The Union Budget 2017-18 aims to reduce the tax liability for those earning up to Rs5 lakh to either zero or by half. This translates into a tax liability of Rs25,000. But in FY18, this rate will be 5%, thus reducing the tax liability by Rs12,500 for everyone. Within this income limit, if someone has a tax liability of Rs2,500, then she will not have to pay income tax. And, even if the tax liability in this case is more than Rs2,500, the amount will get reduced by Rs2,500.

Source: Mint February 01, 2017 09:37 UTC