The Central Board of Direct Taxes Offers Relief in E-Filing of Income Tax
Hyderabad: Finance Minister Nirmala Sitharaman recently announced that individuals earning up to ₹12 lakh annually will not have to pay any income tax. This declaration is being viewed as a significant benefit for middle-class taxpayers.
However, tax experts caution that the full implications of this announcement will only become clear once the bill is introduced. Questions remain about how this exemption will work in practice. For instance, if a person earns ₹15 lakh annually, will they only be taxed on the ₹3 lakh exceeding the ₹12 lakh exemption limit?
The answer is likely no. The tax exemption is expected to apply only to individuals with an annual income of ₹12 lakh or less. Those earning higher amounts will still need to follow the standard slab-wise taxation process.
Under this process, a ₹15 lakh annual income would be taxed in segments. The first ₹4 lakh would be tax-free. The next ₹4 lakh (from ₹4-8 lakh) would be taxed at 5%, amounting to ₹20,000. The next ₹4 lakh (from ₹8-12 lakh) would be taxed at 10%, resulting in ₹40,000. Finally, the remaining ₹3 lakh (from ₹12-15 lakh) would fall under the 15% slab, adding ₹45,000 to the tax liability.
In total, the tax liability for someone earning ₹15 lakh annually would amount to ₹1,05,000. However, the exact details and mechanisms will only be confirmed when the government introduces the bill in the coming weeks.
