We take a look at 5 charts that explain how your tax outgo will change post Narendra Modi government's Union Budget 2017:
Union Budget 2017: Finance Minister Arun Jaitley has made multiple changes in finer clauses which are all set to impact the tax you pay from the next financial year. The very obvious change that he has made – and announced – is the massive reduction in tax rate to 5% from 10% for individuals (below 60 yeras) earning between Rs 2.5 lakh to Rs 5 lakh annually. We take a look at 5 charts that explain how your tax outgo will change post Narendra Modi government’s Union Budget 2017:
1) As stated above the tax rate has been revised up to Rs 5 lakh of income. The new slabs are:
What this means is – and something that is less obvious at first sight – is that if you are earning up to Rs 4.5 lakh annually, you need not pay any tax! Yes, you read it right! For taxpayers whose income is between Rs 2.50 lakh to Rs 3.50 lakh a rebate of Rs 2,500 will be available as against the earlier rebate of Rs 5,000 for the tax payers with an income upto Rs 5 lakh. What this effectively means is that resident individuals with an income of Rs 3 lakh will have a Nil tax burden and if one avails the Rs 1.50 lakh deduction under section 80C then there is no tax for income upto Rs 4.50 lakh!
2) On account of change in base year from April 1, 1981 to April 1 2001, the following is the impact on the indexed cost of acquisition of asset, accordingly impacting the taxable capital gains:
– Cost of acquisition of asset acquired before April 1, 1981 would be the market value as on April 1, 2001 instead of market value as on April 1, 1981; or the cost of aquisition, whichever is more at the option of the assessee.
– Cost of acquisition of asset acquired after April 1, 1981 but before April 1, 2001 would be the market value as on April 1, 2001, or the cost of aquisition, whichever is more at the option of the assessee.
3) Impact on account of limitation of set-off of house property loss
The impact on taxable income will be on account of excess loss under the head house property over and above Rs 2,00,000 arising due to mortgage loan on let out or deemed to be let out house property. Such unadjusted loss can be set-off in next 8 assessment years against income under the head house property only.
4) Impact on account of partial withdrawal from NPS by salaried individual
Tax Exemption on withdrawal from NPS account was only available on closure of account or opting out of the scheme @ 40% total amount payable on withdrawal. However, in order to provide relief to salaried individuals, exemption @ 25% of the employee contribution has been introduced on account of partial withdrawal from NPS account.
5) Impact on account of NPS contribution by self employed
Self-employed individual can claim deduction towards contribution to National Pension System (NPS) up to 20% of gross total income instead of 10%.
The amendment has been brought in order to bring parity with salaried individuals who are availing deduction @ 20% (10% employee contribution and 10% employer contribution)