New Delhi, Feb 3
After changes in tax rates announced in the Union Budget 2025-26 to leave more money with taxpayers, the government is expected to release the draft of the new Income Tax Bill on February 6.
The new bill aims to make big changes to the current Income Tax Act, and it may reduce the word count from almost 6 lakh words to 3 lakh words.
A report by NDTV Profit said that the draft bill will likely include plans to increase the number of people paying taxes, due to fewer people being taxed after the new exemption limits.
Union Finance Minister Nirmala Sitharaman, in a press conference after the Budget, mentioned that around 1 crore taxpayers will benefit directly from the extended rebates and exemptions in the new tax system.
One crore people will no longer pay any income tax due to the increased exemption limit from Rs 7 lakh to Rs 12 lakh.
Under the new tax rules in Budget 2025-26, people earning up to Rs 12 lakh will not have to pay any income tax, which marks a significant change.
She also compared the old and new tax rates for the financial year 2025-26. People earning Rs 8 lakh will have Rs 30,000 more, as their tax will be zero.
Under the new system, people earning up to Rs 12 lakh (or about Rs 1 lakh a month, excluding special income like capital gains) will not pay income tax. For salaried workers, this limit will be Rs 12.75 lakh, because of a standard deduction of Rs 75,000.
The tax rebate, along with the reduction in tax rates, means that some taxpayers will pay no tax at all. The maximum rebate available is Rs 60,000 for those earning Rs 12 lakh under the new tax slabs.
