NEW DELHI, Mar 24: In a relief to taxpayers opting for new tax regime, individuals earning marginally higher income than no-tax ceiling of ₹ 7 lakh will pay tax only on the differential income after the government amended the Finance Bill.
The Finance Bill 2023, passed by the Lok Sabha on Friday, has proposed a marginal relief to taxpayers under new tax regime.
Explaining the provision, the finance ministry said under the new tax regime with effect from April 1, if a taxpayer has annual income of ₹ 7 lakh s/he pays no tax. But if s/he has income of ₹ 7,00,100 s/he pays tax of 25,010.
Thus an additional income of ₹100 leads to a tax of ₹25,010.
Hence, marginal relief is proposed to that so that the tax what one pays should not be more than the income that exceeds ₹ 7 lakh (₹100 in this case), the ministry said.
Nangia Andersen LLP Partner Sandeep Jhunjhunwala said the amendment to Finance Bill seeks to provide a marginal relief to individual taxpayers having borderline income by proposing a deduction of income tax payable in excess of the differential income above ₹ 7 Lakh.
”Working out the math, an individual having income up to (approx.) INR 7,27,700 could stand to benefit from this marginal relief,” Jhunjhunwala added.