NEW INCOME TAX SLAB

BREAKING NEWS:  New proposal to increase tax slab has been communicated by Finance Ministry. The proposal is listed below:

0 - 3 lakhs = 0%
3 to 10 lakhs = 10%
10 to 20 lakhs = 20% and
> 20 lakhs = 30%

Old Slab:

0 – 1.8 lakhs = 0%

1.8 to 5.0 Lakhs = 10%

5.0 to 8.0 Lakhs = 20%

> 8.0 Lakhs = 30%

Most of the TV channels and newspapers have already reported this information. Lets hope and pray that it gets tabled in parliament and passed.

OUTCOME: SAVINGS AS A RESULT

As soon as the news reached my ears, I reached for my calculator to find what’s going to be the gain for me. Need to say it’s a nice gain. I have created a table to explain this impact better.

The Annual salary taken here is just “Take Home Per Month” * 12.  I consider “Take Home Per Month” to be drawn after deducting PF, HRA, 80 C investments etc.

Old Tax Structure:

Annual Income	300000	600000	900000	1200000	2400000
1.8 to 5 slab	12000	32000	32000	32000	32000
5 to 8 slab	0	20000	60000	60000	60000
above 8 slab	0	0	30000	120000	480000
TOTAL	12000	52000	122000	212000	572000

New Tax Structure:

Annual Income	300000	600000	900000	1200000	2400000
3.0 to 10 slab	0	30000	60000	70000	70000
10 to 20 slab	0	0	0	6000	200000
above 20 slab	0	0	0	0	120000
TOTAL	0	30000	60000	76000	390000

Comparison between Old and New Tax Slabs:

Annual Income	OLD SLAB Tax to be Paid	NEW SLAB Tax to Be Paid	Amount Saved
300000	12000	0	12000
600000	52000	30000	22000
900000	122000	60000	62000
1200000	212000	76000	136000
2400000	572000	390000	182000

Note:

The new tax slab as of now remains just a proposal. It needs to be tabled and passed. I am quite optimistic that if not this financial year, at least next financial year the proposal would be passed.

With our GDP winding down, government would be compelled to take measures to increase spending.