personal taxation

8/10/2019 Personal Taxation

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Income Tax Rates and Slabs* applicable for the FY 2014-15 or AY 2015-16

For Men below 60 years of

age

For Senior Citizens (Age 60

years or more but less than 80

years)

For Senior Citizens (Age

80 years or more)

Income Level Tax Rate Income Level Tax Rate Income LevelTaxRate

Rs. 2,50,000 Nil Upto Rs. 3,00,000 NilUpto Rs.5,00,000

Nil

Rs. 2,50,001 -

Rs. 500,00010%

Rs. 3,00,001 - Rs.

500,00010%

Rs. 5,00,001 -

Rs. 10,00,00020%

Rs. 500,001 -

Rs. 10,00,00020%

Rs. 500,001 - Rs.

10,00,00020%

Above Rs.

10,00,00030%

Above Rs.10,00,000

30% Above Rs.10,00,000

30%

A tax rebate of Rs 2,000 from tax calculated will be available for people having an annualincome up to Rs 5 lakh. However, this benefit of Rs 2,000 tax credit will not be available if you

cross the income range of Rs 5 lakh. Thus we can say that tax payable in 10% slab will be

maximum Rs28,000 (taking into account Rs 2000 tax credit), but for people who fall in income

range of Rs5 lakh and above, the tax will be Rs30,000 + 20% tax on income above Rs 5 lakh;

The education cess to continue at 3 percent

Surcharge of 10% will be payable, if income is above Rs 1 crore


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Tax Saving Menu/ Income Tax Deductions and Exemptions

Under Section 80C

Investment and expense under any of the Section 80C heads will reduce your tax outgo

Instruments Tenure

(Yrs)

Return

(%)

Features

Employee Provident Fund TillRetirement

8.75* Highest tax-free assured return

Public Provident Fund 15 8.70* Maximum limit of Rs. 1.50 lakh a year for self,

spouse and minor children

Notified Bank Tax Saving

Deposit

5 Around

8.50 #

Interest payable monthly or quarterly.

Partial/permanent withdrawal and loans not

allowed

National Savings Certificate 5 & 10 8.50/8.80 Rs.100 becomes Rs.151.62 and Rs.236.60 onmaturity

Post Office time deposits 5 8.40 Annual interest can be credited to savings or

recurring deposit account

Senior Citizens Savings Scheme 5 9.20 After age 60. VRS takers-after age 55Equity-linked Savings Scheme Min. 3 Market

linked

Potential to deliver highest inflation-adjusted

return

Unit-linked Insurance Plan Min. 5 Market

linked

Potential to deliver higher return in the long

term

New Pension Scheme Till

Retirement

Market

linked

Low cost pension scheme, you can also choose

investment options and fund manager

Principal Repaid on home loans - - Principal portion of EMI in a year qualifies for

deduction. Even additional repayments qualify

Tuition Fees - - Only tuition fees qualify for two children

(items like school development fees excluded).

No upper limit

Insurance Plans Min: 10 Marketlinked

Savings need to be made during accumulationperiod. Pension from vesting age, for lifetime.

* Fixed by government every year # 0.5 per cent more for Senior Citizens

The most important aspect that needs to be kept in mind is that the total exemption limit

under section 80c is revised from Rs 1 lakh to Rs 1.50 lakh in the budget presented by Finance

Minister Arun Jaitley on July 10th 2014.


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Non-80 C Tax Savings

Section Available on How much deductible

80 CCG Rajiv Gandhi Equity Savings Scheme(RGESS)

The maximum amount eligible for claiming benefitunder RGESS is Rs.50000. Deduction under

Section 80 CCG, is available on 50% of the amount

invested

80D Individual health Cover, family

floater, critical illness or health cover

rider. Cancer, diabetes and otherhealth plans of life insurers quality

Up to Rs.15000 for self and family. Additional

Rs.15000 for parents. Rs.20000 for each member, if

insured are senior citizens

24B Interest payments on home loans Up to Rs.1.50 lakh a year for self-occupied house.

