Finance Minister Nirmala Sitharaman announced on March 24 a marginal relief for individuals earning slightly more than Rs 7 lakh per year. The move by the finance ministry is a bid to promote the adoption of the new tax regime as the relief is only available under the new tax regime.
The relief was introduced via an amendment in the Finance Bill 2023 and will be effective from April 1, 2023. The tax relief is estimated to benefit taxpayers whose income will fall just above Rs 7 lakh and they will be exempted from having to pay taxes.
According to expert views in the Financial Express, individuals earning up to Rs 7 lakh a year are exempt from paying taxes under the concessional income tax regime. In case the income crosses the Rs 7 lakh limit to say Rs 7,00,100, the tax levied jumps to Rs 25,010. An additional income of Rs 100 over the limit attracted Rs 25,010 in tax.
Sandeep Jhunjhunwala, partner at Nangia Anderson LLP said "Working out the math, an individual having income up to (approx.) INR 7,27,700 could stand to benefit from this marginal relief.” It has to be noted that while the announcement of marginal relief has been made, the government hasn’t specified the threshold income eligible for the marginal tax relief.
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