And the Finance Minister has brought lower taxes for most of us!
Budget 2017 has lowered your tax outgo if you Total Income is less than Rs 50L.
A large number of taxpayers will now pay lower taxes. Filing statistics from FY 2013-14 reveal nearly 3 crore taxpayers earned Rs 5lakhs or less.
Let’s see how this tax benefit works.
New Income Tax Slab Rates
Here’s a look at the tax slabs for FY 2017-18 as compared with slab rates for FY 2016-17
|Income slab||slab rate FY 2017-18||slab rate FY 2016-17|
|0 to Rs 2.5Lakhs||nil||nil|
|Rs 2.5Lakhs to Rs 5Lakhs||5%||10%|
|Rs 5Lakhs to Rs 10Lakhs||20%||20%|
|More than Rs 10Lakhs||30%||30%|
Income between Rs 2.5L to Rs5L was taxed at 10%. It will now be taxed at 5%
Change in Tax Outgo explained with Examples
Let’s understand this change in tax rate and how much tax you will save in further detail –
|Total Income||Tax in FY 2017-18||Tax in FY 2016-17||Saving||80C required to keep tax outgo zero||Net tax payable after 80C|
- Income upto Rs 3Lakhs is exempt
- Those with income between Rs 3.5L to Rs 5L have reduced their tax outgo by 50%
- Income upto Rs 4.5L will pay zero tax if they can make the most of section 80C. [It may be practically difficult for taxpayers in this range to reach the Rs 1.5L deduction limit for 80C].
- So taxpayers in the Rs 3.5L to Rs 5L range must renegotiate salary packages in such a way so as to minimise their taxes. Keep a watch on our blog as we will be planning some posts about how to rejig your salary to be able to do this.
Higher taxes for those earning between Rs 50L to Rs 1 crore
Those earning between Rs 50L to Rs 1crore will have to now shell out a surcharge of 10%. This 10% is levied on the total tax payable by them. Earlier the surcharge(15%) was only applicable from income starting from Rs 1crore. However now a new surcharge has been introduced.
|Total Income||Tax in FY 2017-18||Tax in FY 2016-17||Tax save/tax loss|
(calculations do not include cess. Cess is calculated @3% of the total tax payable)
For other updates on Budget 2017 – read our page here.
You can also check out our tax calculator – here. Go play some on it!
Read in detail about income tax slabs here