Tax-free income limit under new regime rises to 12 lakh

Union Finance Minister (FM) Nirmala Sitharaman on Saturday streamlined personal income-tax (I-T) slabs and adjusted tax deducted at source (TDS) limits. The government also plans to introduce a new I-T Bill next week.

- HIMALI PATEL

Key changes to income tax slabs

The FM has proposed to revise tax slabs and rates under the new tax regime. A new tax slab with a 25 per cent tax rate has come in. The rebate limit under Section 87A has also gone up. These changes will translate into nil tax liability for income up to 12 lakh. "For salaried individuals, the nil limit will rise to 12.75 lakh, thanks to the standard deduction of ₹75,000. Section 87A has been amended to offer a rebate of ₹60,000, up from 25,000," says Suresh Surana, a Mumbai-based chartered accountant. A tax rebate allows for a reduction in tax payable, provided certain conditions are met.

Parveen Kumar, partner, direct tax, Dewan PN Chopra & Co, says the rebate applies only to tax on salary income, not capital gains.

The old tax regime remains unchanged. "Taxpayers opting for it will continue to follow the existing slab rates and deductions," says Kumar.