Benefits available to salaried employees in AY 2015-16
Amendment was in the tax slab.
Although there is no change in the existing tax rate yet new Government had increased the minimum limit from Rs. 2,00,000 to Rs. 2,50,000. There were no changes in the tax slab from last 2 years in tax slabs.
So definitely, this is one of the very important announcements in new finance bill. Following are the tax slabs of Assessment Year 2014-15 & 2015-16.
Table 1: Tax Slabs
|Tax Slabs 2014-15||Tax Slabs 2015-16|
|Income||Tax Rate||Income||Tax Rate|
|Upto Rs. 2 Lacs||0||Upto Rs. 2.5 Lacs||0|
|Rs. 2 Lacs to Rs. 5 Lacs||10%||Rs. 2.5 Lacs to Rs. 5 Lacs||10%|
|Rs. 5 Lacs to Rs. 10 lacs||20%||Rs. 5 Lacs to Rs. 10 lacs||20%|
|Above Rs. 10 Lacs||30%||Above Rs. 10 Lacs||30%|
For senior citizen with Age group of 60 years or above but less than 80 years than their minimum tax limit is Rs. 300,000 instead of Rs. 250,000.
On the other hand, senior citizen with age of 80 years or more than they do not need to pay tax of initial income of Rs. 500,000.
Amendment is under section 80C and 80CCC.
Earlier, the maximum qualifying investments for deduction from total income was Rs. 1, 00,000 (even more amount was investment in specified schemes) which was raised to Rs. 1, 50,000.
So if no loan is taken by the employee to construct or renovate the house & having total salary income Rs. 5 lacs than his total taxable income will decline by Rs. 50,000 (after availing this deduction) which is 12.5 % of earlier base income.
The above conclusion can be examined with below table:-
(A) Person Having Income Rs. 5 lacs with no house loan
|Table 2 Before Budget 2014 ( NO House loan is there)||Table 3 After Budget 2014 ( NO House loan is there)|
|Gross Salary||Rs. 500000||Gross Salary||Rs. 500000|
|less deduction U/S 80C +80CCC||Rs. -100000||less deduction U/S 80 + 80CCC||Rs.-150000|
|Taxable salary||Rs. 400000||Taxable salary||Rs. 350000|
|Loss from HP (due to interest on loan taken for construction or renovation of house)||0||Loss from HP (due to interest on loan taken for construction or renovation of house)||0|
|Net Taxable income||Rs. 400000||Net Taxable income||Rs. 350000|
Now tax liability can be calculated as below:-
|Table 4 Tax Liability before Budget 2014 ( NO House loan is there)||Table 5 Tax Liability before Budget 2014 ( NO House loan is there)|
|Tax Rate||Tax||Tax Rate||Tax|
|Upto 2 lacs||0||0||Upto 2.5 lacs||0||0|
|Next 2 Lacs||10%||Rs. 20000||Next 1 Lac||10%||Rs. 10000|
|Total Tax before surcharge||Rs. 20000||Total Tax before surcharge||Rs.10000|
|Surcharge||3%||Rs. 600||Surcharge||3%||Rs. 300|
|Total Tax||Rs. 20600||Total Tax||Rs.10300|
|Less: Rebate **||Rs. 2000|
|Net Tax||Rs. 8300|
Table 6 Net change in Total tax Structure having gross income Rs. 5 lacs.
|Total Tax liability before budget||Rs. 20600|
|Total Tax liability after budget||Rs.-10300|
|Net Benefit||Rs. 10300|
Rebate u/s 87A of Rs 2000 will also be admissible if the person income does not exceed Rs. 500000.
By: Sensys Technologies
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