Big news for tax payers. This budget has brought some good news for the middle class. Nirmala Sitharaman has announced that individuals with a taxable income of up to Rs 12 lakh won’t have to pay any tax. For those earning more than that, there’s a tax exemption on the first Rs 4 lakh of income. A key question now is what the tax rates will be for incomes exceeding Rs 12 lakh, specifically for those earning Rs 15 lakh, Rs 20 lakh, and Rs 25 lakh.
Let’s break down the tax slabs:
– No tax on income from Rs 1 lakh to Rs 4 lakh.
– 5% tax on income from Rs 4 lakh to Rs 8 lakh.
– 10% tax on income from Rs 8 lakh to Rs 12 lakh.
– 15% tax on income from Rs 12 lakh to Rs 16 lakh.
– 20% tax on income from Rs 16 lakh to Rs 20 lakh.
– 25% tax on income from Rs 20 lakh to Rs 24 lakh.
– 30% tax on income above Rs 24 lakh.
Now, if you’re making Rs 15 lakh, you’ll first get a standard deduction of Rs 75,000, bringing your taxable income down to Rs 14.25 lakh. You won’t owe any tax on the first Rs 4 lakh. For the income between Rs 4 lakh and Rs 8 lakh, you’ll pay Rs 20,000 at a 5% rate. Then, on the Rs 8 lakh to Rs 12 lakh range, you’ll be taxed Rs 40,000 at 10%.
For the remaining Rs 2.25 lakh, you’ll incur a 15% tax, which amounts to Rs 33,750. So, your total tax liability will be Rs 93,750. Don’t forget the 4% cess of Rs 3,750, which brings your total income tax to Rs 97,500.
If you’re earning Rs 20 lakh, you’ll start with a standard deduction of Rs 75,000, bringing your taxable income down to Rs 19.25 lakh. You won’t owe any tax on the first Rs 4 lakh. For the income between Rs 4 lakh and Rs 8 lakh, you’ll pay Rs 20,000 at a 5% rate. Then, on the Rs 8 lakh to Rs 12 lakh range, you’ll be taxed Rs 40,000 at 10%.
Next, for the income from Rs 12 lakh to Rs 16 lakh, you’ll face a tax of Rs 60,000 at 15%. Finally, on the remaining Rs 3.25 lakh, you’ll be taxed 20%, which amounts to Rs 65,000 for the Rs 16 lakh to Rs 20 lakh bracket. All in all, your total tax will be Rs 1.85 lakh. Don’t forget the 4% cess of Rs 7,400, which brings your total income tax to Rs 1,92,400.
Now, if your income is Rs 25 lakh, you’ll also start with that Rs 75,000 standard deduction, leaving you with a taxable income of Rs 24.25 lakh. Again, no tax on the first Rs 4 lakh. For the Rs 4 lakh to Rs 8 lakh range, you’ll pay Rs 20,000 at 5%. On the Rs 8 lakh to Rs 12 lakh income, you’ll owe Rs 40,000 at 10%.
For the Rs 12 lakh to Rs 16 lakh segment, it’s Rs 60,000 at 15%. When you hit the Rs 16 lakh to Rs 20 lakh range, you’ll pay Rs 80,000 at 20%. Then, for the Rs 20 lakh to Rs 24 lakh bracket, you’ll owe Rs 1 lakh at 25%. Lastly, on the remaining Rs 25,000, you’ll pay Rs 7,500 at 30%. This brings your total tax to Rs 3,07,500. Add in the 4% cess of Rs 12,300, and your total income tax comes to Rs 3,19,800.