Benefits available to salaried employees in AY 2015-16

 Benefits available to salaried employees in AY 2015-16  Benefits available to salaried employees in AY 2015-16
Oct 182014
 

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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