Budget 2022: In the Union Budget 2021, no changes were made regarding the income tax slab. In the budget of the year 2020, two options were provided for filing tax. So tax payers still have two options. Tax payers can choose any one of the two tax slabs.
Out of these two options, one option is old/existing tax slab and the other option is. The new tax slab, which was introduced in Budget 2020. Let us know which tax slab is beneficial for whom, new or old tax slab.
What is the old tax slab
First let us understand what is the old tax slab, the option of which is still available today. According to the tax slab introduced in the budget before the year 2020, there is no tax on income up to Rs 2.5 lakh. Income between Rs 2.5 lakh to Rs 3 lakh is taxed at the rate of 5 per cent. Also, tax exemption of Rs 12,500 is available under U/S 87A. Income from Rs 3 lakh to Rs 5 lakh is also taxed at the rate of 5 per cent. Under U/S 87A, tax exemption of Rs 12,500 is available. Thus, in this tax slab, no tax liability is created by getting tax exemption under 87A up to income up to Rs 5 lakh.
Beyond this, income of Rs 5 to 7.5 lakh is taxed at the rate of 10 per cent. Income of Rs 7.5 to 10 lakh is taxed at the rate of 15 per cent. Income between Rs 10 to 12.50 lakh is taxed at the rate of 20 per cent. Income between Rs 12.5 lakh and Rs 15 lakh is taxed at the rate of 25 per cent. Thereafter, income above Rs 15 lakh is taxed at the rate of 30 per cent.
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What is the new tax slab
In the budget of the year 2020, the rates in the tax slab were reduced, but in this the other tax exemptions available under section 80C were abolished. The new tax slab is divided according to age. Up to 60 years of age, one slab for 60 years to 80 years of age and a slab for super senior citizens above 80 years of age has also been made. There is no tax on income up to Rs 2.5 lakh for 60 years. 5 per cent on 2.5 lakh to 5 lakh, 10 per cent on Rs 5 lakh to Rs 7.5 lakh, 15 per cent on 7.5 to 10 lakh, 20 per cent on 10-12.5 lakh, 25 per cent on Rs 12.5 lakh to 15 lakh and Rs 15 lakh Over and above is taxed at the rate of 30 per cent.
Which tax slab will be better
In both the tax systems, if your income is less than Rs 5 lakh per annum, then you will get an exemption of Rs 12,500. That is, people with taxable income up to Rs 5 lakh will not have to pay any tax. In the new tax system, senior citizens or super senior citizens do not even get more tax exemption, for all the tax exemption limit is only 2.5 lakh rupees.
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The special thing is that the taxpayers can move from the old tax slab to the new slab and they can come back from the new slab to the old slab. However, this exemption is only for certain categories of taxpayers. Employed people can go back to the new slab. Salaried employees can switch tax slabs in every financial year. Those who have income from salary, rent or other sources, they can change the tax slab every time. If you have income from business then you can shift only once. Businessmen once switched cannot come back.
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