TNN / Updated: Jul 24, 2024, 01:44 IST
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Does this Budget leave you richer or poorer? The answer depends on your income level, which income tax regime you opt for, and how much and where you have invested.n For anybody with annual income of Rs 10 lakh or more, changes made by the FM in tax slabs under the new regime and the enhanced standard deduction mean a net gain of Rs 17,500 annually. Since a reduction in your tax also means health and education cess goes down, you save another Rs 700 (4% of Rs 17,500) to take the total savings to Rs 18,200.
Does this Budget leave you richer or poorer? The answer depends on your income level, which
income tax regime
you opt for, and how much and where you have invested.
- For anybody with annual income of Rs 10 lakh or more, changes made by the FM in
tax slabs under the new regime and the enhancedstandard deduction mean a net gain of Rs 17,500 annually. Since a reduction in your tax also means health and education cess goes down, you save another Rs 700 (4% of Rs 17,500) to take the total savings to Rs 18,200.111969748 - If your annual income is between Rs 50 lakh and Rs 1 crore, you will save Rs 1,750 (10% of 17,500) on
surcharge taking your net savings, including on cess, to Rs 20,020. At incomes of between Rs 1 cr and Rs 2 cr, the 15% surcharge rate means your total savings including surcharge and cess add up to Rs 20,930. Between Rs 2 crore and Rs 5 crore excluding dividends andcapital gains , the 25% surcharge means your total savings add up to Rs 22,750. At the same income level including dividends and capital gains, the surcharge is 15%, so you save Rs 20,930. - The change in standard deduction and tax slabs under the new regime effectively means that if you have an annual income of below Rs 7.75 lakh, your tax liability could be nil. Here’s how that works. Tax is nil till Rs 3 lakh. Between Rs 3 lakh and Rs 7 lakh, the rate is 5%, which means at Rs 7 lakh your liability would be Rs 20,000. But you would be entitled to a Rs 25,000 rebate under Sec 87A, so no tax would actually be due. Add standard deduction of Rs 75,000 and that leaves you free of the taxman till Rs 7.75 lakh.
111969463 - If you have opted for the old I-T regime and intend to stay under it, none of these calculations matter, since nothing has changed under that regime.
- You could on the other hand lose out due to the changes in treatment of capital gains. Short-term gains on equities, for instance, will now be charged at 20% instead of 15%. So, if you gain, say, Rs 2 lakh from buying and selling equity within a year, the tax on the gain will now be Rs 40,000 and not Rs 30,000.
- You could also lose big on sale of property held for over two years. The gains will now be taxed at 12.5% instead of 20%, but you will no longer get an adjustment for inflation over the years. Say, you bought a house for Rs 1 crore five years back and sold it for Rs 1.2 crore now. Under the earlier system the buying price would be adjusted for inflation over five years, which would be around, say, 25%. So the 20% you gained would actually translate into a loss and there would be no capital gains. Now, there will be a Rs 20 lakh gain and hence you’ll have to pay a tax of Rs 2.5 lakh.
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