So how does the new Income Tax Provision is going to affect Individuals from the July 10th 2014 Budget
I heard 3 points in the budget speech today and based on those, here are 3 ways its going to impact you.
1-> Increased the tax exempt limit from Rs 2,00,000 to Rs 2,50,000.
2-> Increased the limit of 80C from Rs 1,00,000 to Rs 1,50,000
3-> Increased interest exemption limit from Rs 1,50,000 to Rs 2,00,000 for self occupied property's home loan.
Lets see the implications for each of the points .
1-> Increases the Tax Exempt limit from Rs 2,00,000 to Rs 2,50,000.
New Tax Slab After the budget :-
Individual Indian resident aged below 60 years
Income Tax :
| Income Slabs | Tax Rates | |
|---|---|---|
| i. | Where the total income does not exceed Rs. 2,50,000/-. | NIL |
| ii. | Where the total income exceeds Rs. 2,50,000/- but does not exceed Rs. 5,00,000/-. | 10% of amount by which the total income exceeds Rs. 2,50,000/-. Less** : Tax Credit - 10% of taxable income upto a maximum of Rs. 2000/-. |
| iii. | Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-. | Rs. 25,000/- + 20% of the amount by which the total income exceeds Rs. 5,00,000/-. |
| iv. | Where the total income exceeds Rs. 10,00,000/-. | Rs. 125,000/- + 30% of the amount by which the total income exceeds Rs. 10,00,000/-. |
** Applicable in case of Resident Individuals only.
Surcharge : 10% of the Income Tax, where total taxable income is more than Rs. 1 crore. )
Education Cess : 3% of the total of Income Tax and Surcharge.
How it impacts you :-
What ever your taxable income is beyond Rs 2,50,000 your savings on income tax is Rs 5000 Only in a year (Per month = Rs 416)
2-> Increase the limit of 80C from Rs 1,00,000 to Rs 1,50,000
It was a long awaiting request from the tax payers.
By doing more savings in 80C you can reduce your taxable income by Rs 50000 and the Tax saving will be based on that slab you fall in . It will also help those who have made pre-payment of home loans for self occupied property but the payments were falling outside the 80C limits.
How it impacts me :-
By putting additional savings Or making home loan repayment of Rs 50000 in 80C , here will be the results
If you fall in Slab 1 of income tax - 0-2.5 L- None
If you fall in Slab 2 of income tax - 2.5L to 5L - you save Upto Rs 5000 Per Year
If you fall in Slab 3 of income tax - 5L to 10 L - you save Upto Rs 10000 Per Year
If you fall in Slab 4 of income tax - Above 10L - you save Upto Rs 15000 Per Year
3-> Increase of interest exemption limit for self occupied property's home loan.
So if you are owning a property and residing into it you can claim for Principle an Interest . Principle shares your 80C while Interest was having a exempt of Rs 1,50,000
The New exempt is Rs 2,00,000
How it impacts me :-
If you fall in Slab 1 of income tax - 0-2.5 L- None
If you fall in Slab 2 of income tax - 2.5L to 5L - you save Upto Rs 5000 Per Year
If you fall in Slab 3 of income tax - 5L to 10 L - you save Upto Rs 10000 Per Year
If you fall in Slab 4 of income tax - Above 10L - you save Upto Rs 15000 Per Year
Who is the maximum gainer ?
One who is owning a property , residing into in , taken home loan on that property and paying interest per annum of Rs 2,00,000 or more.
And
One who is having surplus money left in accounts to save in 80C or share the burden of the home loan principle amount.
And
One whose taxable income falls in 10,00,000 + slab after these deductions.
Will gain Rs 35000 Per Annum (Rs 2916 Per Month ).
