Dr. Rakesh Kumar Sharma
The new Indian government announced its tax rules for the current financial year. But very few announcements were made by new government which could provide relief to salaried class people. The first and the most important 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 ₹ 2,00,000 to ₹ 2,50,000. There were no changes in the tax slab from last 2 years in tax slabs. In the past, this limit was never increased by ₹ 50000 or more amount. So definitely, this is one of the very important announcements in new finance bill. Many Indian employees were expecting this change. Although other subsequent slabs remains the same. Following are the tax slabs of Assessment Year 2014-15 & 2015-16.
| Tax Slabs 2014-15 | Tax Slabs 2015-16 | ||
| Income | Tax Rate | Income | Tax Rate |
| Upto ₹ 2 Lacs | 0 | Upto Rs. 2 .50 Lacs | 0 |
| ₹ 2 Lacs to Rs. 5 Lacs | 10% | ₹ 2.50 Lacs to Rs. 5 Lacs | 10% |
| ₹ 5 Lacs to Rs. 10 lacs | 20% | ₹ 5 Lacs to Rs. 10 lacs | 20% |
| Above ₹ 10 Lacs | 30% | Above ₹ 10 Lacs | 30% |
Second important amendment is under section 80C and 80CCC. Earlier, the maximum qualifying investments for deduction from total income was ₹ 1, 00,000 (even more amount was investment in specified schemes) which was raised to ₹ 1, 50,000. So if no loan is taken by the employee to construct or renovate the house & having total salary income ₹ 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.
Net change in Total tax Structure having gross income Rs.5 lacs.
| Total Tax liability before budget | ₹ 20600 |
| Total Tax liability after budget | ₹-10300 |
| Net Benefit | ₹ 10300 |
Net change in Total tax Structure having gross income Rs. 10 lacs.
| Total Tax liability before budget | ₹ 1,13,300 |
| Total Tax liability after budget | ₹ -97850 |
| Net Benefit | ₹ 15450 |
So after availing these two amendments in new finance bill the person with gross income of ₹ 5 lacs can save tax of ₹ 10300 and in that case his total tax liability will decline by 50 %. Similarly, the person who will have gross income ₹ 10 lacs during financial year 2014-15, he can save a tax of ₹ 15450. In such a case his tax liability will decline by 13.6 % as compare to tax rules in the assessment year 2014-15. If higher gross income will be there than percentage saving in tax will be less as compare to low income.
In the new finance bill, there is an important amendment under section 24(1). In this section the person can claim for deduction for the interest on loan taken for construction or renovation of house property. In this case, self-occupied property the entire amount of interest shall be considered as loss from the house property and same can be adjusted from other person’s income. So in this way, the person can minimise his taxable income as well as the tax liability. In the assessment year 2014-15, the maximum limit under this section was ₹ 1,50,000 which is now raised to ₹ 200,000 in the new finance bill of 2015-2016. This was also a very important amendment in the tax rules. This was one of the most awaited changes in the finance bill as it was consistent for past many years. This change has given great relief to all those assesses who have taken loan for construction or renovation of house property. Below tables analyse the benefit of this amendment to assessee.
With optimum tax planning, person having gross income of ₹ 5 lacs, in the assessment year 2015-16 his or her tax liability will be zero as his taxable income will be less than ₹.2,50,000. While in previous tax rules, his tax liability will be ₹ 5150 (i..e., 10 % on 50,000 + 3% surcharge).
Net change in Total tax Structure having gross income Rs. 10 lacs.
| Total Tax liability before budget | ₹ 82400 |
| Total Tax liability after budget | ₹-56650 |
| Net Benefit | ₹25750 |
With proper tax planning and by taking the benefits of all these three important amendments, the person having gross income of ₹10 lacs can minimize his gross total income to ₹6.5 lacs from ₹ 7.5 lacs. In this way his gross total income will decline by 13.33%. While, in this case his or her net tax liability will diminish by ₹ 25,750 and percentage decrease in this shall be 31.25%.
Conclusion
The new tax rules are indeed a great tax relief for salaried class people in the new finance bill 2014-15 announced as on 10th July, 2014 by Hon. union cabinet finance minister Mr Arun Jetly of government of India. Now, with optimum tax planning under Section 80C & 80CCC , people having income up to ₹ 5 lacs will have maximum tax relief of ₹ 10,300 (if no loan is taken for construction or renovation) otherwise ₹ 15000+ Surcharge. Whereas if income is between ₹ 5 to ₹ 10 lacs than you will have relief ranging from ₹ 10000 to ₹ 15000 + Surcharge. If assesse also pays interest ₹ 2 Lacs or more on home loan than he can get maximum benefit of ₹ 25750.
