Big news for taxpayers! Finance Minister Nirmala Sitharaman has announced a major change in the income tax rebate limit, increasing it from ₹7 lakh to ₹12 lakh. This means that if your total income is ₹12 lakh or less, you won’t have to pay a single rupee in taxes. Sounds great, right? But there’s a catch.
If you earn even a little more than ₹12 lakh—say, ₹12.1 lakh—you won’t get the rebate at all. Instead, you’ll have to pay taxes as per the new slab rates. For example, under the latest tax structure, someone earning ₹12.1 lakh will owe ₹61,500 in taxes.
Here’s how it works:
- Income between ₹4 lakh and ₹8 lakh is taxed at 5%
- Income between ₹8 lakh and ₹12 lakh is taxed at 10%
- Income between ₹12 lakh and ₹16 lakh is taxed at 15%
So, if you earn ₹15 lakh, you’ll end up paying ₹1,05,000 in taxes.
But don’t worry—there’s good news for higher earners too! The government has slashed tax rates for incomes between ₹15 lakh and ₹24 lakh. Earlier, anyone earning above ₹15 lakh had to pay a flat 30% tax. Now, the rates are much lower:
- ₹12 lakh to ₹16 lakh – 15% tax
- ₹16 lakh to ₹20 lakh – 20% tax
- ₹20 lakh to ₹24 lakh – 25% tax
The highest 30% tax rate now only applies to income above ₹24 lakh.
This means significant savings for many taxpayers, making the new tax regime much more attractive. If you’re earning above ₹15 lakh, you’ll now be keeping more of your hard-earned money.
