Tuesday, March 26, 2013

Whom does the Rs. 2000/- tax credit help?

In this year's budget, the tax slabs are unchanged and Rs. 2000/- tax credit has been introduced. The tax slabs as such remain the same

For both Men and Women in India,

Income                       - Tax slab
upto 2 Lakhs              - Nil
2-5 Lakhs                  - 10%
5-10 Lakhs                - 20%
Above 10 Lakhs        - 30%

This Rs. 2000/- tax credit is not for all the tax-payers. It benefits 1.8 crore people in the income group of 2-5 lakhs. Essentially people who are getting less than 2 Lakhs (tax would anyway be NIL) and more than 5 Lakhs have their tax rates unchanged without any tax credit. For those who are under 2 Lakhs will not be credited Rs. 2000/-

The individuals less than 60 years of age will be paying Rs.2000/- lesser if their income is between 2.2 and 5 lakhs. If they are earning more than 2 lakhs and less than 2.2 lakhs, there will be no tax for them.
Similarly for the senior citizens, if their income is between 2.7 and 5 lakhs, they can reduce their tax liability by Rs. 2000/- before paying their tax. If their income is between 2.5 and 2.7 lakhs, they don't have to pay any tax.

Please note that, submitting Income tax return is mandatory for everyone. Even if you have completely paid the tax liable, it is necessary to submit your returns separately. Also, if you are not liable to pay any tax and have some income less than the taxable income, then also its necessary to submit the tax return.

Let me know your thoughts.

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