Union Finance Minister Nirmala Sitharaman on Wednesday presented the last full-fledged budget of the second term of Prime Minister Narendra Modi-led BJP government. In a bid to provide relief to taxpayers, Sitharaman proposed to change the tax structure in the new personal income tax regime by trimming the number of slabs to 5 and increasing the basic tax exemption limit to Rs 3 lakh.
She announced no tax for those with annual income of up to Rs 7 lakh under the new tax regime but made no changes for those who continue in the old regime that provides for tax exemptions and deductions on investments and expenses such as HRA. While an individual will have to forego exemptions and deductions on investments in the new tax regime, the finance minister has allowed a standard deduction of Rs 50,000 in it.
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The old tax regime, on the other hand, provides for a similar standard deduction of Rs 50,000 and no tax on income up to Rs 5 lakh through rebates. A Rs 2.5 lakh basic exemption limit is prescribed in old tax regime.
For high salary people, Sitharaman also reduced surcharge from 37 per cent to 25 per cent for high net worth individuals with income above Rs 2 crore. This would translate into a saving of around Rs 20 lakh for those having a salary income of about Rs 5.5 crore.
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