Good news for employees waiting for fun / increments, now your salary will go up
There has been a big change in the income tax rates in this budget. The middle class has been given great relief. However, it has to be kept in mind that you will get the benefit of new rates of income tax only if you do not take advantage of any deduction and tax exemption. Taxpayers who want the benefit of deduction and tax exemption can remain in the old tax system. Let’s know what has changed in the tax rates.
Income of Rs 2.5 lakh will not be taxed. This exemption was already there. No changes have been made in this. Income from Rs 2.5 lakh to Rs 5 lakh will also attract 5 percent tax as before. People with income above Rs 5 lakh are in a big relief. Now, income of Rs 5 lakh to 7.5 lakh will be taxed at 10 per cent. Income of Rs 7.5 lakh to Rs 10 will now attract 15 percent tax. Income from 10 lakh to 12.5 lakh will now attract 20 percent tax. Income of Rs 12.5 lakh to Rs 15 lakh will now attract 25 percent tax. Those with income above Rs 15 lakh will be taxed 30 per cent as before.
New and old rates of income tax
After filing income tax returns, if you are liable to pay tax, then you have to pay tax to the central government. If you are filing your Income Tax Return (ITR) yourself, then you should know how much tax the government charges on annual income.
Income tax is mandatory for every person in India, earning from a job, business or profession. The condition for this is that your income tax exemption limit is more than 2.5 lakh rupees.
Relief in this case is available only to those whose income is less than the basic exemption limit. Let us know about the slab set by the government for tax exemption or tax liability.
Tax exemption on investment of 1.5 lakh
If you invest in tax saving investment options under section 80C, then through this you can get tax rebate on investments up to Rs 1.5 lakh.
National Pension System (NPS), Voluntary Provident Fund (VPF) and Section 80D of Income Tax Act, along with Section 24, can also save tax separately on certain expenses.
Income tax is levied on a person’s earnings in a phased manner. As your earnings grow, so will the tax rate. In fact, tax rates are decided according to the income slab. The government reviews the income tax slab rate in the Union Budget every year.
If the taxable income is between 2.5 lakh to five lakh rupees, then 5% tax will have to be paid on it. Keep in mind that out of the total income, taxable income is deducted after deducting the amount of tax benefit on investment and expenses etc. made for tax saving.
Taxable income up to Rs 5 lakh is tax free for a common Indian senior citizen.
If the taxable income is five to ten lakh rupees, then you have to pay income tax 20%. On taxable income of more than Rs 10 lakh, you have to pay income tax at the rate of 30%.
In fact, you add the amount of investment made under sections 80C to 80U of the Income Tax Act. After this, add the basic amount of tax exemption to it. Subtract this amount from the total income.
After this, you will have to pay income tax according to the tax slab applicable on the amount left.
On this amount of tax, you also have to calculate the amount of cess (cess) correctly. While filing income tax returns for the last financial year, you will have to calculate two percent education cess (education cess) and one percent secondary cess.
After adding the amount of these cess to your total tax, the tax amount will come out. A person whose annual income is more than one crore rupees has to pay 15% surcharge on the total income tax.
On the same lines, a person with an income between Rs 50 lakh and Rs 1 crore has to pay 10% of the tax amount as surcharge.
If the income of a person is less than 3.5 lakh, then he gets an exemption of up to Rs 2500 on income tax under section 87 (a) of income tax law. This calculation related to the amount of income tax is done before adding the cess.