The Finance Minister has proposed to slash the tax rate for individuals in the lowest income tax slab – Rs 2.5 lakh to Rs 5 lakh –to 5% instead of 10%. The existing rebate under Section 87A (currently given to people with income up to Rs 5 lakh) is proposed to be reduced to Rs 2,500 from the existing Rs 5,000 for individuals earning between Rs 2.5 lakh and Rs 3.5 lakh. As a result of the combined effect of the new Section 87A rebate and the reduction in the lowest slab tax rate to 5%, the tax burden for those with income up to Rs 3 lakh would be zero and the tax burden for those in the Rs 3 lakh to Rs 3.5 lakh bracket would be Rs 2,500.Those earning, Rs 4.5 lakh, can, therefore, reduce their tax liability to zero by fully utilising the tax break under Section 80C, combined with these new proposals.Those falling in the higher income-tax slabs will also be eligible for this lower tax rate of 5% on income between Rs 2.5 lakh and Rs 5 lakh. Therefore, those in the higher tax slabs will pay lower tax by Rs 12,500 per person.Individuals earning between Rs 50 lakh and Rs 1 crore will have to pay a surcharge of 10% on the total income tax payable by them. Currently, there was no such surcharge on this category. Only those with income above Rs 1 crore were required to pay surcharge of 15%, which continues.