Finance Minister Nirmala Sitharaman finally gave in to the widespread demand to reduce tax rates and revise slabs. However, only those who forgo exemptions and deductions will be able to claim the revised lower rates.
Tax-payers earning between Rs 5 lakh to Rs 7.5 lakh will now have to pay 10 per cent tax instead of 20 per cent at present. Those earning between Rs 7.5 lakh to 10 lakh, who were paying tax at the rate of 20 per cent, will now have to shell out 15 per cent tax. For the income slab of Rs 10 lakh to 12.5 lakh, the new rate will go down to 20 per cent from 30 per cent. If you earn between Rs 12.5 lakh to Rs 15 lakh, the applicable tax rate will go down from 30 per cent to 25 per cent. Those drawing over Rs 15 lakh will continue to pay 30 per tax, without exemptions. Citing an example, the FM estimated the tax saving of Rs 78,000 for someone earning Rs 15 lakh. The tax payable will come down from Rs 2,73,000 to Rs 1,95,000, she said. While tax rates have been lowered, the actual benefit will depend on the exemptions forgone.