No cap on loan for house that is not self-occupied

80E Interest paid on education loan Actual interest paidIn addition to above there are certain other non-80 C deductions such as Section 80 DD (expenses on medical

treatment of disabled dependent); Section DDB (expenses on treatment of specified diseases, including cancer,

AIDS and neurological ailments) and 80 G (donations to certain funds and charitable institutions)

An example:

Income Tax Section Gross Annual Salary How Much Tax Can You Save?

Sec. 80C Across all income slabsUpto Rs. 46,350/-saved on investment of Rs.

1,50,000/-

Sec. 80CCC Across all income slabs

Upto Rs.30,900/-saved on Investment of

Rs.1,00,000/-

Sec. 80 D* Across all income slabs

Upto Rs. 10,815/-saved on investment of

Rs.35,000/-

(Inclusive of Rs. 20,000/- towards health

insurance of parents who are senior citizens)

Total Savings

Possible **

Rs. 57,165/-(Rs. 46,350/- under Sec. 80C and Sec. 80CCC and Rs.

10,815/- under Sec. 80D)

Above figures calculated for an individual with gross annual incomeexceeding Rs. 10,00,000/-

Sec. 10 (10)DUnder Sec. 10(10D), the benefits received by you are completely tax-

free, subject to conditions specified there in

* Calculations based on highest tax benefits.** These calculations are illustrative and based on our understandingof current tax legislations. The above-mentioned tax benefits are subject to changes in the tax laws.

Deductions under Section 80CCC - Premiums paid for Pension Plans: Permitted Deduction: Section 80CCC

allows to an individual, tax deduction for amount paid during the financial year out of income chargeable to tax,

towards specified Pension Plan. Maximum deduction allowed is Rs.1,50,000, the overall limit provided under the

Income-tax Act for payments/deposits specified under Section 80C, 80CCC and 80CCD (contribution to pension

scheme of Central Government) in aggregate.


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Switching jobs? Find out how to overcome needless tax complications

13 Oct, 2014

By Shubham Agrawal

It's not uncommon for a 20-something to have worked with three to four employers in as manyyears. However, in the excitement of sifting through jobsbe it for a higher salary, better

prospects, fresh challenges or acquisition of new skillsmost of them ignore their finances and

end up suffering needless complications. The worst casualty of poorfinancial planningistaxation, which is a bugaboo avoided by most employees either due to ignorance or sheer

laziness. Here are the seven most common tax-related issues that are a fall-out of job switches

and how to make sure you don't face the financial consequences.

Impact of multiple Form 16s

Employers usually calculate the tax liability of an individual on the basis of the salary they paid

during a financial year. If you change jobs midstream and do not inform your new employer

about the previous income, be ready for a shock when you file your tax returns. You might haveto cough up additional tax at that stage. This is because both the employers would have factored

in the basic exemption of Rs 2.5 lakh and Section 80Cinvestmentsof Rs 1.5 lakh whilecalculating your tax liability. They would also have given you the benefit of lower tax slabs.

To understand this better, assume that your package is Rs 8 lakh with the first employer and thesecond employer raises it to Rs 10 lakh. The first employer will deduct monthly tax assuming

that your taxable income for the entire year is Rs 4 lakh (after basic exemption of Rs 2.5 lakh and

deduction of Rs 1.5 lakh for Section 80C investments). If you change jobs in October, the second

employer will assume that your taxable income is Rs 1 lakh after a similar exemption anddeduction. So, while your total income for the year is Rs 9 lakh, you would have paid tax for

only Rs 5 lakh, and that too at a lower rate. You can't sweep this under the carpet because thesystem will not give this double benefit when you file your tax returns.

