How the budget affects your Income Tax

* Earlier income up to Rs 5 lakh per annum was tax free. Now it has gone up to Rs 7 lakh (New Regime)

* Earlier income up to Rs 2.5 lakh per annum was tax free. Now it has gone up to Rs 3 lakh. (Old Regime)

The New Regime 

Rs 25,000 tax will be levied on an income of Rs 7 lakh. However, this Rs 25,000 tax becomes nil due to the exemption available under section 87A. Apart from this, there is also a standard deduction of Rs 50,000 and an exemption on professional tax of Rs 2,500.

If your income is Rs 7 lakh rupees, only then you will get exemption under 87A. If the income is Rs 7 lakh 1000 then you will have to pay tax of Rs 25,100. There will be a surcharge at the rate of 4% on this. this. Along with this Rs 50,000 Standard Deduction and Rs 2500 Professional Tax exemption will also be available.

The Old Regime

In this, income up to Rs 5 lakh is tax free. After that there is tax. For a person earning Rs 7 lakh, with a standard deduction of 52,500 and professional tax, if he invests Rs 1,50,000 in instruments or schemes under section 80C, then he will also not have to pay any tax.

What is section 87-A

Under this, till now people with net income up to Rs 5 lakh could claim tax exemption under Section 87A of the Income Tax Act. This is only for individual ITR filers.

What is Section 80-C

In the old tax system, a person can claim tax deduction of up to Rs 1.5 lakh under the total income. Under Section 80C, expenses like children's education, insurance and house rent or loan are exempted.

-Rajesh Jain, CA

Published on: Thursday, February 02, 2023, 03:43 PM IST