The budget has provided several benefits for individuals but there are some smaller details that every individual needs to look at.
The budget has provided several benefits for individuals but there are some smaller details that every individual needs to look at. These determine the manner in which the person would deal with their tax aspects and the final burden that actually falls on their shoulders. Often there is little information about the exact nature of the tax details plus implications and this can come as a shock at some points of time. It is necessary that one takes a careful look at how the situation should be tackled and hence here is a detailed analysis of some of the areas that need attention from the individual.
Basic exemption limit
There has been a rise in the basic exemption limit but before celebrating there is a need for a small bit of caution because every person does not have the benefit of the extra Rs 50,000 as basic exemption. Those who fall in the super senior category do not get the benefit of this extra basic exemption rise. This means that people who are below 60 years of age now have a basic exemption limit of Rs 2.5 lakh. Similarly those who are above 60 years till 79 years of age would get the a basic exemption limit of Rs 3 lakh and those 80 and above would have a figure of Rs 5 lakh. This Rs 5 lakh figure is the same as that was seen in the last year and there is no increase here so this category of people do not have any extra benefit that is coming in to them. This has to be considered in the overall working because this category of people would face the same situation that they were witnessing last year round.
The income tax rates that individuals are familiar with are 10 per cent, 20 per cent and 30 per cent which are applicable on the various levels of income that they earn. There is not much attention paid to the fact that there is an additional surcharge that could be witnessed by the individual if they end up earning a higher income at the end of the day. This is usually ignored as most people do not fall into this tax bracket but there is a provision available whereby the individual would end up paying a 10 per cent surcharge on the total tax if their income crosses the Rs 1 crore mark. This is significant as what this will do is actually increase the rate of tax for the individual from 30 per cent to 33 per cent as the surcharge kicks in but it wont affect most people as their income would be below this amount.
There is however one additional item that is present in the tax working that the individual cannot ignore and this is the education cess. There is a total of 3 per cent of educational cess that has to be paid by every individual and this is calculated on the tax that they have to pay. This means that where there is a basic tax then the cess is calculated on this rate so it would increase the final rate marginally. On the other hand when there is a surcharge present then the cess is to be calculated on the basic income tax plus the surcharge so there is a higher base for the calculation that comes into the picture and this will add to the tax burden that is actually faced by the individual. The cess is important because in many workings the individuals do not pay attention to this aspect and this can lead to a difference in the tax that has to be paid and the amount that has actually been discharged.
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