Income Tax : Income between Rs. 2.5 lakh – Rs. 5 lakh to be taxed at 5 per cent. Rebate of Rs. 5,000 on tax currently given to these assessees is reduced by half to Rs. 2,500 and the rebate would only apply now to those earning up to 3.5 lakh a year. This means that people earning up to 3 lakh a year will pay no income tax after the rebate of Rs. 2,500. Those in higher income groups till Rs. 50 lakh a year will also see savings of up to 12,500.