Finance Minister  has announced some major changes in the Tax Rates for the lower-income group people in the Budget session held in February 01, 2017. He proposed to reduce the income tax rate from 10% to 5% in the lowest Income Tax Slab of  2,50,000 – 5,00,000. However he made no changes in the tax rates for higher income of more than 5 Lakhs. See tables below for various Income tax slab for Financial Year 2017-18.

Since the tax rates are halved [10% to 5%] for lowest tax bracket therefore it is clear that the government has a bonanza for people with less than 5 lakhs income.  Moreover to reduce redundancy government has reduced Rebate u/s 87A to 2500 (from the existing 5000). Rs 5000 Rebate was applicable for  Individual with total income less than 5 lakhs, whereas now the Rebate is 2500 applicable for individual with total income less than 3.5 lakhs. The total income of Individual is gross income minus any deduction u/s 80C to u/s 80U  Now let us understand how does these changes will affect the tax liability of common people. For this, four examples of different income group are given with comparison of Income Tax payable in Financial Year 2016-17 and FY 2017-18.

Income Tax slab FY 2017-2018 (AY 2018-2019

For General Tax Payers below 60 Years of Age
Both Men & Women and HUF (Hindu Undivided Family)

For Senior citizens of age between 60 to 80 Years

For Very Senior citizens of age above 80 Years