The Finance Ministry formulated the fundamental tax rule in Budget 2020 to give taxpayers proper relief. The Income tax rates have been cut in India, and the income tax slab has been revamped for taxpayers who will abstain from exemptions and deductions.
If you make an income of 1 lakh or more in a year, you must pay income tax on that specific earning. The new income tax salary slab for 2022 is one crore INR. Thus, you need to reimburse income tax at the 40% marginal rate for income between 1 crore to 5 crore INR. For five crore INR to 10 crore INR, you should give income tax at a 30% marginal rate. Additionally, for ten crores INR, you must render income tax at the 20% marginal rate.
These income tax returns are valid to all the taxpayers who earn wages in India in any financial year comprising self-employed individuals who are the owner of an enterprise holding incomes above two crores in any financial year.
There are a few exemptions to these new income tax rates: ex-pats (incorporating armed forces members) who are residing outside India for over 182 days during the prior 12 months need not pay income tax, reliant pensioners(those availing pension from a government unit apart from their employer or whose pension comes from an annuity or a retirement fund), or disable people are off the hook from paying tax on every income(excluding their wife's income if they file mutually).
About 80% of middle-class Indian taxpayers have abstracted tax at 9.9% since 1996. Upper-middle-class Indian taxpayers with income tax returns above ₹ one crore decreased their regular deductions to 90%.
What Exemptions and Deductions are eliminated in the new income tax slab?
The taxpayers are given a choice to either endure the old regime or prefer a new regime. If you go for a new income tax salary slab, then you will be deprived of securing any exemptions and deductions as stated below:
- Leave Travel Allowances (LTAs) are mentioned in Clause 5section 10 of the Income Tax Act 1961
- Housing Rent Allowances (HRAs) cited in clause 13 A of section 10
- Deductions till Rs 1 50 000 (under section 80 C for investments toward the provident fund, insurance premium, housing loan, principal repayment, etc.)
- The professional tax deduction on salary under section 16
- The standard deduction of 50,000 INR under section 16 for income tax filing
- Deduction of Interest under section 24 regarding self-occupied or vacant property stated in sub-section 2 of section 23 (Loss under income from the house property for a borrowed house)
- Any deduction which holds under Chapter VI-A
- Other exemptions/ deductions as approved from time to time
What would be the annual income tax on salary of eight lakhs per annum in India as per the 2022 budget?
As per the budget, the income tax return rate with a salary of 8 lakhs INR or more will be 10%. This indicates that you must pay relevant income tax on this salary.
There are other aspects to consider for income tax on salary of 8 lakhs INR in 2022 in India.
Primarily, zero income tax will be limited to 30 lakhs INR according to a novel set of income tax rates. So, regardless of your salary, you must not pay income taxes if your net taxable income is less than 30 lakhs INR.
Remember that it is just a discussion for the base salary, i.e., without considering benefits. After exclusion, you will obtain a 5% education cess on the net taxable amount at source (NTA-SS) and over 1 lakh INR at NTA-PAT = Nil Net Taxable Income (Nti).
What is the income Tax on salary of 10 Lakhs INR annually in India according to the 2022 Budget?
The income tax on salary of 10 lakhs INR per annum in India, according to the 2022 budget, is 140000 monthly. This factor implies that if you earn a salary of 10 lakhs INR per annum, you must pay 40% of your salary as income tax.
This income tax salary slab is universal irrespective of whether you are self-employed or an employee. You also need to pay the GST on this income, and the GST rate for salaries is approximately 18%.
You can assert many deductions to decrease your taxable income. These contain deductions for medical and education expenditures and employer contributions toward social security systems schemes like NSC and EPF.
If you are in a circumstance where your anticipated taxable income is more than your actual income, you can quickly go for an income tax return filing waiver application with the Income Tax Department. This facet will enable you to avoid paying any taxes on the surplus amount.
How can you save tax if your salary is less than ten lakhs?
- If you have a salary of fewer than ten lakhs, you can choose an old Income tax regime and should try to lower the tax burden by executing the following:
- Make 80 C limit of Rs 1,50,000
- Alleviate medical expenses, invest more in health insurance and obtain a deduction
- Affirm for home loan interest
- You will acquire the Supplementary tax benefit if you are the NPS contributor.
- Gain a standard deduction if you are a remunerated person.
The Bottom Line
The income tax varies on several factors, be it your financial circumstance or your employer's taxable income. However, if your salary of 8 lakhs and ten lakhs INR per annum, then you need to pay 10% and 40% income tax on your earnings. Per the novel income tax salary slab, post-budget 2022, 20% of your taxable income is accountable for the tax deduction. Thus, one can select the deductions or save them in the old tax regime.
If you have any queries about the functionality of Income tax, then you can reach out to Lawgical India. Our advisors would guide you properly for the procedure and make you aware of the latest norms.
