The last post was about "Bad News for Home Buyers" and I was a bit upset about the same. But it looks like, there may be some real good, and I mean there MAYBE REAL GOOD news for all Tax Payers in India in this Union Budget that will be filed for the financial year beginning April 1st 2012 and ending March 31st 2013.
Before we begin, let me add a disclaimer that, this is only unverified/unconfirmed news and may or may not be part of the Union Budget this year. So, don’t get your hopes so high and let’s wait and hope for the best!!!
What is this Real Good News?
This Good News is:
The Finance Ministry is contemplating on hiking the Tax Slabs for exemptions from its existing levels. If what I hear about the proposals are correct they could be:
0 - 3 lakhs = 0%
3 to 10 lakhs = 10%
10 to 20 lakhs = 20% and
> 20 lakhs = 30%
Why would the Government Do such a thing?
If you are someone who wonders, why would the Government do such a thing? Wouldn’t they lose a lot of Tax Income? Then, the answer my friend is that, "These tax slabs haven’t been revised much for decades. The Government feels that Inflation over the past years has to be taken into account when tax slabs are calculated". That is why this radical proposition.
As said before, let us not get ahead of ourselves. This is just a proposition and this may or may not be approved & implemented this year.
Is this really good news?
Of Course it is. Anyone whose Annual Income is less than 3 lakhs (Which is probably a very big chunk of the Salaried Class in India) does not need to pay any taxes. The Amount of Tax individuals would have to pay will come down drastically. Let’s see how by taking a few examples with Mr. X who earns Rs. 6 lakhs, Mr. Y who earns 12 lakhs, Mr. Z who earns 20 lakhs and Mr. A who earns 25 lakhs every year respectively.
Note: All these are men and have no tax saving options. We are just considering their Tax Liability under the assumption that they have done nothing like HRA, Sec 80C etc. to save tax.
Below is a Summary of how much Tax Mr. X, Y, Z and A would pay as per the existing tax slabs, how much they would pay if this new tax slabs are implemented and compare the Savings.
|Person||Annual Income||Tax Payable as per Previous Slabs||Tax Payable as per New Slabs||Tax Amount Saved||% Tax Saved|
|Mr. X||6 Lakhs||Rs. 52,000/-||Rs. 30,000/-||Rs. 22,000/-||42.3%|
|Mr. Y||12 Lakhs||Rs. 2,12,000/-||Rs. 1,10,000/-||Rs. 1,02,000/-||48.11%|
|Mr. Z||20 Lakhs||Rs. 4,52,000/-||Rs. 2,70,000/-||Rs. 1,82,000/-||40.26%|
|Mr. A||25 Lakhs||Rs. 6,02,000/-||Rs. 4,20,000/-||Rs. 1,80,000/-||29.9%|
As you can see, the most tax benefit is among the population whose income is less than 20 lakhs (which would probably amount to at least 90% of the tax paying salaried class of Indians).
To know about the Existing Tax Slabs "Click Here"
Some Last words:
News about taxation of property taxes, minimum income limits for mandatory tax filing, amount of tax exemptions under various sections like Sec 80C etc. are also being discussed. Concrete information about these things will be known once the Finance Minister files his Union Budget in the Parliament.
So, until then, let’s keep our fingers crossed and hope for the best.
Watch out for more news about the Indian finance world in my blog. Happy Reading!!!