No tax for individuals earning up to ₹12 lakh per year under new regime: FM

Individuals earning up to ₹12 lakh annually will not have to pay any income tax under the new tax regime as Finance Minister Nirmala Sitharaman on Feb 1 gave relief to middle class by raising exemption limit and rejigging slabs.

For salaried employees, this nil tax limit will be ₹12.75 lakh per annum, after taking into account a standard deduction of ₹75,000.

Higher exemptions and rejigs have been effected under the new income tax regime.

"I am now happy to announce that there will be no income tax payable up to income of ₹12 lakh (i.e. average income of ₹1 lakh per month other than special rate income such as capital gains) under the new regime," the finance minister said.

"The new structure will substantially reduce the taxes of the middle class and leave more money in their hands, boosting household consumption, savings and investment," Sitharaman said in her Budget speech.

As per the rejig, for people earning more than ₹12 lakh per annum, there will be nil tax for income up to ₹4 lakh, 5% for income between ₹4 and 8 lakh, 10% for ₹8-12 lakh, 15% for ₹12-16 lakh.

A 20% income tax will be levied on income between ₹16 and 20 lakh, 25% on ₹20-24 lakh and 30% above ₹24 lakh per annum.

A tax payer in the new regime with an income of ₹12 lakh will get a benefit of ₹80,000 in tax. A person having income of ₹18 lakh will get a benefit of ₹70,000 in tax.

A person with an income of ₹25 lakh gets a benefit of ₹1.10 lakh.

Meanwhile, Prime Minister Narendra Modi lauded the Union Budget as a "people's budget" that puts more money in the hands of people and said it is a force-multiplier that will increase investments and lead to growth.

In televised remarks on the Budget, Modi said the government has opened up many sectors for the youth, who will drive the mission of 'Viksit Bharat' (developed India).

"This Budget is a force multiplier. This Budget will increase savings, investment, consumption and growth," the prime minister said, congratulating the finance minister and her team for presenting a "people's budget".

He said a budget usually focuses on increasing the income of the government, but the budget presented by Sitharaman seeks to put more money in the pockets of people, increase savings and make citizens partners in the development journey.

"The Budget lays a strong foundation to increase savings and make citizens partners in development," he said.

Modi said welfare measures for gig workers underscore the government's commitment to the dignity of labor.

He said the measures presented in the Budget for the manufacturing sector will allow Indian products to shine globally.

The tax relief will provide big benefits to the middle class and salaried employees.

The announcements in the Budget for farmers will revolutionize the agriculture sector and rural economy.

"In terms of reforms, many important steps have been taken in this Budget. Encouraging the private sector in nuclear energy is historic. It will ensure a big contribution of civil nuclear energy in the development of the country," the prime minister said.

(PTI)