Budget 2017 has come with usage of technology in the form of digital payments, political funding, and infrastructure. But there is some tangible impact for the common man especially salaried class who has suffered a lot on government’s decision on demonetization.
The budget has come with announcements like taxation, service charges, rebates, revenues, etc. that are implemented from the coming financial year. All these will have impact on tangible and measurable change in how much you pay in taxes and surcharges. Let us take a look at what is going to impact salaried employees:
Revised Tax Slabs
Here comes good news for the salaried employees.
- Individual earning up to Rs. 3 lakh annually will have zero tax liability.
- Further, those who are earning between Rs. 3 lakhs and Rs. 5 lakhs will be taxed at a rate of 5% as compared to the previous rate of 10%. The tax liability will be halved immediately of the employees earning below Rs. 5 lakhs or even lesser, if the benefits are claimed.
- Rebate under section 87A reduced to Rs. 2,500 from the earlier rebate of Rs. 5,000 and shall be applicable to individuals whose total taxable income is less than Rs 3.5 lakh.
National Pension Scheme (NPS) offers tax saving at the time of investment and accumulation, but the withdrawal is taxable (expect for the tax-exempt portion), which means, that NPS defers the tax you have to pay today.
Moving to Cashless Transactions
In order to push for further digitization, the finance minister has imposed restrictions on cash transactions in excess of Rs. 3 lakh. In addition to this, cash donations exceeding Rs. 2,000 to charitable funds or institutions will not be eligible for deduction under section 80G.
Tax Filing Reforms
Now you don’t have to invest much time in filling up the tax form as a new form is being proposed for individuals with taxable income below Rs. 5 lakh. It will help you to understand the amount of tax you will save or pay more depending on your income category.
To promote compliance, it is proposed to charge a fine of Rs. 5,000 for late filing of income-tax returns by Dec. 31 of the assessment year, and Rs. 10,000 in all other cases. But low-income earners with income below Rs. 5 lakh will be charged a fine that would be restricted to Rs. 1,000.
There are definitely some savings on the tax front it is for very low-income strata. However, the middle-income strata (taxable income between 5 – 15 Lakhs) do not have as many benefits. The Government has chosen to allocate more funds towards populist schemes.