What's the new slab of tax exemption?

Forums Budget 2017 What's the new slab of tax exemption?

What's the new slab of tax exemption?

Media says 3-5 lacs attracts 5% tax to begin with but its said 2.5 – 3 lacs are exempted. What do you understand by this ?

Profile photo of Xavier Asked By: Xavier 2 replies 2 helpful answers Last Updated: 5 months, 2 weeks ago
  • Profile photo of XavierXavier
    Participant

    Media says 3-5 lacs attracts 5% tax to begin with but its said 2.5 – 3 lacs are exempted. What do you understand by this ?

  • Profile photo of Neha JoshiNeha Joshi
    Moderator

    Budget 2017 has proposed a change in the tax rates applicable to the slab Rs. 2.5 lakhs to Rs. 5 lakhs from 10% to 5%. Hence now the slab of Rs. 2.5 lakhs to Rs. 5 lakhs will be taxed at the rate of 5%. The rebate u/s 87A is also revised to Rs. 2,500 and is now available to taxpayers with income up to Rs. 3.5. lakhs. This leads to a zero tax liability on an income of Rs 3,00,000.
    Please refer to the calculations below for income tax on an income of Rs 3 lakhs.
    Tax on income up to Rs. 2.5. lakhs – 0
    Tax on income between Rs. 2.5 lakhs to Rs. 3 lakhs – Rs. 50,000 x 5% = Rs. 2,500
    Rebate available u/s 87A on this tax Rs. 2,500
    Hence tax laibility will be = 0

  • Profile photo of Neha JoshiNeha Joshi
    Moderator

    Slabs for tax exemption haven’t changed at all in Budget 2017. The basic slab exempt from tax still remains at Rs. 2.5 lakhs. The only change has been in the rate of tax applicable to the first slab of Rs. 2.5 lakhs to Rs. 5 lakhs. The rate has come down from 10% to 5%.

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