Income Tax. This is what hurts the most for the salaried middle class. At least in terms of income tax, some good days are coming for this middle class. The reason is five big announcements regarding income tax in the budget speech of Finance Minister Nirmala Sitharaman. Let’s know about this one by one…
1. Now no tax up to seven lakh
At present, those having taxable income of Rs 5 lakh were not required to pay any tax in both the tax regimes. Now this limit will be seven lakh rupees. This limit of exemption has been increased in the new tax regime. No announcement has been made regarding the change in the slab of the old regime.
2. Income tax slab changed
In the new regime, the threshold limit for exemption from income tax has been raised to Rs 3 lakh. Earlier this limit was Rs 2.5 lakh.
What will be the benefit: This will give great relief to the taxpayers joining the new system. If a person’s annual income is Rs 9 lakh, then he will have to pay tax of Rs 45 thousand only. It will be only five percent of his income. He will have to pay 25 per cent less tax. Earlier, where he had to pay tax of 60 thousand rupees. Now instead of that only 45 thousand tax will have to be paid. Similarly, if someone has an annual income of Rs 15 lakh, then he will have to pay tax of Rs 1.5 lakh only. This will be 10% of his income. He will now have to pay 20 per cent less tax. Earlier he had to pay tax of Rs 1,87,500.
3. Standard deduction
Pensioners, family pensioners and people getting fixed salary will get some relief in standard deduction in the new system. If your income is Rs 15.58 lakh or more, then there will be a benefit of Rs 52,500 in standard deduction. Earlier the standard deduction was Rs 50,000.
4. Super rich tax cut
The tax rate for the highest earners is 42.74%, which was the highest in the world. It is now being reduced to 39%. Now let us also know how to get this benefit? Actually, the higher surcharge rate for super rich people is being reduced from 37% to 25%. In this way, the super rich tax which was earlier 42.74% will now be 39%.
5. Leave encasement
In 2002, the limit of income tax exemption for non-government salaried employees in leave encashment on retirement was fixed at three lakh rupees. At that time, the highest basic pay in the government was Rs.30,000. This limit is being increased to Rs 25 lakh. That is, there will be no tax on leave encashment up to Rs 25 lakh.
Other things related to income tax
The new income tax regime will be made the default regime, but will be able to go back to the old system as well.
Income tax returns were being processed in 93 days in 2013-14, now they are being processed in 16 days only. 45% of the returns were processed within 24 hours. Maximum 72 lakh returns were received on the tax portal in a single day.
