Under the brand new tax regime, taxpayers can avail decrease tax charges if they’re prepared to forego exemptions
The authorities has now introduced in amendments to the Finance Bill 2023, which has given ‘marginal aid’ to these taxpayers with annual earnings a little bit over Rs 7 lakh
Even because the Budget 2023 exempted people with earnings as much as Rs 7 lakh from earnings tax, the Finance Bill 2023 has given additional aid to particular person taxpayers by offering a marginal aid. With this, these having earnings within the vary of Rs 7,00,001-Rs 7,29,000 will likely be handled at par with the individual having an earnings of as much as Rs 7 lakh, thus no tax payable.
Explaining the availability, the finance ministry stated beneath the brand new tax regime with impact from April 1, if a taxpayer has annual earnings of Rs 7 lakh s/he pays no tax. But if s/he has earnings of Rs 7,00,100 s/he pays tax of 25,010.
Thus a further earnings of Rs 100 results in a tax of Rs 25,010.
Hence, marginal aid is proposed to that in order that the tax what one pays shouldn’t be greater than the earnings that exceeds Rs 7 lakh (Rs 100 on this case), the ministry stated.
Nangia Andersen LLP Partner Sandeep Jhunjhunwala stated the modification to Finance Bill seeks to offer a marginal aid to particular person taxpayers having borderline earnings by proposing a deduction of earnings tax payable in extra of the differential earnings above Rs 7 Lakh.
“Working out the maths, a person having earnings as much as (approx.) INR 7,27,700 might stand to profit from this marginal aid,” Jhunjhunwala added.
The budget 2023-24 had announced the tax rebate whereby no tax would be levied on those with annual income of up to Rs 7 lakh under the new tax regime. The move which experts felt was a push for salaried class taxpayer to switch to new tax regime where no exemptions on investments is provided.
Under the new tax regime, taxpayers can avail lower tax rates if they are willing to forego exemptions
Under the revamped new tax regime, no tax would be levied for income up to Rs 3 lakh. Income between Rs 3-6 lakh would be taxed at 5 per cent; Rs 6-9 lakh at 10 per cent, Rs 9-12 lakh at 15 per cent, Rs 12-15 lakh at 20 per cent and income of Rs 15 lakh and above will be taxed at 30 per cent. Further, a Rs 50,000 standard deduction was allowed under the new regime.
Now the government has brought in amendments to the Finance Bill 2023, which has given ‘marginal relief’ to those taxpayers with annual income a little over Rs 7 lakh.
Although the government has not specified the threshold income which would be eligible for marginal relief, tax experts said as per computation, individual taxpayers with income of Rs 7,27,777 would be benefited by this relief.
(With Inputs From PTI)
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