Income tax rules: In this year’s budget, the limit of income tax exemption including rebate has been increased to Rs 12 lakh. Under this, in the new tax regime, you will not have to pay any income tax on your taxable income up to Rs 12 lakh.
Income tax: In this year’s budget, the limit of income tax exemption including rebate has been increased to Rs 12 lakh. Under this, in the new tax regime, you will not have to pay any income tax on your taxable income up to Rs 12 lakh. Apart from this, every employed person will also get a standard deduction of Rs 75 thousand.
Now the question arises here that what if the income is more than Rs 12.75 lakh? Will there be a tax of Rs 60,000 directly if the income is even one rupee more? Let us understand what is the income tax rule, due to which Chartered Accountants i.e. CAs save a lot of tax. Also, let us know the calculation of income tax.
So what does the income tax rule say?
If someone’s income exceeds the income tax exemption limit, then margin relief is also considered while calculating tax. The more your salary is above the tax exemption limit, the more tax you will have to pay either less or at the most equal to it.
Let’s understand with an example
Suppose your salary is Rs 12 lakh 1. In such a situation, your salary is Rs 1 more than the income tax exemption limit, so your entire income will not be tax free, but you will be taxed. If seen, tax of Rs 60 thousand is due on such a salary, but your salary is only Rs 1 more than the tax exemption limit. In such a situation, the maximum tax levied on you can be only Rs 1. That is, you will get a margin relief of Rs 59,999.
So how much tax will have to be paid on how much income?
If your taxable income is Rs 12,10,000 after taking standard deduction of Rs 75,000, then your total tax will be Rs 61,500. In such a situation, you will get a margin relief of Rs 51,500, after which your tax will become Rs 10,000.
If your taxable income is Rs 12,50,000 after taking standard deduction of Rs 75,000, then your total tax will be Rs 67,500. On this, you will get a margin relief of Rs 17,500 and you will have to pay a tax of Rs 50,000.
If your taxable income is Rs 12,70,000 after taking standard deduction of Rs 75,000, then your total tax will be Rs 70,500, on which you will get a margin relief of Rs 500. In this way, you will have to pay tax of Rs 70,000.
On the other hand, if after taking standard deduction of Rs 75,000, your taxable income is Rs 12,75,000, then your total tax will be Rs 71,250, on which no margin relief will be available and you will have to pay the full tax.
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