Source | NDTV
With some tinkering in the income tax rates for 2017-18, Finance Minister Arun Jaitley reduced the tax rate for income between Rs. 2.5 lakh to Rs. 5 lakh to 5 per cent in Budget, while adding a surcharge of 10 per cent on tax for income between Rs. 50 lakh and Rs. 1 crore. Although the basic income tax exemption limit remains same at Rs. 2.5 lakh, there are many exemptions available in the Income Tax Act, which can substantially reduce your tax liability. One needs to plan from the beginning of the next financial year to take maximum benefit of the income tax deductions available.
Here are the new income tax slabs for tax payers
General Category Senior Citizens Super Senior Citizens
(Person up to 60 years of age) (60-80 years) (Above 80 years)
Income Tax Income Tax Income Tax
Up to Rs. 2.5 lakh Nil Up to Rs. 3 lakh Nil Up to Rs. 5 lakh Nil
Rs. 2,50,001-Rs. 5 lakh 5% Rs. 3,00,001-Rs. 5 lakh 5% Rs. 5,00,001-Rs. 10 lakh 20%
Rs. 500,001-Rs. 10 lakh 20% Rs. 5,00,001-Rs. 10 lakh 20% Above Rs. 10 lakh 30%
Above Rs. 10 lakh 30% Above Rs. 10 lakh 30%
# Surcharge of 10% for income between Rs. 50 lakh and Rs. 1 crore (with marginal relief)
# Surcharge of 15% for income above Rs. 1 crore (with marginal relief)
# Rebate of up to Rs. 2,500 for taxable salary up to Rs. 3.5 lakh
# Education and higher education cess of 3%
(Check your exact tax liability here)
Here are the some of the deductions available for FY2017-18:
House Rent Allowance under Sec 10 (13A)
House Rent Allowance or commonly known as HRA, makes up a major chunk of a salaried individual’s total pay. HRA is partly exempted from tax. If you are staying in your own house or not paying any rent, then your HRA will be completely taxable. However, those who stay with their parents can also claim HRA benefits by paying rent to their parents.
The amount which is allowed for exemption under HRA is calculated as minimum of:
1) Rent paid annually minus 10 per cent of basic salary plus dearness allowance
2) Actual HRA received
3) 40 per cent of basic and dearness allowance (50 per cent in case of metro cities)
Deductions under Section 80C
Section 80C of Income Tax Act provides various provisions under which an individual can get deduction benefits up to Rs. 1.5 lakh. Employees’ Provident Fund (EPF), Public Provident Fund (PPF), Sukanya Samriddhi Account, National Savings Certificate, and tax-saving fixed deposits are some of the investment options that offer benefits under Section 80C. The premium paid for life insurance plans, National Pension Scheme (NPS) and tax-saving mutual funds (ELSS) also qualify for deduction under Section 80C.