As DNA predicted earlier that the Budget 2020 will bring income tax relief to salaried employees, Finance Minister Nirmala Sitharaman on Saturday announced a new income tax regime to allow taxpayers save more money. The new regime, however, comes with certain terms and conditions.

"We propose to bring a personal income tax regime, where income tax rates will be reduced, so now, a person earning between Rs 5-7.5 lakhs will be required to pay tax at 10% against current 20%," she said.

While those earning up to Rs 5 lakh in a year will pay no tax, a person earning Rs 15 lakh per annum and not availing any deductions will now pay Rs 1.95 lakh tax in place of Rs 2.73 lakh, the FM said.

Under the new personal income tax regime, individual taxpayers will pay tax at a reduced rate of 10% for income between Rs 5 lakh and Rs 7.5 lakh. For income between Rs 7.5 lakh and Rs 10 lakhs, the tax rate will now be 15% against the current 20%. For income between Rs 10 lakh and Rs 12.5 lakh, the new tax rate will be 20%, down from 30% now. Rs 12.5 lakh - Rs 15 lakh - tax will be 25%. Income above Rs 15 lakh will continue to be taxed at 30%.

> No tax for income below Rs 5 lakh

> Income between 5 lakh -7.5 lakh: 10%

> Income between 7.5 lakh- 10 lakh: 15%

> Income between 10 lakh- 12.5 lakh: 20%

> Income between 12.5 lakh- 15 lakh: 25%

> Income above 15 lakh: 30%

However, these reduced tax rates can only be availed by those who do not avail relief for investments.

"This will be depending on the exemptions and deductions being availed under the old regime. The new personal income tax regime is optional for taxpayers," Sitharaman said.

Sitharaman also informed that the government will lose Rs 40,000 crore annual revenue with the new tax regime.