Extra Relief to Small Taxpayers under New Tax Regime; To Benefit People With Annual Earning of Rs 7 Lakh to Rs 7.5 lakh

New Delhi: Centre has declared extra relief for small taxpayers opting for the new tax regime. People earning marginally higher than no-tax ceiling of Rs 7 lakh will pay tax only on the differential income. This decision was taken after the government amended the Finance Bill.

The Finance Bill 2023, passed by the Lok Sabha on Friday, has proposed a marginal relief to taxpayers under the new tax regime. As per the new tax regime with effect from April 1, a taxpayer with an annual income of Rs 7 lakh pays no tax. But if s/he has an income of Rs 7,00,100 s/he pays tax of 25,010. Thus an additional income of Rs 100 leads to a tax of Rs 25,010. Hence, marginal relief is proposed to that so that the tax that one pays should not be more than the income that exceeds Rs 7 lakh (Rs 100 in this case), the ministry said.

Working out the math, an individual having income up to (approx.) Rs 7,27,700 could stand to benefit from this marginal relief.

The Budget 2023-24 had announced the tax rebate whereby no tax would be levied on those with annual income of up to Rs 7 lakh under the new tax regime. This move was a push for the salaried-class taxpayer to switch to new tax regime where no exemptions on investments is provided.

Under the revamped new tax regime, no tax would be levied for income up to Rs 3 lakh. Income between Rs 3-6 lakh would be taxed at 5%, Rs 6-9 lakh at 10%, Rs 9-12 lakh at 15%, Rs 12-15 lakh at 20% and income of Rs 15 lakh and above will be taxed at 30%.