman on Saturday, while presenting her eighth consecutive Union Budget, revised income tax slabs under the New Tax Regime, in a bid to provide relief to salaried individuals and tax payers.
After decades of having a singular income tax regime, FM Sitharaman introduced a parallel regime—the New Tax Regime—in the Union Budget 2020-21 in a bid to simplify and streamline taxation rules and expand the taxpayer base.
Under the New Tax Regime, salaried tax payers with taxable income of up to Rs 12.75 lakh (income Rs 12 lakhs with standard deduction of Rs 75,000), will be tax exempt. However, for those exceeding the Rs 12.75 lakh limit, the tax slabs are as follows:
India has always had a notoriously low taxpayer base in comparison to the country's population: for instance, in 2021-22, a mere 2.09 crore people paid income taxes, about 2.2 per cent of the voting population. In comparison, the US and most European countries have over 50 per cent of their population paying taxes.
Hence, tax slabs were revised, and lower tax rates were announced for the revised slabs in comparison to the Old Tax Regime. However, these lower rates under the New Regime came at a cost -- specific deductions and exemptions that were allowed under the Old Regime were done away with.
As it stands, however, both the Old Regime and New Regime exist parallelly, and individuals can opt to get taxed under either.
Union Budget 2025 | Nirmala Sitharaman, who continues to be Finance Minister, will present her record 8th Union Budget this time. While inflation has burnt a hole in the pockets of 'aam janata', reports suggest there might be a tax relief for those making up to Rs 15 lakh per year. Track the latest coverage, live news, in-depth opinions, and analysis only on Deccan Herald. Also follow us on WhatsApp, LinkedIn, X, Facebook, YouTube, and Instagram.