Income Tax Slab Lowest Tax Rate Ripped to 5% from 10% for FY 2017-18 : Central Government has introduced the Union Budget 2017 just recently. Finance Minister Arun Jaitely introduced the Union Budget 2017 prestigiously in presence of both Houses of Parliament. It is the first time the Railway Budget was merged with General Budget. With great advancements in the budget, the central government has put before its ultimate budget plan for the functional year 2017. This time, high priority was given to farming sector, rural population, youth, poor, health care, infrastructure, public services, tax administration etc.
Coming to one of the most important factors in the budget, Tax, the finance minister has relaxed the tax rates by half. He proposed to reduce the income tax slab rate from present 10 percent to 5 percent for people who are making an income between Rs. 2.5 lakh to Rs. 5 lakh. Citing the lower bracket income tax payers, it is quite an interesting move by the government to slash the tax rate from 10 percent to 5 percent. He also announced that there will be zero tax liability to people having annual income up to Rs 3 lakh. This proposal was made indicating that there could be a duplication of benefits for the Rs 2.5-R 5 lakh tax slab.
Here is what Jaitley proposed regarding the Tax for the functional year 2017.
Tax Rate for lowest income tax slab slashed to 5% from 10%
Previously, the tax slabs had caps at an annual income of Rs 2.5 lakh, Rs 5 lakh and Rs 10 lakh charging the income tax of 10 per cent, 20 per cent and 30 per cent respectively. People with income between Rs 50 lakh to Rs 1 crore will be imposed with a surcharge of 10 per cent while the people with income above Rs. 1 crore will be charged with 15 percent surcharge. This will ultimately make an additional revenue of Rs 2,700 crores.
The tax slabs that came into existence after the announcement from Jaitely are:
|Annual Income||Income Tax||Education Cess||Higher Education Cess|
|Up to Rs 3 lakh (for senior citizens)||Nil||Nil||Nil|
|Rs 2.5-5 lakh||5%||2%||1%|
|Rs 5-Rs 10 lakh||20%||2%||1%|
|Above Rs 10 lakh||30%||2%||1%|
|Above Rs 50 lakh||30%||+ 10% surcharge|
|Above Rs 1 crore||30%||+ 15% surcharge|
Income Tax Proposal by Arun Jaitley
In the presence of both the Houses of the Parliament and Honorable President Pranab Mukherjee, Jaitley has made known the union budget 2017. He proposed to slash down the current rate of taxation for individual assesses who make income between Rs 2.5 lakh to Rs 5 lakh to 5% from the current rate of 10%. This move would reduce the tax liability of all persons with income below Rs 5 lakh either to zero with a rebate or to half of their existing liability.
To avoid the duplication of benefit, the current benefit of rebate available to the same assessee has been reduced to Rs 2500 for those with income of Rs 3.5 lakh. As a result of both the measures, there will be zero tax liability for assesses with income up to Rs 3 lakh per annum whereas the tax liability will only be Rs 2,500 for people with income between Rs 3 and Rs 3.5 lakh p.a. The tax would be zero for people with income of Rs. 4.5 lakh if the limit of Rs. 1.5 lakh under Section 80 C for investment is used fully. On the other hand, the tax rate for people with income up to Rs 5 lakh has been reduced to half.
Other than these advancements, the taxpayers in other slabs will also get the same benefit of Rs. 12, 5000.