Have you computed how much income tax you need to pay this year? In Budget 2017, the government did not change income tax slabs/rates but gave a rebate of up to Rs 2,500 for taxable salary up to Rs 3.5 lakh. Are you on the right track in terms of income tax planning? As your employer will this month seek the documents for proof towards tax-savings investments and deductions. Financial planners say that tax payers should not wait for the last moment and instead plan from the beginning of the financial year to take maximum benefit of the income tax deductions available. Under the Income Tax Act, there are many exemptions that can reduce your tax liability. Here are the income tax rates and other other details.
Income tax slabs for taxpayers for FY 2017-18 (Assessment Year 2018-19)
General category Senior citizens Super senior citizens
(Up to 60 years of age) (60-80 years) (Above 80 years)
Income Tax Income Tax Income Tax
Up to Rs. 2.5 lakh Nil Up to Rs. 3 lakh Nil Up to Rs. 5 lakh Nil
Rs. 2,50,001-Rs. 5 lakh 5% Rs. 3,00,001-Rs. 5 lakh 5% Rs. 5,00,001-Rs. 10 lakh 20%
Rs. 500,001-Rs. 10 lakh 20% Rs. 5,00,001-Rs. 10 lakh 20% Above Rs. 10 lakh 30%
Above Rs. 10 lakh 30% Above Rs. 10 lakh 30%
Surcharge of 10% for income between Rs. 50 lakh and Rs. 1 crore with marginal relief
Surcharge of 15% for income above Rs. 1 crore with marginal relief
# Rebate of up to Rs. 2,500 for taxable salary up to Rs. 3.5 lakh
# Education and higher education cess of 3%
Surcharge: The amount of income-tax shall be increased by a surcharge at the rate of 10 percent of such tax, where total income exceeds fifty lakh rupees but does not exceed one crore rupees. However, the surcharge shall be subject to marginal relief (where income exceeds fifty lakh rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of fifty lakh rupees by more than the amount of income that exceeds fifty lakh rupees).
ii) The amount of income-tax shall be increased by a surcharge at the rate of 15% of such tax, where total income exceeds one crore rupees. However, the surcharge shall be subject to marginal relief (where income exceeds one crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one crore rupees by more than the amount of income that exceeds one crore rupees).
Some of the deductions available for FY2017-18:
House Rent Allowance under Section 10 (13A) of the Income Tax Act
HRA or House Rent Allowance is partly exempted from tax.
The amount which is allowed for exemption under HRA is calculated as minimum of:
1) Rent paid annually minus 10 per cent of basic salary plus dearness allowance
2) Actual HRA received
3) 40 per cent of basic and dearness allowance (50 per cent in case of metro cities)
Deductions under Section 80C
Section 80 C of the Income Tax Act provides various provisions under which an individual can get deduction benefits up to Rs. 1.5 lakh. Tax-saving mutual funds (ELSS), Employees’ Provident Fund (EPF), Public Provident Fund (PPF), Sukanya Samriddhi Account, National Savings Certificate and tax-saving fixed deposits are some of the investment options that offer benefits under Section 80C. Further, one can claim tuition fees paid for up to two children, principal repayment on home loan, stamp duty and registration cost on the house bought as deduction under Section 80C.
Deductions under Section 80CCD(1B)
It provides deduction up to Rs. 50,000 for investment in NPS Tier 1 account. This deduction is over and above the deduction available in Section 80C.
Deduction of interest on housing loan
Under Section 24B of the Income Tax Act, interest paid up to Rs. 2 lakh on housing loan is allowed as deduction from your taxable income. On rented properties, the borrower can only claim deduction of up to Rs. 2 lakh per year after adjusting for the rental income. And the amount above Rs. 2 lakh can be carried forward for eight assessment years.
Deduction under Section 80EE
Under Section 80EE, an additional deduction of Rs. 50,000 is available over and above the limit of Section 24B on interest paid on home loans if the person is buying a house for the first time (the person must not own any other residential property on the date of sanction of loan).
Deduction under Section 80D
You can claim deduction of Rs. 25,000, if he is below 60 years of age, and Rs. 30,000 if he is above 60 years of age, towards medical insurance premium paid for self, spouse and children. Further, additional deduction of Rs. 25,000 is available if one has bought medical insurance for his parents. This deduction can go up to Rs. 30,000 if parents are above the age of 60 years.
Deduction under Section 80E
A taxpayer can claim deduction for interest paid on education loan for him, spouse or children. There is no upper limit on the amount of deduction.
Deductions on House Rent
Section 80GG: Deduction for House Rent Paid Where HRA is not Received
• This deduction is available for rent paid when HRA is not received. The taxpayer, spouse or minor child should not own residential accommodation at the place of employment.
• The taxpayer should not have self-occupied residential property in any other place.
• The taxpayer must be living on rent and paying rent.
Deduction available is the minimum of:
1. Rent paid minus 10% of total income
2. Rs 5000/- per month
3. 25% of total income
Courtesy NDTV.com