Save over 50% tax if new income tax slabs are implemented in Budget of 2017
For the income between Rs 10 lakh to Rs 15 lakh, the tax rate is likely to be 20% as per the new proposal.
Your personal income tax might get reduced if Ministry of Finance acts on a proposal, Tarun Sharma of Zee Business reports.
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ources told Zee Business that the finance ministry has proposed that no tax will be liable up to the income worth Rs 4 lakh. Currently, no tax is charged up to income of Rs 2.5 lakh per year.
Industry experts believe that Finance Ministry is mulling easing of income tax as demonetisation has impacted consumption and one of the ways to revive consumer spending is by leaving them with more money.
Lower income tax would mean more disposable income which in turn would lead to higher spending.
The impact of demonetisation is seen as a prime cause for the Government to give this rebate in income tax. .
Moreover, as per the proposal, the government likely to impose 10% tax on income between Rs 4 lakh to Rs 10 lakh in the new tax bracket. Currently, for the income exceeding Rs 2.5 lakh to Rs 5 lakh is liable for 10% tax.
For the income between Rs 10 lakh to Rs 15 lakh, the tax rate is likely to be 15% as per the new proposal. Presently, 20% is imposed on income between Rs 5 lakh to Rs 10 lakh.
Further, for the income between 15 lakh to Rs 20 lakh, 20% of tax will be charged. Currently, 30% tax rate is levied on income more than Rs 10 lakh.
Income tax for income over Rs 20 lakh may be fixed at 30%, the source said.
Given these new proposed tax slabs, if you earn Rs 4 lakh a year, you will pay no tax as against Rs 15,000 as per the current 10% tax slab for income up to Rs 5 lakh.
Similarly, if you earn Rs 7 lakh, your income tax would fall to Rs 30,000 from current Rs 65,000.
Salary of Rs 10 lakh a year would mean that your new tax liability would reduce to Rs 60,000 from Rs 1,25,000 as per current tax slab of 20% on income between Rs 5 lakh to Rs 10 lakh.