Sun Feb 02 08:26:46 UTC 2025: ## India Announces Significant Income Tax Relief in Budget

**New Delhi, [Date]** – The Indian government unveiled a major income tax relief in its latest budget, significantly altering the new tax regime. Under the revised system, individuals will now enjoy tax exemption on earnings up to ₹12 lakh annually. This limit increases to ₹12.75 lakh for salaried individuals, factoring in the standard deduction of ₹75,000.

This relief is achieved through Section 87A of the Income Tax Act, effectively waiving the 5% tax on income between ₹4-8 lakh and the 10% tax on income between ₹8-12 lakh under the new regime. This translates to a potential tax savings of ₹60,000 for eligible taxpayers. However, it’s crucial to note that this exemption only applies to income from salary and other sources. Capital gains will be taxed separately. For instance, an individual earning ₹12 lakh (₹8 lakh salary, ₹4 lakh capital gains) will only receive the ₹8 lakh exemption under Section 87A; the capital gains will be subject to tax.

The government has not altered the old tax regime, offering taxpayers a choice between the two systems. The old regime maintains a ₹2.5 lakh tax-free income threshold, while also allowing for various deductions like those from EPF, PPF, home loan interest, and medical insurance. Taxpayers with significant investments or eligible deductions may find the old regime more beneficial.

The government is expected to introduce a new income tax bill next week. A dedicated income tax calculator will be available to assist taxpayers in determining their tax liability under both regimes. Chartered accountants advise careful consideration of both options to determine the most advantageous tax structure based on individual circumstances.

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