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To reduce the financial burden on the salaried class and foster economic stability, the government has proposed significant reductions in income tax rates across all income slabs. This initiative seeks to simplify the tax structure and ensure a balance between inflation and take-home pay, particularly for middle-income earners.
| Annual Income Range (Rs.) | Current Tax Rate | Proposed Tax Rate | Current Tax Amount (Approx.) | Proposed Tax Amount (Approx.) | Change |
|---|---|---|---|---|---|
| 6,00,000 – 12,00,000 | 5% | 1% | Varies by income | Varies by income | Major reduction in the rate |
| 12,00,001 – 22,00,000 | 15% + Rs. 30,000 | 11% + Rs. 6,000 | Approx. Rs. 30,000+ | Approx. Rs. 6,000+ | Substantial decrease |
| Up to 22,00,000 | 15% (min) | 11% (min) | Rs. 3,30,000 | Rs. 2,42,000 | Lower minimum tax rate |
| 22,00,001 – 32,00,000 | 25% + Rs. 1,80,000 | 23% + Rs. 1,16,000 | Rs. 1,80,000+ | Rs. 1,16,000+ | Tax rate & amount reduced |
| Above 32,00,000 | Unchanged % | Same % | Rs. X | Rs. X – Rs. 84,000 | Flat Rs. 84,000 reduction |
Under the proposed changes, individuals earning between Rs. 6 lakh and Rs. 12 lakh will see their tax rate dramatically reduced from 5 percent to a mere 1 percent. For those earning Rs. 12 lakh to Rs. 22 lakh, the tax amount is proposed to decrease substantially from Rs. 30,000 and 15% to Rs. 6,000 and 11%. Higher earners are also set to benefit, with the minimum tax rate for those earning up to Rs. 2.2 lakh proposed to be lowered to 11 percent from 15 percent. Furthermore, individuals earning between Rs. 22 lakh and Rs. 32 lakh could see their tax rate drop from 25 percent to 23 percent with Rs. 116000 instead of Rs. 180000 previously. Beyond Rs. 32 lakh, the tax percentage will stay the same, but the annual sum would be reduced by Rs. 84000
The government is also addressing concerns regarding the high tax burden on the country’s professional workforce, acknowledging that it currently faces some of the highest taxes in the region. To counter the potential for a “brain drain” and retain top talent within the country, the surcharge would be reduced by 1 percent for those earning more than Rs. 10 million.
