Budget FAQs

Frequently Asked Questions about BUDGET

Has the tax-free income become ₹7 lakh? 

No. The tax-free income remains at ₹2.5 lakh in the old tax regime, while it has been raised to ₹3 lakh under the new system. It's the tax rebate under Section 87A that's been extended up to ₹7 lakh of income, that too only in the new regime. See the table below for a sample calculation in the new regime. In the old regime, it stays at up to ₹25 lakh of income.

How income up to ₹7 lakh becomes tax-free in the new regime

Can one claim the standard deduction under the new-tax regime?

The budget has introduced standard deduction under the new regime. Now, salaried individuals and pensioners can claim a standard deduction of ₹50,000, irrespective of which tax regime they follow. For example, if your gross annual income is ₹7.5 lakh, after claiming a standard deduction of ₹50,000, your taxable income would reduce to ₹7 lakh.

Can existing SCSS and POMIS investors take advantage of higher investment limits?

Yes. Since the budget has increased the deposit cap in Senior Citizens Savings Schemes (SCSS) from ₹15 lakh to ₹30 lakh, existing investors can open a new account and invest more money to take advantage of the enhanced limit.

The same goes for investors of the Post Office Monthly Income Scheme. Here too, the deposit limit has been doubled from ₹4.5 lakh to ₹9 lakh, providing an opportunity for you to receive a higher regular pay-out. That said, we will get operational clarity once the finance bill is passed.

My daughter is studying abroad. I want to transfer money for her living expenses. Will I be charged TCS at 20 per cent?