Finance minister Arun Jaitley on Wednesday proposed revised tax limits for individual assesses in his presentation of the Union Budget 2017-18.
Here is Q&A on Income tax rate change announced by FM Jaitley
Q. What changes in Tax rate?
# Existing rate of taxation of those with income between Rs 2.5 lakh and Rs 5 lakh reduced from 10% to 5%.
# It will reduce the tax liability to 0 with a rebate or 50% of existing liability.
# A zero tax liability for up to Rs 3 lakh.
# All other taxpayers will get benefit of Rs 12,500 for all classes above Rs 5 lakh.
Q. What is Tax rebate?
# It is the amount refunded to a taxpayer on their income tax if the rebate amount set is lesser than the tax they are supposed to pay.
Q. How it works?
# The rebate is available on the income tax before adding education and secondary and higher education cess.
Q. Who is eligible?
# Only an individual assessee is eligible for this rebate and such an individual should be resident of India.
Q. What had happened in last year's budget?
# Finance Minister Arun Jaitley had announced an increase in tax rebate given for individuals who have a net income equal to or less than Rs 5 lakh.
Q. What it means
# Falling under section 87A of the Constitution, the amount of rebate was hiked from Rs 2000 to Rs 5000. However, the amount of tax rebate has been reduced by Rs 500 to Rs 4,500.
# This means that under this section, a resident earning upto Rs 5 lakh can either get the full rebate of the income tax they are supposed pay or get Rs 4,500, whichever amount is lower.
Q. What is there for Hindu Undivided Families, and individual?
# Currently, for Hindu Undivided Families (HUFs) and an individual below 60 years of age, income up to Rs 2.5 lakh is exempt from tax.
Q. What is new for the high income group?
# Jaitley announced a 10% surcharge on income between Rs 50 lakh and a continuation of the 15% surcharge on income over Rs 1 crore.
# Tere would be no scrutiny for first time tax payers conducting high value transactions.