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Wednesday, February 1, 2017

Income Tax after Budget 2017

Finance Minister statement: 
I, therefore, propose to reduce the existing rate of taxation for individual assesses between income of Rs 2.5 lakhs to Rs 5 lakhs to 5% from the present rate of 10%. This would reduce the tax liability of all persons below Rs 5 lakh income either to zero (with rebate) or 50% of their existing liability.
 In order not to have duplication of benefit, the existing benefit of rebate available to the same group of beneficiaries is being reduced to Rs 2500 available only to assessees upto income of Rs 3.5 lakhs. The combined effect of both these measures will mean that there would be zero tax liability for people getting income upto Rs3 lakhs p.a. and the tax liability will only be Rs 2,500 for people with income between Rs 3 and Rs 3.5 lakhs. If the limit of Rs 1.5 lakh under Section 80C for investment is used fully the tax would be zero for people with income of Rs 4.5 lakhs. While the taxation liability of people with income upto Rs 5 lakhs is being reduced to half, all the other categories of tax payers in the subsequent slabs will also get a uniform benefit of Rs 12,500/- per person. The total amount of tax foregone on account of this measure is Rs 15,500 crores.
1. A person with taxable income (after deductions such as Section 80C etc) of Rs 3.5 lakh will pay a tax of Rs 2575 as against Rs 5150 payable earlier. 

2. Persons with taxable income over Rs 5 lakh up to Rs 50 lakh will pay Rs 12875 less (including the cess saved), 

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