Money saved is money earned. By raising the exemption limit for income tax and adjusting the slabs for payment of different rates, Friday’s budget puts more cash in your pocket in the next fiscal year — particularly if you utilise your investment options to save on tax payment.
The gain could be as high as Rs 54,951 per annum — or nearly Rs 4,600 per month — if you earn Rs 12 lakh a month.
The saving, seen as a proportion of your salary, appears even more attractive if your annual income is Rs 5 lakh. In that case, you save Rs. 36,050 — or about Rs 3,000 per month — enough to pay monthly instalments on a small car.
If your annual income is up to Rs 1.5 lakh, you are totally exempt from tax. The current limit is Rs 1.1 lakh.
The proposed slabs that should take effect from April call for 10 per cent tax on incomes between Rs. 1.5 and Rs. 3 lakh per annum, 20 per cent between Rs. 3 and 5 lakh per annum and 30 per cent on incomes above Rs. 5 lakh a year.
Under existing slabs, 10 per cent tax is levied on incomes up to Rs. 1.5 lakh per annum and incomes up to Rs. 2.5 lakh from there are taxed at 20 per cent.