How To Save More Under New Tax Regime!

Finance minister has proposed major tax reforms in a push to the new tax regime. Here's how much you can save.

- Avneet Kaur

FINANCE MINISTER Nirmala Sitharaman has proposed several changes to the new income tax regime in a relief to middle-income taxpayers. The most important is increase in personal income tax rebate limit to ₹7 lakh under the new tax regime. "At present, those with income up to ₹5 lakh do not pay income tax under both old and new tax regimes. I propose to increase the limit to ₹7 lakh in the new tax regime. Thus, persons in the new tax regime with income up to ₹7 lakh will not have to pay any tax," she said in her Budget speech. The finance minister also increased the basic exemption limit under the new regime from ₹2.5 lakh to ₹3 lakh while reducing the number of tax slabs from six to five and extending the benefit of standard deduction to those opting for the new regime. She had introduced the new personal income tax regime in 2020 with six slabs starting from ₹2.5 lakh. The new regime will be the default option, though individuals will be able to continue with the old regime that has higher effective tax rates but far more exemptions. The government has also proposed to reduce surcharge on the highest rate from 37% to 25% in the new regime. Will these announcements benefit taxpayers? Here's what taxation experts have to say.

Push Towards New Tax Regime: Too Soon