If the government increases the standard deduction to Rs 1 lakh, then according to the new tax system calculation, taxpayers will get a huge benefit. Taxpayers will save Rs 23400 annually. Whereas tax will start being levied on annual income of more than Rs 8 lakh.
Finance Minister Nirmala Sitharaman is going to present the budget. Meanwhile, taxpayers have special expectations from the budget. It is being said that the government may reduce the tax rate in the budget to provide relief to the middle class. At the same time, tax experts believe that standard deduction can be increased further, which will be a relief for taxpayers.
Currently, in the new tax system, standard deduction of Rs 75000 is being given. Which was increased by Finance Minister Nirmala Sitharaman from Rs 50 thousand to Rs 25,000 to Rs 75000 in the last budget. Now it is being said to increase it to 1 lakh. If this happens, then how much money of taxpayers will be saved? Let’s know the complete calculation.
How much money will be saved if there is 1 lakh standard deduction
Right now under the new tax system, no tax has to be paid on annual income of 7 lakh. At the same time, a standard deduction of Rs 75000 is given. In such a situation, if your salary is Rs 7 lakh 75000 annually, then there is no need to pay any tax, but as soon as it is even 1 rupee more, tax has to be paid on annual income.
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If the government increases the standard deduction to Rs 1 lakh, then according to the new tax system calculation, taxpayers will get a huge benefit. Taxpayers will save Rs 23400 annually. Whereas tax will start being levied on annual income of more than Rs 8 lakh.
New Tax Regime Tax Slab
₹0-₹3 lakh: Zero
₹3-₹7 lakh: 5%
₹7-₹10 lakh: 10%
₹10-₹12 lakh: 15%
₹12-₹15 lakh: 20%
₹15 lakh and above: 30%
Old Tax Regime
– Income from Rs 0 to Rs 2.5 lakh: 0%
– Income from Rs 2.5 lakh to Rs 5 lakh: 5%
– Income from Rs 05 lakh to Rs 10 lakh: 20%
– Income above Rs 10 lakh: 30%
There may be a change in the tax slab
The government may consider making further changes in the income tax slab under the new tax system. In particular, there is speculation that the 30% tax rate can be implemented at income levels above ₹ 20 lakh.
According to sources, the news is that the new Income Tax Act can be introduced in Parliament during the budget session. This will be a new law, not an amendment to the existing Act. At present, the Law Ministry is considering the draft of the law, and it is likely to be introduced in Parliament in the second part of the budget session. Actually, its purpose is to make the existing Income Tax Act, 1961 easy, clear and understandable.
