After the revision of tax slabs in the Union Budget for 2025-26, designed to ensure taxpayers have “more money in hand,” the government is expected to release the highly anticipated draft of the new Income Tax Bill on February 6.
The proposed bill intends to overhaul the existing Income Tax Act, potentially cutting down the current 6 lakh words by as much as 3 lakh words.
As reported by NDTV Profit on Monday, citing sources familiar with the matter, the draft bill is expected to include provisions aimed at expanding the tax base, in response to the contraction caused by the new exemption limits.
Union Finance Minister Nirmala Sitharaman, during her post-Budget press conference, mentioned that nearly 1 crore taxpayers would directly benefit from the extended rebates and exemptions under the New Tax regime.
A total of 10 million people will benefit from the increased tax exemption limit, which rises from Rs 7 lakh to Rs 12 lakh. These taxpayers will be exempt from paying income tax, according to her statement.
Under the new tax slabs proposed in Budget 2025-26, individuals earning up to Rs 12 lakh will no longer be required to pay income tax, marking a significant shift in the tax structure.
Comparing the current tax rates with those proposed for FY 2025-26, she noted that individuals earning Rs 8 lakh will see Rs 30,000 more in their hands, as their tax liability will be eliminated.
For incomes up to Rs 12 lakh (excluding special rate income like capital gains) under the new regime, no income tax will be payable. Salaried taxpayers will have a higher threshold of Rs 12.75 lakh due to a standard deduction of Rs 75,000.
In addition to the benefit of reduced tax slabs, a tax rebate will ensure that no tax is payable by certain taxpayers. The maximum rebate, Rs 60,000, will apply to individuals with an income of Rs 12 lakh, subject to tax as per the new slabs.
