As Finance Minister Nirmala Sitharaman prepares to unveil the Union Budget 2022 on February 1, the salaried class is hoping for a rise in the income tax threshold, which has not been raised in many years.
To help taxpayers, the government should enact legislation that expands the ELSS category savings to include fixed incomes rather than only equity schemes, providing investors more alternatives. Many people want to know what the FM thinks about capital gains tax simplicity and consistency.
“For workers, the WFH allowance becoming tax-free, the rise in the standard deduction, and greater tax advantages on housing loans for interest payment and principal repayment will offer some respite in these difficult times,” said experts.
“In terms of tax benefits, repayment of a house loan’s principal amount qualifies for a deduction under section 80C, which has a ceiling of Rs 1.50 lakh per year. Since the same part – 80C – accounts for a variety of other investments such as PPF, PF, and life insurance policies, it becomes difficult for a buyer to profit from this section,” experts noted.
Because the interest portion of a house loan is subject to a limit of Rs 2 lakh per year under section 20(b) of the Income Tax Act, and because home loans are bigger in size, purchasers are unable to take advantage of this benefit. To provide extra tax advantages to purchasers, the government has introduced a few subsections 80EE and 80EEA to the Income Tax Act, however, the volume of loans does not enable buyers to take use of these sub-sections.
In the Union Budget of 2022, dynamic modifications in income-tax slabs and increased refunds under sections 80EE, 80C, 80EEA, and 24(b) of the Income Tax Act may be required.
Here’s how to figure out what tax bracket you’re in and how much you should pay
Union Finance Minister Nirmala Sitharaman will propose the Union Budget 2022-2023 to Parliament on February 1, 2022. Taxpayers await the budget statements linked to income tax slabs with bated breath, as they do every year.
Individual taxpayers are now classified into three categories:
Individuals who are under the age of 60. Both residents and non-residents fall under this group.
Residents who are 60 years old or older but under the age of 80 are considered senior citizens.
Residents who are above the age of 80 are considered super elderly people.
While you wait for the income tax pronouncements in the Budget, here are some facts regarding the present tax slabs:
Individual taxpayers are taxed based on a slab structure in income tax. Various tax rates are set for different categories of income under a slab system. It indicates that when a taxpayer’s income grows, so does the tax rate. This kind of taxation aids the government in establishing progressive and fair taxes.
The central government made no modifications to income tax slabs in the previous budget. The finance minister, on the other hand, adopted a new tax system the year before the previous Budget.
New Tax System
A person may pay reduced tax rates under the new system, but they must forfeit deductions. People might continue to pay tax under the present tax legislation while claiming any available exemptions under the former tax scheme.
There are seven income slabs accessible under the new tax structure.
Individuals earning up to Rs 2.5 lakh per year are excluded from the tax rate.
Individuals earning between Rs 2.5 and Rs 5 lakh per year must pay a 5% tax on their earnings.
People who earn between Rs 5 lakh and Rs 7.5 lakh must pay a 10% tax on their earnings.
Individuals with an annual income of between Rs 7.5 lakh and Rs 10 lakh must pay a 15% tax on their earnings.
Those earning between Rs 10 lakh and Rs 12.5 lakh must pay a 20% tax on their earnings.
Those earning between Rs 12.5 lakh and Rs 15 lakh, on the other hand, must pay a 25% tax on their earnings.
Individuals earning more than Rs 15 lakh must pay a 30% tax on their earnings.
Exemptions under Section 80C are not permitted under this framework. Home loan exemptions, insurance exemptions, and basic deductions are also not included in the new tax system.
Taxation in the Past
According to the previous structure:
Individuals with a total annual income of less than Rs 2.25 lakh are exempt from paying income tax.
Those earning between Rs 2.5 and Rs 5 lakh must pay a 5% income tax on their earnings.
If an individual’s income is between Rs 5 lakh and Rs 10 lakh, he must pay a 20% tax on it.
Those earning more than Rs 10 lakh must pay a 30% tax on their earnings.
Source: Zee News
Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on investment or recommend buying and selling any stock.