Before we begin:
All Calculations done below are done under the basic assumption that the individual has done no tax saving. He is paying taxes on his whole income as received. The actual numbers may vary from individual to individual depending on how much tax they save. There are many sections under which you can save income tax. You may want to visit the Article titled "Income Tax in India" and learn more about it.
Lets get started. We are going to compare the Tax savings of 5 people with income of 6, 9, 12, 15 and 20 lakhs respectively per year. They are split into 3 categories – The Regular Citizens, The Senior Citizens and The Very Senior Citizens.
For Regular Citizens – Men and Women aged below 60 years:
| Income | Tax As per Old Slabs (in Rs) | Tax As per New Slabs (In Rs) | Tax Saved (In Rs) |
|---|---|---|---|
| 6 lakhs | 52000 | 50000 | 2000 |
| 9 lakhs | 122000 | 110000 | 12000 |
| 12 lakhs | 212000 | 190000 | 22000 |
| 15 lakhs | 302000 | 280000 | 22000 |
| 20 lakhs | 452000 | 430000 | 22000 |
Inference:
Overall, though there has been a revision in the tax slabs, it doesn’t amount to more than Rs. 1000/- to Rs. 2000/- per month for a majority of Tax Payers. So, if you were in the dream of realizing a better take home salary after this budget, you are in for a unpleasant surprise. People who are in the Higher Income Range (Between 10 to 12 lakhs) are the ones that reap the most benefits in terms of % tax saved when compared to what they were paying up until this year.
Women enjoyed an additional Rs. 10,000/- income without taxes (Limit was Rs. 1.8 lakhs for men and 1.9 lakhs for women) until this year. The Finance Minister has eliminated this Bias towards women which some may welcome while some wouldn’t. Since the amount of tax women paid on this Rs. 10,000/- @ 10% was only Rs. 1000/- there wouldn’t be much of a difference eitherways…
Verdict: NOT BAD. ATLEAST SOME OF US GET SOME GOOD NEWS
For Senior Citizens – Men and Women aged between 60 to 80 years:
| Income | Tax As per Old Slabs (in Rs) | Tax As per New Slabs (In Rs) | Tax Saved (In Rs) |
|---|---|---|---|
| 6 lakhs | 45000 | 45000 | 0 |
| 9 lakhs | 115000 | 115000 | 0 |
| 12 lakhs | 205000 | 185000 | 20000 |
| 15 lakhs | 295000 | 275000 | 20000 |
| 20 lakhs | 445000 | 425000 | 20000 |
Inference:
There's nothing in this year's budget for the old-age population of India. There is no real benefit if your income is below 9 lakhs. As most senior citizens earning a pension or living off income from fixed deposits don’t manage to earn more than 9 lakhs, this revision in tax slabs doesn’t really make much difference.
Verdict: DOESN’T MAKE A DIFFERENCE
For Very Senior Citizens – Men and women aged above 80 years:
| Income | Tax As per Old Slabs (in Rs) | Tax As per New Slabs (In Rs) | Tax Saved (In Rs) |
|---|---|---|---|
| 6 lakhs | 20000 | 20000 | 0 |
| 9 lakhs | 90000 | 80000 | 10000 |
| 12 lakhs | 180000 | 160000 | 20000 |
| 15 lakhs | 270000 | 250000 | 20000 |
| 20 lakhs | 420000 | 400000 | 20000 |
Inference:
There's nothing in this year's budget for the Super Senior population of India. There is no real benefit if your income is below 6 lakhs. There is a marginal benefit for people whose income crosses that limit. But, as with Senior Citizens, the Super Seniors too don’t earn that much and hence, this revision in tax slabs doesn’t make much difference to them.
Verdict: DOESN’T MAKE A DIFFERENCE
Overall Verdict:
The overall verdict from the Union Finance Budget, with respect to Income Taxes has been one of Disappointment. Though there is a marginal tax saving, the increase in Service Tax, Excise Duty and Wealth Tax means that, you will only end up paying more taxes this year than what you did last year.
To top this all, rising crude oil prices coupled with increase in service tax, will push the price of even the essential commodities which is going to make the life of the common middle-class Indian even all the more difficult.
HOPED FOR A BETTER BUDGET THAT ACTUALLY HELPED THE COMMON MAN.
Better Luck Next Time I Guess!!!
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