Under this, now no tax will have to be paid on taxable income up to Rs 12 lakh. Under the new tax system, there will be no tax on standard deduction of Rs 75,000. That is, salaried people will not have to pay any tax on taxable income up to Rs 12.75 lakh. Till now there is no tax on income up to Rs 7 lakh. After including the standard deduction, this amount becomes Rs 7.75 lakh.

In her speech, the Finance Minister said, ‘I am now happy to announce that there will be no income tax on income up to Rs 12 lakh. Now there will be zero tax on zero to four lakh rupees, 5% on 4 to 8 lakh rupees, 10% on eight to 12 lakh rupees, 15% on 12 to 16 lakh rupees, 20% on 16 to 20 lakh rupees, 25% on 20 to 24 lakh rupees and 30% tax on income above 24 lakh rupees. Tax exemption under section 87A is given under both the old and new tax regimes.

What do experts say

Manoranjan Sharma, Chief Economist of Infomerics Ratings, said that in the budget, the Finance Minister had announced tax exemption on income up to Rs 12 lakh. This was expected. The middle class is suffering from inflation and its disposable income was shrinking. The country’s GDP was showing sluggishness for the last few quarters. The biggest reason for this was that consumption was decreasing in urban areas. This is the reason why there was a demand for giving more income tax exemption to the middle class. With the increase in disposable income of the middle class, more money will come in their pockets and this will give a boost to the economy.

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Due to which now those having an annual income of seven lakh rupees will not have to pay any tax. However, this can be possible due to the rebate given by the government. This exemption is available under Section 87A of the Income Tax Act. In 2013-2014, tax rebate was introduced under Section 87A through the Government of India. Presenting the Union Budget 2023-24 on February 1, 2023, Finance Minister Nirmala Sitharaman has announced a change in this income tax exemption under the new income tax regime. Let’s know about it…

What is Income Tax Rebate?

Simply put, income tax rebate is a form of refund on your income. The Income Tax (IT) Department provides this refund or exemption under certain circumstances. Taxpayers are liable to get income tax rebate when they have paid tax in excess of the amount payable to the Income Tax Department in a financial year. To avail income tax exemption, you must ensure that you calculate your tax liability correctly and file your income tax return within the stipulated time.

What is section 87A?

Under the provisions of section 87A of the Income Tax Act, a resident Indian individual whose total income for the financial year does not exceed the prescribed limit, is provided a rebate of 100% on the income tax payable. Till the financial year 2022-23, the income limit for claiming exemption under section 87A was Rs 5 lakh. This means that for the financial year 2022-23, a person whose income was up to Rs 5 lakh was not required to pay any income tax.

Tax Exemption

The maximum income limit for claiming exemption under section 87A has been amended from time to time. In the Union Budget 2019, the government increased the maximum limit of net taxable income to Rs 5 lakh for claiming exemption under section 87A. At the same time, in the Union Budget 2023, Finance Minister Nirmala Sitharaman announced that the rebate under Section 87A will be increased from Rs 5 lakh to Rs 7 lakh, which has brought a big sigh of relief for India’s growing middle class population.

Tax Slab

In the new tax regime, the exemption limit has now been increased to Rs 7 lakh. Thus, in the new tax system, people with income up to Rs 7 lakh will not have to pay any tax. This means that from FY 2023-24 an individual taxpayer who is a resident of India will now be entitled to claim income tax rebate of 100% of the income tax payable on total income above Rs 7 lakh.

The post Income Tax Rebate: Now these people will get the benefit of tax exemption, know about it… first appeared on Rightsofemployees.com.