The halving of the tax rate for those with incomes between Rs 2.5 lakh and Rs 5 lakh will result in a tax benefit of Rs 12,500 for everyone as the tax reduces from Rs 25,000 (10 per cent of 2,50,000) to Rs 12,500 (5 per cent of 2,50,000).
The Finance Minister Arun Jaitley gave the salaried class something to cheer for. In his Union Budget 2017 speech, Jaitley halved the tax rate for those people whose income is between Rs 2.5 lakh to Rs 5 lakh from 10 per cent to 5 per cent.
However, the tax rate of 20 per cent and 30 per cent on those with incomes between Rs 5 lakh to Rs 10 lakh and above Rs 10 lakh respectively remains the same.
DownloadAutomated Income Tax Calculator for Financial Year 2017-18 & AssessmentYear 2018-19 ( As per Finance Budget 2017-18)
This halving of the tax rate for those with incomes between Rs 2.5 lakh and Rs 5 lakh will result in a tax benefit of Rs 12,500 for everyone as the tax reduces from Rs 25,000 (10 per cent of 2,50,000) to Rs 12,500 (5 per cent of 2,50,000).
Jaitley has also reduced the rebate under section 87A from Rs 5,000 to Rs 2,500 with this rebate being made available to those people whose taxable income is less than Rs 5 lakh per year.
On the other end of the spectrum, those people whose income exceeds Rs 50 lakh but is less than Rs 1 crore will have to pay a surcharge of 10 per cent. Those with a taxable income of Rs 1 crore and more will continue to pay a surcharge of 15 per cent.
Tax slab for an individual of below 60 years of age:
Tax Slab for F.Y. 2017-18 & A.Y.2018-19
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New Tax slab
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Income below Rs 2.5 lakh
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No Tax
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Rs 2.5 lakh to Rs 5 lakh
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5%
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Rs 5 lakh to Rs 10 lakh
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20%
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Income above Rs 10 lakh
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30%
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Tax Liability
Under the new tax slab, the tax liability for people who earn Rs 3 lakh per annum will be zero after the rebate of Rs 2,500 under Section 87A.
In his Budget Speech, finance minister Arun Jaitley said if a person is earning Rs 4.5 lakh in a financial year, his tax liability will be zero if he or she claims a deduction of Rs 1.5 lakh under Section 80C.
