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Wednesday, February 1, 2017

NDA Govt Budget 2017-18 - Change in the personal income tax rate for individual assessees



The Finance Minister Arun Jaitley while presenting the Union Budget for 20177-18 on Wednesday Feb 01,2017 chose to move towards person taxation towards the end of his speech, and he entered on a lighter note. “We are largely a tax-non-compliant society,” he said almost winking as he took a pause to drink a sip of water.
And then came the reward, which according to him is well-deserved for those tax-payers who weathered the brunt of the initial days of demonetisation.
In one of the biggest income tax reforms in recent years, those with an income of under Rs 5 lakh now have and halved the 10% tax to 5%.
However, the 10% surcharge imposed on those earning above Rs 50 lakh will hit the wealthy among the salaried hard.
IncomeTax Rates
Up to Rs. 2,50,000Nil
Rs. 2,50,001 to Rs. 5,00,0005 per cent.
Rs. 5,00,001 to Rs. 10,00,00020 per cent.
Above Rs. 10,00,00030 per cent
Above 60 years of age
Up to Rs. 3,00,000Nil
Rs. 3,00,001 to Rs. 5,00,0005 per cent
Rs. 5,00,001 to Rs. 10,00,00020 per cent
Above Rs. 10,00,00030 per cent.
80 years and above
Up to Rs. 5,00,000Nil
Rs. 5,00,001 to Rs. 10,00,00020 per cent
Above Rs. 10,00,00030 per cent
Surcharge
Rs 50 lakh to Rs 1 crore10 per cent
Above Rs 1 crore15 per cent

For those in 20 percent (Rs 5 lakh-Rs 10 lakh) and 30 percent (Rs 10 lakh plus), there is a Rs 12,500 rebate in the budget. “The total cost of the two measures for the government will be Rs 15,500 crore,” the FM said. To compensate for this, those earning Rs 50 lakh a year will pay a 10 percent surcharge, he said.
The change in the personal income tax rate for individual assessees between Rs 2.5 lakh and Rs 5 lakh income would reduce the tax liability of all persons below Rs 5 lakh to either to zero (with rebate) or 50 per cent of their existing liability.
In order to have duplication of benefit, the existing benefit of rebate available to them is being reduced to Rs 2,500 available only to assessees upto income of Rs 3.5 lakh.
While the taxation liability of people with income upto Rs 5 lakh is being reduced to half, all other categories of tax payers in the subsequent slabs will also get a uniform benefit of Rs 12,500 per person.
In the case of senior citizens above 60 years, there will be no tax upto Rs 3 lakh, while the exemption will be upto Rs 5 lakh in case of citizens above 80 years. Both the categories will attract income tax of 20 percent on income between Rs 5 lakh and Rs 10 lakh and 30 per cent for income above Rs 10 lakh

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