The government has on Saturday announced some tax breaks for lower/middle-income categories in the Union Budget. As reported earlier today, the system of optional personal Income Tax Regime with no exemptions has been introduced. This means that the new rates will be applicable only if you give up certain deductions/exemptions. Here are the new rates:

10%: Rs 5 – 7.5 lakh (Versus 20%)
15%: Rs 7.5 – 10 lakh (Versus 20%)
20%: Rs 10 – 12.5 lakh (Versus 30%)
25%: Rs 12.5 – 15 lakh (Versus 30%)
30%: Above Rs 15 lakh (Versus 30%)

The optional income tax regime, many are saying, will not be of much use. Economic commentator Deepak Shenoy says, "The deduction thing is complex - but if you are paying PF or kids' school fees, the lower tax is not relevant. Just ignore the "lower" tax slabs. I can't see it making sense for most people."

It's said that this is hardly a simplification of the tax process.

Ashu says, "I can't give a straight answer to you if the new optional system of income tax is good or bad for you. It all depends on what all benefits you avail right now and what you may forego if you opt for it. What I can tell you is that calling it simplified is wrong."

What is the estimated annual revenue that the government will lose because of the change? It will lose Rs 40,000 Cr with the new tax rates.