NEW DELHI — After the revision in tax slabs in the Union Budget 2025-26 to leave 'enough money in the hands' of taxpayers, the government is likely to unveil the much-anticipated draft of the new Income Tax Bill on February 6.
The proposed bill aims to bring sweeping reforms to the current Income Tax Act and could potentially see up to 3 lakh words slashed from the near 6 lakh words at present.
According to a report in NDTV profit on Monday, citing people in the know, the draft bill is likely to provide directions to widen the tax net, given the contraction in the tax base following the new exemption limits.
Union Finance Minister Nirmala Sitharaman, in her post-Budget press conference, said about 1 crore taxpayers will be directly benefitted from the extended rebates and exemptions, under the New Tax regime.
One crore people will benefit due to the increased tax exemption limit from Rs 7 lakh to Rs 12 lakh. They will have to pay no income tax, she mentioned.
As per the new slabs, proposed in Budget 2025-26, those with an income of up to Rs 12 lakh will have to pay no income tax, marking a decisive change in the tax structure.
Drawing a comparison between the prevailing tax rates and the proposed new ones in FY25-26, she said that those who are earning Rs 8 lakh will have Rs 30,000 more money into their pockets because their tax liability has been brought to zero.
There will be no income tax payable up to income of Rs 12 lakh (average income of Rs 1 lakh per month other than special rate income such as capital gains) under the new regime. This limit will be Rs 12.75 lakh for salaried taxpayers, due to the standard deduction of Rs 75,000.
Tax rebate is being provided in addition to the benefit due to slab rate reduction in such a manner that there is no tax payable by them. The maximum rebate available is Rs 60,000 which is there for a taxpayer having income of Rs 12 lakh on which tax is payable as per the new slabs.