Income tax rates have been slashed significantly, but with a catch. It would be optional and only for those willing to forego reliefs and exemptions.
Finance Minister Nirmala Sitharaman said that those earning less than Rs 5 lakh annually would not have to pay income tax like earlier.
She said the new tax relief would result in a Rs 48,000 crore revenue loss.
Under the new income tax slab, those earning between Rs 5 lakh and Rs 7.5 lakh annually, the rate has been halved to 10 per cent. But this would be for those willing to forego reliefs and exemptions.
Those in the income slab of Rs 7.5 lakh to Rs 10 lakh, the rate is 15 per cent. For incomes in Rs 10 lakh-12.5 lakh the rate is 20 per cent and those in the Rs 12.5 lakh-15 lakh slab would have to pay 25 per cent. Those earning above Rs 15 lakh would have to pay the regular 30 per cent.
Nirmala added that income tax reforms would promote growth and tax collected would go back to 'the people manifold'.