Direct Tax Code panel had proposed New Tax Slabs to boost consumption and investment. The government is expecting that increased purchasing power will push demand ahead of supply, incentivize firms to increase the production which will reflect in GDP growth in the next financial year.
The new tax slabs escalated the minimum taxable limit from₹ 2.5 lakh to ₹5 lakh. On the other hand, anyone earning more than ₹2 crores annually will be subject to a 35% tax rate instead of 30%. However, the new tax slabs are only actionable to people who do not opt for exemptions under the tax administration.
Exemptions include ATC, Insurance or any other tax saving investment schemes. Basically, individual taxpayers have now the choice to choose between the two tax regimes depending on their requisite.
|Income||Previous Tax Rate||New Tax Rate|
|Up to ₹2.5 lakh||Nil||Nil|
|₹2.5 lakh – ₹5 lakh||5%||Nil|
|₹5 lakh – ₹7.5 lakh||20%||10%|
|₹7.5 lakh – ₹10 lakh||20%||15%|
|₹10 lakh – ₹12.5 lakh||30%||20%|
|₹12.5 lakh – ₹15 lakh||30%||25%|
|Above ₹15 lakh||30%||30%|
The new tax rates are less for the income category ₹2.5 lakh – ₹15 lakh than the previous one which is beneficial for the taxpayers.