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Budget 2014/2015 – Personal Tax Rates & TDS

The Finance Minister (FM) presented the Interim Budget and introduced Finance Bill 2014 on 17th February 2014.

He has not proposed any changes in the existing Personal Tax (PT) or Tax Deducted at Source (TDS) rates

The PT rates for Financial Year 2014-2015 are going to be as below:

1. Tax Slab for an Individual (resident & below 60 years) or HUF/AOP/BOI/AJP

Income Slabs

Tax Rates

Total income up to Rs. 2 Lac 0% Tax
Total income above Rs. 2 Lac and below Rs.5 Lac 10% on amount exceeding Rs. 2 Lac
Total income above Rs. 5 Lac and below Rs.10 Lac 20% on Income exceeding Rs. 5 Lac + Rs. 30,000
Total income more than Rs. 10 Lac 30% on Income exceeding Rs. 10 Lac + Rs. 1,30,000

* u/s 87A the Individual having taxable income up to Rs. 5 Lac , can claim rebate, on the Actual Tax amount subject to a maximum of Rs.2,000

Where the Taxable Income exceeds Rs. 1 crore, Surcharge @ 10% of Income tax is applicable

2. Tax Slab for an Individual (resident & above 60 years but below 80 years)

Income Slabs

Tax Rates

Total income up to Rs. 2.50 Lac 0% Tax
Total income above Rs. 2.50 Lac and below Rs.5 Lac 10% on amount exceeding Rs. 2.50 Lac
Total income above Rs. 5 Lac and below Rs.10 Lac 20% on Income exceeding Rs. 5 Lac + Rs. 25,000
Total income more than Rs. 10 Lac 30% on Income exceeding Rs. 10 Lac + Rs. 1,25,000

Where the Taxable Income exceeds Rs. 1 crore, Surcharge @ 10% of Income tax is applicable

3. Tax Slab for an Individual (resident & above 80 years)

Income Slabs

Tax Rates

Total income up to Rs. 5 Lac 0% Tax
Total income above Rs. 5 Lac and below Rs.10 Lac 20% on Income exceeding Rs. 5 Lac
Total income more than Rs. 10 Lac 30% on Income exceeding Rs. 10 Lac + Rs. 1 Lac

Where the Taxable Income exceeds Rs. 1 crore, Surcharge @ 10% of Income tax is applicable

Employee with income upto 5 Lacs ? No need to file IT Return for AY 2012-13

CBDT has issued Notification 9/2012 dated Feb 17,2012 which will come as a big relief for employees.

Exemption from filing IT Return

  • Exemption is available for employees having income from
  1. Salaries
  2. Interest from Saving Bank Account upto Rs. 10,000
  • Exemption is available if Total Income does not exceed Rs. 5 Lacs ( Total Income means Gross Total  Income Less Deductions under Chapter VI A)

Conditions

This exemption is not blanket and the following conditions must be fulfilled before this exemption is available

  • Employee must report his PAN to employer
  • Employee must report his income from interest on savings bank account to employer
  • Employee has received Form 16 from his employer
  • Total tax liability of employee has bee paid  off by employer by way of TDS and employer has deposited TDS with central government
  • Employee has no refund claim
  • Employee has received salary only from one  employer
  • Employee has not received any Notice from income tax department for filing of income-tax return

Analysis

  • Though welcome step, it might not benefit many employees.
  • Most of the employees have investment in Fixed Deposits, Debentures, Post Office Saving Schemes and they will earn some interest from these investments. Such employees are not exempt from filing IT Return.
  • Again ,several employees take home loan and submit details of interest on home loan to employers, who factor it while deducting TDS. Such employees are also not exempt from filing IT return as the interest paid on home loan has to be shown under  “Income from house property”
  • Any employee who has earned short term or long term capital gains will also not be exempt from filing IT return