New income tax slabs – Budget 2017 -2018
The finance minister of India, Arun Jaitley in his budget has proposed to slice the tax rate for individual tax payers in the lowest income tax bracket that falls in the income range of Rs. 2,50,000 to Rs 5,00,000 to 5% instead of the current 10% tax rate.
Also, the existing rebate under Section 87A, which is for a individuals with income of up to Rs 5,00,000 is proposed to reduce to Rs 2,500. It was earlier Rs 5,000 for person earning between Rs 2.5 lakh and Rs 3.5 lakh.
For income up to Rs 300,000, no tax payable
With the combined effect of the new Section 87A rebate and the reduction in the lowest slab tax rate to 5%, there will be Nil tax liability for those with income of up to Rs 3,00,000 and there will be a tax liability of only Rs. 2,500 for those earning between Rs. 3 lakh to Rs 3.5 lakh . That is if they do not invest in tax saving instrument.
And if a person invests Rs. 1,50,000 in the tax saving instruments listed in section 80C, his/her tax liability shall be zero if his earnings are upto Rs 4.5 lakh.
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 get the tax benefit of Rs 12,500 per person.
For those individuals earning between Rs 50 lakh and Rs 1 crore, there will be a surcharge of 10% on the total income tax payable by them. Currently there was surcharge of 15% only for those with income above Rs 1 crore, which shall continue to be levied. Cess will remain and shall be over and above the tax amount
Simplification of tax return forms for income up to Rs 500,000 provided there is no business income earned by the same individual.
Proposed income-tax slabs for FY 2017-2018 (assessment year 2018-19) announced in Budget 2017
income tax rate for FY 2017-2018 > age 80
For the information purpose, income tax slab rates for the financial year 2016-17 (assessment year 2017-18) are also given below in the table:
1. Normal tax rates applicable to a resident individual below the age of 60 years, non-resident individual, resident/non-resident HUF, AOP, BOI, artificial juridical person.
2. Normal tax rates applicable to a resident individual of the age of 60 years or above at any time during the year but below the age of 80 years
3. Normal tax rates applicable to a resident individual of the age of 80 years or above at any time during the year
After taking the deductions under Section 80 (C) to 80 (U), the tax is payable after adding the cess and surcharge, if applicable.
The education cess of 2% and secondary cess of 1% are calculated on the amount of tax payable separately. Both the cess are then added to the tax payable to arrive at the Gross tax payable amount.
The surcharge is levied @ 15% on the amount of income tax where net income exceeds Rs 1 crore. In the case where the surcharge is levied, the cess will be levied on the tax amount plus surcharge.
A resident individual can also avail rebate under Section 87(A) whose net income is equal to or less than Rs 5 lakh. The amount of rebate under this section is 100% of the income tax or Rs 5,000 whichever is less. It is deductible before calculating the cess.