Union Budget 2017-18: How tax proposals will affect you

New Delhi: Highlights of the Union budget for 2017-18 presented by Finance Minister Arun Jaitley in parliament on Wednesday.

New Delhi: While presenting the Union Budget for the financial year 2017-18, Finance Minister Arun Jaitley on Wednesday proposed to reduce the existing rate of taxation for individual assesses between income of Rs 2.5 lakhs to Rs 5 lakhs to 5% from the present rate of 10%.

This would reduce the tax liability of all persons below Rs 5 lakh income either to zero (with rebate) or 50% of their existing liability.

In order to avoid having duplication of benefits, the existing benefit of rebate available to the same group of beneficiaries is being reduced to Rs 2,500 available only to assesses upto income of Rs 3.5 lakhs.

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The combined effect of both these measures will mean that there would be zero tax liability for people getting income upto Rs 3 lakhs per annum and the tax liability will only be Rs 2,500 for people with income between Rs 3 to Rs 3.5 lakhs.    

If the limit of Rs 1.5 lakh under Section 80C for investment is used fully, the tax would be zero for people with income of Rs 4.5 lakhs.

While the taxation liability of people with income up to Rs 5 lakhs is being reduced to half, all the other categories of tax payers in the subsequent slabs will also get a uniform benefit of Rs 12,500/-per  person.  

The total amount of tax foregone on account of this measure is Rs 15,500 crores.

In order to make good some of this revenue loss on account of this relief, the government has proposed to levy a surcharge of 10% of tax payable on categories of individuals whose annual taxable income is between Rs 50 lakhs and Rs 1 crore.

 

The existing surcharge of 15% of tax on people earning more than Rs 1 crore will continue. This is likely to give additional revenue of Rs 2,700 crores.

In order to expand the tax net, the Finance Minister also said that a simple one page form to be filed as income tax return for the category of individuals having taxable income  upto Rs 5 lakhs other than business income.  

Also a person, who falls in this category and files income tax  return for the first time, would not be subjected to any scrutiny in the first year unless there is specific information available with the department regarding his high value transaction.   

Following is the table of impact on individual on tax proposals:

INCOME TAX RATE IMPACT

Individual Tax Payers

• -Up to Rs 2,50,000: NIL NIL
• -Rs 2,50,001 to Rs 5,00,000: 5% Rs 7,725 (Savings)

Senior Citizens 60 years but less than 80 years

• -Up to Rs 3,00,000: NIL NIL
• -Rs 3,00,001 to Rs 5,00,000: 5% Rs 2,575 (Savings)
• -Rs 5,00,001 to Rs 10,00,000: 20% Rs 7,725 (Savings)

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Senior Citizens 80 years and above

• -Up to Rs 5,00,000: NIL NIL
• -Rs 5,00,001 to Rs 10,00,000: 20% Rs 7,725 (Savings)

Surcharge of 10% on income of all individuals above Rs 50 lakh and less than Rs 1 crore and surcharge of 15 percent on income above Rs 1 crore