Budget FY 2017-18 – Tax on Salary

Budget FY 2017-18 – Tax on Salary

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Budget FY 2017-18 – Tax on Salary

The Union Finances for FY 2017-18 was tabled within the Parliament by the Finance Minister of India on 01-Feb-2017. Listed here are the important thing proposals associated to computation of tax on wage which payroll managers want to think about for FY 2017-18.

1. A change within the tax fee.

The tax fee for the Rs 2,50,001 to Rs 5,00,000 wage slab modifications from 10% to five%. The charges for the opposite wage slabs stay the identical.

The tax charges (for FY 2017-18) for salaried staff under 60 years of age are as follows.

Complete Revenue for the Yr in Rs Tax Price in %
As much as 2,50,000 Nil
2,50,001 to five,00,000 5
5,00,001 to 10,00,000 20
Above 10,00,000 30

The tax charges (for FY 2017-18) for salaried staff aged 60 years and above however under 80 years are as follows.

Complete Revenue for the Yr in Rs Tax Fee in %
As much as three,00,000 Nil
three,00,001 to five,00,000 5
5,00,001 to 10,00,000 20
Above 10,00,000 30

Observe:
1. The Schooling cess together with Larger Schooling cess stays at three%.

2. Tax aid beneath Part 87A

The tax credit score beneath Part 87A has been decreased to Rs 2,500 for FY 2017-18 (from Rs 5,000 for FY 2016-17) if the full revenue doesn't exceed Rs three.5 lakh (lowered from Rs 5 lakh for FY 2016-17) for the yr. Which means there shall be no tax payable as much as a taxable wage of Rs three lakh every year.

three. A brand new surcharge

In case the entire taxable revenue for the yr goes past Rs 50 lakh (however is lower than or equal to Rs 1 crore) within the yr, a surcharge of 10% (topic to marginal relief) on the revenue tax is to be deducted – there was no equal surcharge in FY 2016-17.

In case the entire taxable revenue for the yr goes past Rs 1 crore within the yr, a surcharge of 15% (topic to marginal relief) on the revenue tax is to be deducted – the surcharge was 15% in FY 2016-17 too.

four. Restriction of housing mortgage curiosity profit.

In FY 2016-17, the utmost curiosity (on housing mortgage) profit one might get on self-occupied property was Rs 2 lakh whereas for let-out property there was no ceiling on the curiosity profit so long as the worker declared the lease (acquired or deemed to be acquired) as revenue from home property. For instance, let assume that an worker owned 2 properties – one self-occupied and the opposite let-out.

1. If the worker’s curiosity payable on the self-occupied property was Rs 2 lakh, the profit out there on the self-occupied property was Rs 2 lakh.

2. If the worker’s curiosity payable on housing mortgage for the let-out property was Rs 6 lakh and he acquired Rs three lakh as lease, the profit obtainable on the let-out property was Rs three lakh.

In complete, the worker might set-off the lack of Rs 5 lakh (Rs 2 lakh from self-occupied property and Rs three lakh from let-out property) towards his wage, thereby decreasing his taxable wage.

As per the 2017 price range, in FY 2017-18, the utmost curiosity profit obtainable on home property shall be restricted to Rs 2 lakh, regardless of the variety of home properties owned.

Within the above instance, the worker can set-off solely Rs 2 lakh (even after contemplating each the properties) towards his wage within the yr FY 2017-18.

It might be famous that the unused profit (past Rs 2 lakh) may be carried ahead to subsequent years as much as eight years and set off towards home property revenue in subsequent years.

This modification is more likely to improve the tax legal responsibility of many staff (particularly people who draw a excessive wage) who've been claiming housing mortgage curiosity profit on a number of home properties up to now.

5. Phasing out of Rajiv Gandhi Fairness Financial savings Scheme.

At present, underneath Part 80CCG, staff who've invested in listed fairness shares or models in fairness oriented funds can declare deduction of 50% of quantity invested to the extent such deduction doesn't exceed Rs 25,000 for 3 consecutive years (topic to sure circumstances).

From FY 2017-18, no recent deduction underneath the scheme may be claimed. Nevertheless, those that have invested and claimed deduction earlier can proceed to say deduction for the subsequent 2 years, till 31-Mar-2019, topic to circumstances.

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