The changes in the income tax that Finance Minister Nirmala Sitharaman has proposed in the Budget on July 23 are expected to result in savings for the ordinary taxpayer. However, contrary to the expectations by many, no change has been announced in the basic exemption limits available to the different age groups of taxpayers ie, below 60 years, 60-80 years (senior citizens) and above 80 years (super senior citizens).
According to experts, the change in income tax in the new tax regime will mostly benefit those earning up to Rs 10 lakh a year.
None has to pay any tax in the new tax regime if the income does not exceed Rs 7 lakh an annum.
The calculation
The tax slabs proposed are:
0 to Rs 3,00,000 – applicable tax rate NIL
Rs 3,00,001 to Rs 7,00,000 – applicable tax rate 5%
Rs 7,00,001 to Rs 10,00,00 – applicable tax rate 10%
Rs 10,00,001 to Rs 12,00,000 – applicable tax rate 15%
Rs 12,00,001 to Rs 15,00,000 – applicable tax rate 20%
Rs 15,00,001 and more – applicable tax rate 30%
Standard deduction up for new tax regime
The budget has also proposed that standard deduction will be hiked from Rs 50,000 to Rs 75,000 only for those who have opted for the new tax regime.
Let’s see the table below for a snapshot of the taxes payable in the new and old regimes for certain levels of income.
Big difference for lower levels
For annual income of Rs 7.75 lakh, income tax under the old regime is Rs 59,800 while it is NIL in the new tax regime.
For income of Rs 15 lakh, the tax in the old regime is Rs 2,57,400. That in the new tax regime is Rs 130,000.
For income of Rs 25 lakh, the tax in the old regime will be Rs 569,400 while that in the new regime will be Rs 434,200.
Savings even for upper levels
If the income is Rs 30 lakh, the tax impact for the old regime will be Rs 725,400. The impact on the new regime will be Rs 590,200.
For an annual income of Rs 50 lakh, the tax impact will be 1349,400. The impact in the new regime will be far less – only Rs 1214,200.
The proposals made in the budget are expected to result in savings for the taxpayers. The savings will be more for those in the lower income brackets. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
