The income tax rebate limit increased from Rs 5 lakh to Rs 7 lakh under new tax regime

The government has increased the income tax rebate limit from Rs 5 lakh to Rs 7 lakh under the new tax regime. The new tax rates are as follows:

Rs 0 to Rs 3 lakh – no tax

Rs 3 to 6 lakh – 5%

Rs 6 to 9 lakh – 10%

Rs 9 to 12 lakh – 15%

Rs 12 to 15 lakh – 20%

Above Rs 15 lakhs – 30%

Moving forwards, the new tax regime will be default. However, citizens can continue to use the old one too.

Sitharaman proposed to reduce the highest surcharge rate from 37% to 25% in the new tax regime. She said the proposed change would result in reduction of the maximum tax rate to 39 per cent.

Personal income tax involved the limit on tax exemption on leave encashment on the retirement of non-government salaried employees. The limit of ₹3 lakh was last fixed in 2002. In line with the increase in government salaries, Sitharman proposed to increase this limit to ₹25 lakh.