There are reports that the central government has decided to make changes in the personal income tax rates.
According to a central government official, the government plans to raise the income limit from the current Rs.3 lakh to Rs.5 lakh in the upcoming budget, and these changes are expected to come into effect in mid-July.
Some big relief is expected from the government in income tax slabs to help the middle class. Central government is expected to make changes in income tax in the following ways.
- Income up to 8 lakhs – No tax
- 8-10 lakhs – 5%
- 10-15 lakhs – 10%
- 15-20 lakhs – 15%
- 20-30 lakhs – 20%
- 30-50 lakhs – 25%
- 50 lakh+-30% is expected to be set.
The present system; Individuals have the right to switch between the old and new income tax system. At the same time, the Income Tax Department has imposed restrictions on the number of times a person can switch between the two. They can be allowed to switch between the two depending on their income type slab.
People who earn income by doing business are allowed to switch between old and new income tax system only once. That means if you switch from the old system to the new system.. then you can switch.
Download and fill Form 10IE expressing your desire to switch to the new income tax regime. Submit Form 10IE before July 31. Through this people who are using the old income tax system.. can change it to the new system. You can also switch back to the old system using the same method. But only one time will be allowed to switch from the new system to the old system.
Budget Income Tax: Based on the changes made in 2023, the personal income tax – tax rebate has been fixed up to Rs 7 lakh for those in the new income tax category. Nothing has changed this year. At the same time, the central government did not make any changes in the old income tax system last year and this year as well.
Current Practice: Presently there are two methods of income tax. People can choose between these two methods.
First method – old taxation system. 2.5 lakhs of annual income you buy in this is tax free. But if the income is between 2.5 lakhs and 5 lakhs, the tax will be 5%. 5 lakhs to 10 lakhs will be subject to 20% tax.
If you buy more than 10 lakhs, there will be 30% tax. In this, you can get some tax exemption through benefits like 80C, 80D. Those with income up to 7 lakhs can get even higher deductions through benefits like 80C, 80D. No change has been made in this levy since last time.
New Method; Those who don’t want the old system can follow the new system. In the new system, tax deductions such as 80C and 80D cannot be availed. In this, till today’s changes, your annual income of Rs 2.5 lakh was tax-free. But if the income is between 2.5 lakhs and 5 lakhs, the tax will be 5%.
That is, if you buy between 5 lakhs and 7.5 lakhs, there will be 10 percent tax. 7.5 lakhs to 10 lakhs will be taxed at 15%. 10 lakhs to 12.5 lakhs will be taxed at 20% at 20%. This new taxation system which was in effect was changed in the last budget.
Accordingly, the personal income tax – tax rebate has been increased up to Rs. 7 lakh for those in the new income tax category. This means that under the new tax system, if you have an income of 7 lakh rupees, you will not have to pay tax. No tax on any purchase under 7.
That is if you are buying 7.10 lakhs your income 0-300000 will be taxed at: 0 percent. 300000-600000 income: 5 percent tax levied. 600000-900000 Taxable: 10% tax 900000-1200000: 15% tax 1200000-1500000: 20% tax Above 15%: 30% tax As I understand it.. 7 lakhs will not be taxed.
But suppose you buy income of 8 lakhs.. Now out of that 8 lakhs first 3 lakhs is tax free. 3-6 lakhs is taxed at 5%. 6-9 lakhs is taxed at 10%. This will result in a tax of up to 35,000 rupees. In the new system, tax deductions such as 80C and 80D cannot be availed. Thus it will have to be built as it is.
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