Bringing in some cheers to the salaried class, the Finance Minister Arun Jaitley has reduced the tax rate for the income between Rs 2.5 lakh to Rs 5 lakh from 10 per cent to 5 per cent. While the tax rate of 20 per cent and 30 per cent on income between Rs 5 lakh to Rs 10 lakh and above Rs 10 lakh respectively remains unchanged.
The reduction in the tax slab rate from 10 per cent five percent for income between Rs 2.5 lakh and Rs 5 lakh will result into a tax benefit of Rs 12,500 as the tax reduces from Rs 25,000 (10 per cent of 2,50,000) to Rs 12,500 (5 per cent of Rs 2,50,000).
Apart from this the rebate under Section 87A has been reduced from Rs 5,000 to Rs 2,500.This rebate is available to those people whose total taxable income was less than Rs 5 lakh in a year.
Those tax payers whose income exceed Rs 50 lakh but less than Rs one crore in the financial year will have to pay a surcharge of 10 per cent. While those having a taxable income of Rs one crore will continue paying surcharge of 15 per cent.
Tax slab for an individual of below 60 years of age
The tax liability of those earning Rs 3 lakh will be zero after the rebate of Rs 2,500 under Section 87A.
The finance minister, Arun Jaitley also said that if a person is earning Rs 4.5 lakh in a financial year, his tax liability will be zero if he or she claims a deduction of Rs 1.5 lakh under Section 80C.
Tax liability of a person earning Rs 4.5 lakh after claiming Section 80C deduction