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Your Guide to Income Tax Slabs for FY 2015-16

Income Tax Slabs for FY 2015-16 & Deductions

Early 2015 saw the much awaited announcement regarding the Income Tax slabs for the financial year, i.e. 2015-16. While there is no change in the basic tax rate for individuals, Hindu Undivided Family (HUF) etc., however, a new regulation has been passed in a bid to bring additional focus on ensuring tax compliance and widening the tax base. This regulation will clamp down on those concealing or furnishing inaccurate details pertaining to foreign income and/ or assets. Being non-compoundable and prosecutable, the penalty is now much higher for defaulters.

Let’s take a quick look at some of the more prominent features of the new tax slabs:

  • By investing in the new pension scheme under Section 80CCD, your tax deduction now goes up to Rs. 1,50,000, with the limit being raised by Rs. 50,000 in a bid to promote social security.
  • Health insurance also sees a boost, with the tax deduction limit now at Rs. 25,000 compared to the previous Rs.15,000 under Section 80D. To help foster better health care for the elderly, the limit for senior citizens is now at Rs. 30,000.
  • Super-senior citizens (i.e. those persons above the age of 80) who haven’t availed of health insurance can claim a tax deduction of Rs. 30,000 on medical expenses under Section 80D.
  • For salaried employees, under Section 10(14)(ii), the transport allowance (typically part of the compensation package) exemption limit is now upped to Rs. 1,600 per month, compared to the earlier Rs. 800.
  • There is an increase of 2% in income tax surcharge bringing it to 12%. This means that the super-rich (individuals having an annual taxable income of over Rs. 1.0 crore) will now have to pay more tax. As a result, wealth tax has been abolished effective April 01, 2015. While abolishing wealth tax will mean a loss of Rs. 1008 crore by way of taxes, the relatively easier to administer additional surcharge will bring in about Rs. 9000 crore.

That said; let’s also understand what the tax slabs are all about:

Simply put, higher the tax bracket that you fall into, the higher is your opportunity to save tax. The tax slab varies depending upon the class of taxpayer, i.e. individual/ HUF, senior and super-senior citizen, cooperative society, firm, domestic company etc. To determine a tax slab, you need to consider your net income, i.e. the amount available to you post subtraction of all deductions and exemptions, however including any additional income and un-exempted capital gains.

For an individual resident (both general tax payers and women) of age 60 years or less (born on or after April 01, 1956), the minimum taxable income is Rs. 2.50 lakhs.

Tax Slab for Financial Year 2015 – 16 (Assessment Year 2016 – 17)

For Men/ Women below 60 years of age For Senior Citizens
(Age 60 years or more but less than 80 years)
For Senior Citizens
(Age 80 years or more)
Income Level Tax Rate Income Level Tax Rate Income Level Tax Rate
Rs. 2,50,000 Nil Upto Rs. 3,00,000 Nil Upto Rs. 5,00,000 Nil
Rs. 2,50,001 –
Rs. 5,00,000
10% Rs. 3,00,001 –
Rs. 5,00,000
10% Rs. 5,00,001 –
Rs. 10,00,000
20%
Rs. 5,00,001 –
Rs. 10,00,000
20% Rs. 500,001 –
Rs. 10,00,000
20% Above Rs. 10,00,000 30%
Above Rs. 10,00,000 30% Above Rs. 10,00,000 30%

When filing your returns for Assessment Year 2016-17, do take into account these slabs as per the class you/ your establishment fall under. You can then make an informed decision as to the investments you want to make, in order to save money. Doing so not only helps you as an individual, but also the country’s economy, as you invest through the right channels.

This year, save tax prudently with various tax saving investment options available and make your money work for you.

Learn how to calculate your income tax based on current tax slabs at It’s All About Money.

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