No Tax On Income Up To Rs 7 Lakh, New slabs also announced 2023
No Tax On Income Up To Rs 7 Lakh: Finance Minister Nirmala Sitharaman has given a big relief in Income Tax after 8 years. Now income tax up to 7 lakh rupees per annum will not have to be paid. However, this will only be available under the new tax slab. Still there will be two options to file income tax return.
Until now, income up to Rs 2.5 lakh was tax free. The last time the income tax slabs were changed was in the 2014-15 budget. In 2019-20, 8 crore people paid income tax or corporate tax. In the budget, the tax exemption given to new startups for 3 years has been kept unchanged.
Under the old tax system, income above Rs 2.5 lakh is taxed
Under the old tax system, annual income up to Rs 2.5 lakh will be tax free. If your income is between 2.5 to 5 lakhs, you have to pay 5% tax on 5 lakhs – 2.5 lakhs = 2.5 lakhs. However, by taking advantage of Section 87A of the Income Tax Act, you can also save tax on annual income up to Rs 5 lakh.
The government levies income tax at the rate of 5% on earnings between Rs 2.5 lakh and Rs 5 lakh, but waives this tax under Section 87A of the Income Tax Act, meaning that if one’s annual taxable income is up to Rs 5 lakh, he has to pay no income tax. No, but if your income is 5 lakh 10 thousand rupees then instead of paying tax on 10 thousand rupees you have to pay tax on 5.10 lakh – 2.5 lakh = 2.60 lakh.
Presently 2 options for filing income tax return
There are 2 options for filing income tax returns, i.e. 2 options for filing ITR. A new option was given on 1 April 2020. In the new tax slab, the tax rate on income above Rs 5 lakh has been kept low, but the deduction has been taken away, and if you opt for the old tax slab, you can avail several tax deductions.
There was no change in income tax slab for the last 8 years
There has been no change in the tax slab for the last 8 years. In the 2014-15 budget, the income tax exemption limit for taxpayers below 60 years is Rs. 2 lakhs to Rs. 2.5 lakh was made. At the same time, the exemption limit for senior citizens has been increased from Rs 2.5 lakh to Rs 3 lakh. However, in the Budget 2019-2020, individuals with annual income up to Rs 5 lakh were given full exemption from income tax (Section 87A). This concession is given on temporary basis.