It is time to cheer, Budget 2017-18 has brought happiness to the middle class. Income tax slab rate has been changed for FY 2017-18. The government has reduced the income tax rate for the income between Rs.2.5 lacs and 5 lacs. You should plan your tax saving on the basis of this tax rate. This new income tax slab rate would be used when you file income tax return during 2018-19. Hence, the assessment year for this tax slab would be 2018-19.
Download Automatic All in One TDS on Salary for Govt & Non-Govt Employees for F.Y. 2017-18 [ This Excel Utility can prepare at a time Tax Compute Sheet + Individual Salary Sheet + Individual Salary Structure + Automatic H.R.A. Calculation + Automatic Arrears Relief Calculator with form 10E + Automatic Form 16 Part A&B and Form 16 Part B for F.Y.2017-18]
After the demonetization people were expecting lesser income tax. We wanted tax higher tax-free income and a greater limit for tax saving investments. Fortunately, the government has given a big relief to common taxpayers. Now we can save income tax up to Rs 12,500 in a year.
While there are many tax benefits to the middle class and employees, the rich has to bear more tax burden. I will discuss all these new tax decisions. Along with this, you would also learn the new income tax slab rate of 2017-18. You would also learn the tax calculation as well.
Budget 2017-18 – Income tax Highlights
Change in Income Tax Slab
There is a new income tax slab in FY 2017-18 for the individual tax payer. As always senior citizens has a higher tax-free income limit. Female did not get any extra advantage. The income tax slab rate for females is similar to the males.
Now the income up to Rs 2.5 lacs is tax free. This tax-free limit is applicable for salaried individuals, females, professionals, and businessmen. Companies, firms, and organisations don’t get any tax free limit.
The tax-free limit for senior citizens is Rs.50,000 higher. Thus they can save up to Rs 15,450 extra tax. The tax-free limit for the senior citizen is Rs 3.0 lacs.
Income Tax Rebate Reduced
The income tax rebate continues but it is reduced now. The income tax rebate came down to 2,500. Last year it was Rs 5000. Not only the reduction, the threshold for this rebate also came down. Now, the income up to 3.5 lacs is eligible for this rebate. Earlier, income up to Rs 5 lac was eligible for the income tax rebate.
Because of this provision, those who earns up to Rs 3 lacs are not required to pay any tax. Rather, if a person uses the all available deductions, the income up to Rs 5 lacs can become tax-free
No Change in 80C limit
Despite many demands, the government did not increase the 80C limit. It is still Rs 1.5 lacs. Some investment and expenses up to this limit give you benefit o tax deduction. Moreover, the investment in National pension scheme gives you the extra tax deduction of up to Rs 50,000.
Surcharge Threshold Came down
The government gave relief to the middle class but charged more tax from the rich people. Now, those who earns more than ₹50 lacs in a year has to give more tax than the prescribed income tax slab rate. In the normal course, income over Rs 10 lacs attracts tax at the rate of 30%. But Now, if income exceeds Rs 50 lacs, the taxpayer has to give extra 10% tax. It is called as the income tax surcharge. Earlier this 15% surcharge was levied on those who earns more than Rs 1 crore. This 15% rate for the income of above Rs.1 crore still applicable.
The Income Tax Slab For FY 2017-18
Now let is come to the point. I will tell your income tax slab rates for the financial year 2017-18. This income tax slab rate is applicable on the income which is earned during 1st April 2017- 31st March 2018. You file income tax return of this income after 31st March 2018. In other words, this income tax slab rate is applicable for Assessment year 2018-19.
Besides the income tax rates, the surcharge is also charged if total taxable income exceeds Rs 50 lacs. Since the budget 2017-18, the income tax surcharge itself has two slabs. 10% between 50 lacs to 1 crore and 15% above this. However, marginal relief is given in such cases.