As per new tax rule, with optimum tax planning and getting the benefit of deduction under section 24(1), assesse can minimise his net taxable income as well as net tax liability. Assesse with higher income or higher tax slab can get maximum benefits of all amendments made in new finance bill 2014-15.
Whereas, if income is between ₹ 5 to ₹ 10 lacs than you will have relief ranging from ₹ 10000 to ₹ 15000 + Surcharge. If assesse also pays interest ₹ 2 Lacs or more on home loan than you can get maximum benefit of ₹.25750.
(Author is Assistant Professor & Tax Consultant atSchool of Behavioral Sciences & Business Studies,Thapar University , Patiala)
14950 (16250(Basic)-1300(VPF)
8126 Rental Receipt to be submitted
19289 Flexi
3000 Bright Hours Allowance
1250 Medical Bill to be Submitted
13000 Performance Bonus
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59615 Total Monthly Income
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Can you pls. help me how to avoid tax for the above monthly income urgently
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My gross taxable salary 1075000/ from which efforts i can reduce my tax liability
company form 16# toaltaxable income=(601148-149466)=451682
tax payable=18714, but tax paid=28895,
tds(fd, mod) from bank# tax paid=4515.
what return is refundable & how much, plz send actual calculation on my mail
what is new rules in new budjet 2015 i.e.f.y. ended 31.03.2016 for TDS on investment in bank deposit interest earlier it was Rs.10000/- in particular Bank in per branch and not clubed other branch tdr of same bank,but it is heard that now new rules is clubed all the FDR of the same bank and if interest amount Rs.10000/- and above will attract tds insted of earlier per branch of the bank please clearfy. thanks
Hello Sir,
for FY15-16, I will be getting Rs.6,00,000/- salary (Rs.50,000/-) please do let know how to save tax on this and what are the savings, bills, I need to accumulate.
Regards,
PNK
For financial year2014-15 U/s 87A Rs 2000 deduction is apply or not?
Please let me know if premium paid for insurance of Home Loan will be considered for Tax Rebate. Is yes, under which section? What is the maximum limit?
Sir,
Which amount can be exemption U/S 54EC for the AY2015-16 investment in NHAI,REC
At the time I read the article the Tax slabs seem corrected. I think now it is right.
TAX STRUCTURE IS ABSOLUTELY CORRECT FOR AY 2015-16 THANKS TO FM.
BUT 80CCC IS CLUBBED WITH 80C IS NOT EXPECTED AS WELL AS ACCEPTABLE. ONE THING
MORE I HAVE HC JUDGEMENT COPY. MENTION U/S 17(1)(IV) REIMBURSMENT IS NOT CONSIDERED AS TAXABLE INCOME. THEN WHY EXCEED RS.15000/- MEDICAL EXPENSES CONSIDERED AS TAXABLE INCOME ? PLEASE REPLAY.
THANKS.
REGARDS.
Dear Sir, I want to know the exemption come under 80c & other. Maximum amount of Mutual Funds come under in which section? What is maximum amount of interest on Fixed Deposits is emempted from tds? and other exemptionted categories may be intimated to me. Thank You, Sir.
Dear Dr Sharma
Kindly get the article corrected for the unwelcome iclusion of SURCHARGE @ 3%. This should be cess( E.Cess + SHE.Cess) @ 3%. Surcharge is sleeping devil. Please do not make it awake even by mistake.
Dear HARIOM SHARMA Sir,
You are right that from long time there is no change in the exemption limit for Transport allowance as well in medical reimbursement. while the transport allowance have been increased under sixth pay commission. As per 5th pay commission exempted limit was Rs. 800 and central government was also giving same amount of allowance. So taxable part was zero. But right now employees are getting TA Rs. 3200(1600+percentage of DA) But still they can claim exemption of Rs.800 while remaining is taxable. So exemption limit of this must be increased in next budget. Medical reimbursement exemption limit had also not been changed from last more than 10 years. So this should also be change in next budget.
