Friday, February 3, 2017

Top 5 Income Tax Changes and Slab Rates from Budget 2017

The Indian Budget for 2017 has been announced a couple of days back and Finance Minister Mr. Arun Jaitely announced some Income tax reforms, amendments, and relief for personal income tax payers of India in his budget 2017 speech. The most important of them are 5% tax on the lowest slab i.e. 2.5 lakhs to 5.0 lakhs instead of 10%. This change will impact most of the tax payers in India as data provided in the budget, total 3.7 crore people filed income tax returns in 2015-16 and out of those almost 2 crore was in the range of 2.5 lakh to 5 lakh.

Another announcement which I think is significant is the single page ITR form for people who has taxable income less than 5 lakhs to ease the tax filling process. Since many taxpayers think filling income tax return tedious and cumbersome, this will certainly encourage more people to file tax in India.

Top 5 Income tax changes from Budget 2017

Here are some of the important changes related to income tax announced in the India's union budget of the year 2017:

Professionals earning up to INR 3 lakh will enjoy zero tax liability.
Individuals earning INR 2.5 – INR 5 lakh a year will now be taxed at 5 percent instead of 10 percent.
This would reduce the tax liability of all persons below Rs 5 lakh income either to zero (with rebate) or 50% of their existing liability. If the limit of Rs 1.5 lakh under Section 80C for investment is used fully the tax would be zero for people with income of Rs 4.5 lakhs.

Single-page income tax return filing form for taxable income under INR 5 lakh.
This is another significant change announced in the union budget of 2017. Even though this looks minuscule I think it will make income tax filing process easier and encourage much more people to file their income tax.

10% surcharge for taxpayers with income between Rs 50 lakh and 1 crore
Those with income between INR 50 lakh and INR 1 crore, 10 per cent surcharge will be imposed.
In order to cover the loss of revenue loss on account of relief provided to people with income less than 5 lakh, finance minister proposes to levy a surcharge of 10% of tax payable on categories of individuals whose annual taxable income is between 50 lakhs and 1 crore.

15% surcharge on incomes above Rs 1 crore will continue.
The existing surcharge of 15% of income tax on people earning more than 1 crore will continue. So there is no change on this.

Income Tax Slab Rates for 2017

In short, here are the latest income tax slab rates for the financial year 2017-2018. This is adjusted as per the announcement and relief made in the union budget 2017 i.e. 5% tax rates for individuals earning less than 5 lakhs.

Income Tax Slab Rates for 2017

You can see that for 2.5 lakh you don't need to pay any tax and this tax exemption limit is 3.0 lakhs for senior citizens and women. The most important change from last year's income tax rates and 2017 income tax rates is 5% tax in the 2.5 to 5.0 lakh slab, which was 10% earlier.

There were some more incentives he gives to companies in the corporate tax amendments but that's the focus of this article. The most important change IMHO is the single-page income tax return filing for individuals whose income is less than 5 lakhs. This will encourage more people to file income tax returns in India. Also, at one hand the move to reduce the tax rate from 10% to 5% for individuals earning less than 5 lakh is a good move, the surcharge of 10% on people whose income is more than 50 lakh is not that great. They were already paying tax in higher band hence surcharge is just additional burden

No comments:

Post a Comment