Provident Fund

TheEPFOhas promised that theProvident Fundaccounts will become portable from Octoberthis year. Till this becomes a reality, it is best to transfer your PF balance to the new employer

instead of withdrawing the amount. If you withdraw your PF balance before five years of

continuous service, you will lose the tax benefit availed of on the amount in previous years. Theamount will be taxed as normal income in the year of withdrawal and you might lose a big chunk

of interest earned on your balance to the taxman.

TDS on joining bonus

If you get a joining bonus, but don't serve till the stipulated period, you will be asked to refund

the amount. Don't forget the tax angle if you do this. Your employer must have deducted tax on

the bonus before paying it to you, but when you refund it, you have to pay the entire amount

(including tax) to the employer. Of course, the deducted tax can be claimed when you file yourtax return. Suppose A is offered a joining bonus of Rs 1 lakh, but gets Rs 70,000 after a 30% tax

deduction. If A leaves the job within six months of joining, he has to pay Rs 1 lakh to his

employer, and the Rs 30,000 deducted as tax can be claimed as refund when he files his return.
http://economictimes.indiatimes.com/topic/financial-planninghttp://economictimes.indiatimes.com/topic/financial-planninghttp://economictimes.indiatimes.com/topic/financial-planninghttp://economictimes.indiatimes.com/topic/investmentshttp://economictimes.indiatimes.com/topic/investmentshttp://economictimes.indiatimes.com/topic/investmentshttp://economictimes.indiatimes.com/topic/EPFOhttp://economictimes.indiatimes.com/topic/EPFOhttp://economictimes.indiatimes.com/topic/EPFOhttp://economictimes.indiatimes.com/topic/Provident-Fundhttp://economictimes.indiatimes.com/topic/Provident-Fundhttp://economictimes.indiatimes.com/topic/Provident-Fundhttp://economictimes.indiatimes.com/topic/Provident-Fundhttp://economictimes.indiatimes.com/topic/EPFOhttp://economictimes.indiatimes.com/topic/investmentshttp://economictimes.indiatimes.com/topic/financial-planning


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Leave travel allowance

According to the leave travel allowance (LTA) rules, travel expenses for you and your family

can be claimed for two return journeys in a block of four years. This means that tax exemption

can be claimed only twice, irrespective of the number of companies you were employed with

during those four years. So, you can carry forward unused LTA from your previous employer to

the next within the same block, but must retain the proof of travel to claim LTA.

Avoidtaxation of allowances

If you change your job before the January deadlineto submit documentary proof for claiming

the allowances you are eligible foryour annual house rent and medical or conveyance

allowances could lose the tax-free status. This is because your previous employer will pay italong with the final settlement amount. If you have not submitted rent receipts and bills, the sum

will be taxed as normal income without tax exemption. So, make sure you submit rent receipts

and other documents before you put in your papers. If you fail to give the rent receipt, you can

claim HRA exemption when you file the return.

Tax on overseas incomeIf you are moving to an overseas location, you may choose to withdraw your Provident Fund

after three years. If a PF account is not active for three years, that is, there has been no depositfor 36 months, the EPFO will stop crediting interest. Apart from this, you also need to determine

your residential status for the year in which you make the move. If you move before October

(spending less than 182 days in India), you will be considered a non-resident for the tax year. So,the income earned abroad will not be taxed in India. However, if you are considered a resident

Indian, you will need to pay tax on your overseas income in India. Besides, if India has a double

taxation treaty with the country you are employed in, you can claim credit for the taxes paid

abroad.

Check all documents before you exit

You must have the following documents when you move out of an organisation: payslips, full

and final settlement statement, Form 19 and Form 10C for PF withdrawal, and your ProvidentFund account details, among others. Also, do not forget to ask for your Form 16 at the end of the

financial year.

(The author is, senior taxation advisor, TaxFile.in)

http://economictimes.indiatimes.com/wealth/tax-savers/tax-news/switching-jobs-find-out-how-to-overcome-needless-tax-complications/articleshow/44781871.cms?prtpage=1 October 16, 2-14
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