How changes in Income Tax Rates affect you

How changes in Income Tax Rates affect you

Change in Income Tax rates may either encourage or discourage individuals to invest and work more/less. It is also related with economic growth of the country. If taxes are high, it will definitely hamper the national income. On the other hand, Income Tax Rates cuts can encourage people to work more, save more and invest more. Change in income tax rates may affect the annual budget of assesses. It may have either positive or negative results.

Budget 2016, brought changes in income tax rates:-

U/s 87A IT ACT,1961 tax rebate was increased from Rs.2000/- to Rs.5000/- for individuals earning up to Rs.50000/-

Those who live in the rented house, deduction of rent paid has been increased from Rs.24000/- p.a. to Rs.60000/- under Section 80GG.  

For MSME category assesses, the government has increased turnover limit to Rs.2 Crore under Presumptive Taxation Scheme u/s 44 AD of IT ACT.

100 % reduction in profits up to 3 to 5 years for startups set up from April 2016 to March 2019

Surcharge rate has been raised from 14 % to 15 % on persons, other than companies, cooperative societies and firms having income over Rs.1 Crore.

All cars will now cost more expensive.

Withdrawal of 40% of pension corpus is now tax-free.

For non-residents not providing PAN CARD, higher TDS shall not apply.

Individual taxpayers (Tax rate/Relief):-

  • Up to Rs 2,50,000 — NIL / NIL
  • Rs 2,50,001 to Rs 5,00,000 — 10% / Rs 5,000 (Savings increased from Rs 2,000)
  • Rs 5,00,001 to Rs 10,00,000 — 20% / NIL
  • Rs 10,00,001 to Rs 1 crore — 30% / NIL
  • Above Rs 1 crore — 30% / 15% surcharge (Increased from 12%)

For senior citizens:-

Now seniors having no Business are exempted from paying Advance Tax and are subject to pay only Self-Assessment Tax.

Senior citizens may apply for Form 15H for non-deduction of TDS on interest on FRD if total income is exempted from the levy of income tax and tax is nil.

Senior citizens (60 years and above, but less than 80 years) (Tax rate/Relief):-

  • Up to Rs 3,00,000 — NIL / NIL
  • Rs 3,00,001 to Rs 5,00,000 — 10% / Rs 5,000 (Savings increased from Rs 2,000)
  • Rs 5,00,001 to Rs 10,00,000 — 20% / NIL
  • Rs 10,00,001 to Rs 1 crore — 30% / NIL
  • Above Rs 1 crore — 30% / 15% surcharge (Increased from 12%)

Related Topic: How GST is going to affect the Indian Economy?

Senior citizens (80 years and above) (Tax rate/Relief):-

  • Up to Rs 5,00,000 — NIL / Rs 5,000 (Savings increased from Rs 2,000)
  • Rs 5,00,001 to Rs 10,00,000 — 20% / NIL
  • Rs 10,00,001 to Rs 1 crore — 30% / NIL
  • Above Rs 1 crore — 30% / 15% surcharge (Increased from 12%)

An additional tax of 10 per cent proposed on dividend income over Rs 10 lakh from domestic company.

Simple and easy procedure to file income tax return online through ITR Software.

By | 2018-08-08T07:20:46+00:00 September 22nd, 2016|Categories: Income tax basics, Income Tax Guide|0 Comments

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