U/s 87 there is also provision of rebate if income of individual does not exceed Rs. 5 lacs,
Tax Slabs 2014-15 Tax Slabs 2015-16
Income Tax Rate Income Tax Rate
Upto ₹ 2 Lacs 0 Upto Rs. 2 Lacs 0
₹ 2 Lacs to Rs. 5 Lacs 10% ₹ 2 Lacs to Rs. 5 Lacs 10%
₹ 5 Lacs to Rs. 10 lacs 20% ₹ 5 Lacs to Rs. 10 lacs 20%
Above ₹ 10 Lacs 30% Above ₹ 10 Lacs 30%
The tax slab given is correct now. Sr citizen’s tax slab has not been given. Was it previously not correct?
Mistake in Tax slab for AY 2015-16…I thonk…
I guess tax slab table needs to be change as both are having same contents:
Please change the table
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%
Dear Sir,
Pls explain below how one can save more tax u/s 24(1)
In this case, self-occupied property the entire amount of interest shall be considered as loss from the house property and same can be adjusted from other person’s income.
Dear Dr. Rakesh Kumar Sharma,
i request you to kindly give correct information;
Current exemption limit is Rs. 2,50,000/- instead of Rs. 2,00,000/-
Tax slab for 14 15 and 15 16 in box shown as same
check the article once again. The first table I am referring to.
IN ABOVE ARTICLE SLAB GIVEN FOR ASSESSMENT YEAR YEAR 2014/15AND 2015/16 1ST SLAB AT NIL INCOME TAX IS SHOWN AS 2000000/- WHILE FOR ASSESSMENT YEAR2015/16 MINIMUM LIMIT FOR NIL TAX IS RAISED FROM 200000/- TO 250000/-
Dear Author – Pl correct the tax slab table..
tax slab for A.Y 2015-16 – why slab of 2 Lacs to 5 Lacs is mentioned for 10%? It should be 2.5 Lacs to 5 Lacs.
Slab rate for AY 2015-16 in the example is same as of AY 2014-15.
Please make correction.
Exemption Limit Up to 2.5 Lac should have been mentioned under Tax Slab for 2015-16 column.
Dear Sirs,
There are certain limits still no revision have been made in these limits since a long time such as: 1. school fee paid paid by employer , conveyance Rs.800/- P.M., medical expense 15000/- is too less in todays costs, there is need to give a standard deduction for salaried because a business man can clam business expense while calculating taxability and a salaried person consumes his life that is not reversible for ever so apart from other reliefs this may be advisable to give less tax burdon on salaried tax payers for a certail limit of salary or say salary income till 99 lacs per annum. This is only a view,
Kindly update the AY 2015-16 tax slabs table to show 0 to 2.5 lakhs as 0 tax rate; and hence the benefit.
No Change in tax slab rate for AY 2014-15 & 2015-16????
Upto 2 Lacs nil in both cases?????
In the tax slab for assessment year 2015-16 the threshold limit is shown as 200000 whereas it should be 250000.please correct it
Tax slabs shown for assessment yeard 2014-15 and 2015-16 are one and the same.Threshold limit has been increased to 250000 for assessment year 2015-16.Please correct.
Dear Dr. Rakesh Kumar Sharma
Please you are showing wrong infromation in Tax Slab Chart. Please correct the Tax Slab for AY 2015-16.
Thaking you,
Nitin Doiphode,
mo – 9422402347
Income tax slabs which is mentioned above is incorrect.
Sir,
In the slabs shown above (Table-1), there is no change in both years whereas in AY 2015-16, the 0% slab should be 2.50 Lacs.
Secondly, there is a tax credit of Rs. 2000/- U/s 87A to those individuals whose income is below 5.00 Lac
Pl check these and advise us.
There is a error in the first Table you have provided. The Tax Slab for AY 2015-16 says the Income upto 2 Lacs is NIL – it should be 2.5 Lacs. Also, the second row (for AT 2015-16) should be 2.5 L – 5 L (instead of 2 Lacs – 5 Lacs).
Dear Dr. Sharma,
please check and put correct tax slab for A/Y 2015-16
Tax Slabs for AY 2015-16 mentioned in the above table is incorrect.
It has to be :
Income Tax Rate
Upto Rs. 2.5 Lacs 0
₹ 2.5 Lacs to Rs. 5 Lacs 10%
Dr.R K Sharma, your analysis is good, but please note that first Tax Slab for Asst.Yr 15-16 if Rs.2,50,000/- not upto 2 Lakhs as you have given in Tabular format.
Please look into table and rectify
Second Slab for 2015-16 should be 2.5 to 5 instead of 2 to 5
informative 1! but please rectify tax slab table.