In his Union Budget 2017 speech, Jaitley halved the tax rate for those people whose income is between Rs 2.5 lakh to Rs 5 lakh from 10 per cent to 5 per cent. However, the tax rate of 20 per cent and 30 per cent on those with incomes between Rs 5 lakh to Rs 10 lakh and above Rs 10 lakh respectively remains the same. This halving of the tax rate for those with incomes between Rs 2.5 lakh and Rs 5 lakh will result in a tax benefit of Rs 12,500 for everyone as the tax reduces from Rs 25,000 (10 per cent of 2,50,000) to Rs 12,500 (5 per cent of 2,50,000). Tax slab for an individual of below 60 years of age:New Tax slab Old tax slab Income below Rs 2.5 lakh No Tax No Tax Rs 2.5 lakh to Rs 5 lakh 5% 10% Rs 5 lakh to Rs 10 lakh 20% 20% Income above Rs 10 lakh 30% 30%Tax LiabilityUnder the new tax slab, the tax liability for people who earn Rs 3 lakh per annum will be zero after the rebate of Rs 2,500 under Section 87A. Here is the tax liability calculation, post-Section 80C deduction, for a person who earns Rs 4.5 lakh per annum:Income: Rs 4,50,000Less basic income tax exemption: Rs 2,50,000Less deduction under Section 80C: Rs 1,50,000Total taxable income: Rs 50,000Total tax on it @of 5%: Rs 2,500Less Rebate under Section 87A: Rs 2,500Total tax liability: NilAlso read: Union Budget 2017-18: Income Tax rate halved to 5 per cent for Rs 2.5-5 lakh slab

Source: India Today February 01, 2017 11:15 UTC