New Tax Rates and Rules applicable from 1st April 2017

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The new budget saw a number of changes made to policy and laws, but none with greater impact to hard working Indian citizens than the new Income Tax slabs, rules, and exemption investments. Given below are the new slabs, rules, and deductibles for FY2017-18:

Income tax can't be treated like a game
Income tax can’t be treated like a game

According to the new rules under the General category (persons under 60 years of age):

  • Those earning up to Rs.2,50,000 have no tax liability.
  • Those earning between Rs.2,50,000 and Rs.5,00,000 are liable to pay 5% tax.
  • Those earning between Rs.5,00,001 and Rs.10,00,000 are liable to pay 20% tax.
  • Those earning over Rs.10,00,000 are liable to pay 30% tax.

According to the new rules under the Senior Citizens category (persons between 61 and 80 years of age):

  • Those earning up to Rs.3,00,000 have no tax liability.
  • Those earning between Rs.3,00,001 and Rs.5,00,000 are liable to pay 5% tax.
  • Those earning between Rs.5,00,001 and Rs.10,00,000 are liable to pay 20% tax.
  • Those earning over Rs.10,00,000 are liable to pay 30% tax.

According to the new under the Super Senior Citizens category (persons over 80 years of age):

  • Those earning up to Rs.5,00,000 have no tax liability.
  • Those earning between Rs.5,00,001 and Rs.10,00,000 are liable to pay 20% tax.
  • Those earning over Rs.10,00,000 are liable to pay 30% tax.

The recent budget has also introduced surcharges for the equitable distribution of wealth:

  • 10% surcharge for those earning between Rs.50 lakh and Rs.1 crore (with marginal relief).
  • 15% surcharge for those earning more than Rs.1 crore (with marginal relief).
  • Rs.2,500 rebate for taxable salary up to Rs.3,50,000.
  • 3% CESS for education and higher education.

Deductions available under various sections for FY2017-18 are:

    • House Rent Allowance (HRA): A large chunk of income can be claimed for tax deduction if rent is being paid and proof is available of the same.
    • Deductions under Section 80C: A total of Rs.1,50,000 can be deducted from taxable income under Section 80C if investments are made in any 5-year tax saving FD, NSC, SSA (Sukanya Samriddhi Account), PPF, etc.
    • Deductions under Section 80CCD(1B): A total of Rs.50,000 can deducted from taxable income under Section 80CCD(1B) if investments are made in NPS Tier 1 account.
    • Deductions under Section 24B: A total of Rs.2 lakh can be deducted from taxable income by declaring interest paid on home loan. Alternatively, a total of Rs.30,000 can be deducted from taxable income by declaring interest paid on home improvement loan. According to the new budget, home loan borrowers can claim up to Rs.2 lakh deduction per year after adjusting rental income; any amount over Rs.2 lakh can be carried forward for a total of 8 assessment years.
    • Deductions under Section 80EE: An additional total of Rs.50,000 can be deducted from taxable income on interest paid on home loan (above 24B provisions) if the loan was taken for the purchase of the assessee’s first home costing less than Rs.50 lakh.
  • Deductions under Section 80D: A total of Rs.25,000 (General category) and Rs.30,000 (Senior citizens category) can be deducted from taxable income for amounts paid towards premiums for health insurance policies.
  • Deductions under Section 80DD: A total of Rs.1.25 lakh can be deducted from taxable income if the assessee has severely disabled dependants for whom medical expenses and maintenance receipts can be produced. For minor disabilities, the total deduction is up to Rs.75,000.
  • Deductions under Section 80DDB: A total of Rs.40,000 (General category) or Rs.60,000 (Senior citizens category) or Rs.80,000 (Super senior citizens category) can be exempted from taxable income if the amount has been spent on the treatment of a specific disease.
  • Deduction under Section 80E: Interest paid/payable on any education loan taken on the name of the assessee or his/her dependants can be reduced from total taxable income with no upper limit on the amount.

 

 

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