Dosto kanoon ke haat lambe hote hain, lekin income tax department ke haat toh usse bhi lambe hote hai. Moreover while the law is only looking to catch hold of law-breakers, the income tax department is coming for most of us. And but obviously so- taxes se, sarkar desh ko chalate hai. Especially with all the relief packages being doled out amid the pandemic, the government is relying all the more on citizens being diligent and cooperative with paying their taxes.
While we should all pay our taxes honestly, there is no harm in understanding the tax slabs and trying our best to minimize our tax burden, within guidelines and exemptions given by the government.
What tax slabs have been fixed as per Union Budget 2021? What changes have been made in taxation since the prior budget? Is the old tax regime still in place? What can I do to reduce the amount of tax that I need to pay? These are some of the questions that are very popular during this time.
So let’s dive in!
Shuru karte hai by having a look at the tax slabs for 2021 -2022.
To begin, we have to note that there has been no change to the tax slab rates pertaining to the income tax jo hum sab annually bhar dete hai. They are the same as in 2020 - 2021. Lekin 2020 mein a big change took place, in case aapko yaad hai.
In the union budget of 2020-2021, a unique offer was proposed by the finance minister. Taxpayers could opt for the old tax regime, that offers various exemptions and deductions on taxes payable. Or alternatively, people could opt for the new tax regime and opt for lowered tax rates wherein no exemptions and deductions can be availed of. The choice has been left in the hands of individual taxpayers. For people who habitually forget to do their 80c investments, a second alternative shayad better reh sakta hai. Lekin sach bolu toh, it is not that simple.
For most part, it looks like there can be no absolute consensus on which regime is better overall. All of it seems to depend on the individual’s income slab. For some lower income groups, new regime bahut badiya hai. For the highest income group, the new regime is bad news. For those in between, it depends on their investments and their life situation, for example kya in ke koi loans abhi bhi pay back phase mein hain?
Let us take a closer look at both categories of tax slabs and how they should affect your investment outlook.
For those earning up to Rs 2.5 lakh aapko koi tax nahi bharna hota hai, in both the old regime as well as the new regime. Agar aapke paas koi excess income rehta hai, good on you, you can invest it or splurge it as you like. You need not do any tax saving investments. If you have money to invest you can invest to make your money earn for you instead.
Jin logon ka annual income Rs 2.5 lakh aur Rs 5 lakh ke andar hai, in ko old regime ke hisaab se 5 per cent tax dena hota hai. New regime mein yeh logo ko koi tax nahi dena hota hai. Obviously for those who fall under this specific income group, the new tax regime is a big benefit. Aapko na hi 80c investments pe dyaan dena hai aur na hi koi dusre deductions, because your whole income is tax free. So you can Enjoy your earnings and yes, if you can manage some self control and clock some savings, you need not choose the tax-saving type. You can go with any type of investment that helps your capital grow for you in the long run. Perhaps opt for an SIP or two that are long-term investments.
For those earning between Rs 5 lakh and Rs 7.5 lakh, the tax rate applicable under the new regime is 10 percent, while under the old regime it is 20 percent. Yes that’s right, double. You can do the math and decide which way works out better for you depending on what your income is and what investments you are comfortable with. If you do choose to go with the old tax regime and opt for deductions and exemptions you should ideally try to reduce your tax by investing in ELSS mutual funds. These give you a tax exemption on investments up to Rs 1.5 lakh. But in addition, they can potentially deliver better returns than one would see in an FD or in PPF.
Income tax of 15 percent is payable for citizens earning between Rs 7.5 lakh and Rs 10 lakh per annum under the new tax regime. This rate jumps to 20 percent under the old tax regime. At this tax slab, you should be able to make room for substantial investments. Aapke paas tax-saving investments aur growth-oriented investments dono hona chahiye. Ji tax saving investments are only necessary if you are going with the new regime… lekin at this income, you should be able to save something.
It might also help to look at other areas where one can seek deductions and exemptions to draw a true comparison between the old regime and the new regime for your specific earnings. What about 80D which gives you deductions on mediclaim paid? If you are paying back an education loan that helped you arrive at this salary in the first place, perhaps you can also get a deduction under 80E. Donations to certain funds also get exemptions under 80G. The interest you pay on your home loan makes you entitled to deductions under 80EE.
Jin logon ka annual income Rs 10 lakh aur Rs 12.5 lakh ke andar hai, un ko old regime ke hisaab 30 percent income tax burden tha. Lekin new regime mein, un ko 20 percent tax dene ka option hai. Yeh logon ko hum same advice de denge as the previous group. Sit down and see what all deductions and exemptions you can claim if you went with the old regime. What is your estimated tax liability? Now compare it with your tax liability if you paid a straightforward 20 percent on your income. Kaunse option mein tax kam rahega?
Earlier those earning Rs 12.5 lakh to Rs 15 lakh had to pay the same rate of 30 percent tax as those earning above 15 lakh. However, if these taxpayers opt for the new regime, they can instead reduce their tax burden to 25 percent. Agar aap yeh category mein ho toh previous 2 categories ke logon ke jaise, thoda bahut comparison karne ke liye time nikaal do. Aap kisi tax advisor ka bhi sahaytha le sakte ho.
For those clocking above 15 lakh per annum there has been no change at all in the tax rates applicable. The tax on this income slab remains at 30 per cent. Obviously for this group, it makes much better sense to opt for the old regime and get at least some deductions and exemptions on the huge tax burden that one is under.
To sum up, those who are earning above Rs 5 lakh need to consider their investments carefully. Samajhdaar financial planning ki zaroorat hoti hai, taki aap apna tax burden reduce karein. Alternatively, taxpayers should at least opt for an evaluation on whether the new tax regime or old tax regime will be more profitable for them. They can either sit down and figure out the various deductions applicable to them independently nahi toh tax advisor ka help le sakte hai.
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