GG News Bureau
New Delhi, 2nd Feb. Understanding India’s Revised Income Tax Structure
In a significant move to boost consumer spending and stimulate economic growth, the Indian government has announced that individuals earning up to ₹12 lakh annually will now be exempt from income tax. This development has led to some confusion, particularly regarding the existing 5% tax slab for incomes between ₹4 lakh and ₹8 lakh. To clarify, while the overarching exemption applies to total annual income, the tax slabs are structured to ensure progressive taxation, meaning that different portions of an individual’s income are taxed at varying rates. Therefore, even with the exemption up to ₹12 lakh, the 5% tax rate for the ₹4 lakh to ₹8 lakh bracket remains relevant for calculating taxes on higher incomes. This approach ensures that the tax system remains equitable, with higher earners contributing a fair share relative to their income levels.
Revised Tax Slabs Under the New Regime
The updated tax structure under the new regime is as follows:
- ₹0 – ₹3 lakh: No tax
- ₹3 – ₹7 lakh: 5%
- ₹7 – ₹10 lakh: 10%
- ₹10 – ₹12 lakh: 15%
- ₹12 – ₹15 lakh: 20%
- Above ₹15 lakh: 30%
These revisions aim to provide substantial relief to the middle class, increasing disposable income and encouraging spending.
Impact on Taxpayers
With the new exemptions and revised tax slabs, taxpayers can expect significant savings. For instance, individuals earning up to ₹12 lakh will now be exempt from paying any income tax, resulting in considerable annual savings. This move is anticipated to boost consumer spending, thereby stimulating economic growth.
Government’s Objective
The primary goal behind these tax reforms is to increase disposable incomes for the middle class, thereby enhancing consumption, savings, and investments in the economy. The government also aims to encourage more individuals to adopt the new tax system, predicting that a significant majority of taxpayers will file under it in the coming fiscal years.
Conclusion
The recent changes in India’s income tax structure are designed to provide relief to taxpayers and stimulate economic activity. While the exemption up to ₹12 lakh offers significant benefits, it’s essential to understand the progressive nature of the tax system and how different income slabs are taxed to appreciate the full impact of these reforms.
The post Income Up to ₹12 Lakh Exempt from Tax: Clarifying the 5% Slab for ₹4 to ₹8 Lakh appeared first on Global Governance News- Asia's First Bilingual News portal for Global News and Updates.
