But the announcement made by the Finance Minister for the tax payers is a bit complicated. Finance Minister Nirmala Sitharaman announced that there will be no tax on income up to Rs 7 lakh. But in reality this change has been made in the new tax regime. While no change has been made in the old tax regime.

The government promoting the new tax regime,

if you have already claimed income tax exemption under the old tax regime, then you have not benefited in any way. But if you have claimed till the financial year 2022 under the new tax regime, then you will get a direct benefit. That is, the benefit of this tax regime will be for those with higher salary. The Finance Minister said during the budget speech that now the default new tax regime will remain. Actually, the new tax regime is being promoted continuously by the government, under which this change has been made.

Understand the old tax regime

if you have selected the boy default new tax regime, then it will be heavy on your pocket and you will have to pay tax accordingly. You cannot claim any kind of tax exemption in the new tax regime. Whereas in the old tax regime, Rs 2 lakh can be claimed under 80C and NPS, Rs 2 lakh on home loan interest, medical insurance of Rs 25,000 under 80D and checkup of Rs 5,000. Apart from this, you can claim medical insurance premium of up to 50 thousand for senior citizens. Apart from this, standard deduction of 50 thousand rupees is also available in it. That is, you do not have to pay any tax on income up to Rs 10 lakh in this.

Understand the change of the new tax regime

the benefit of selecting the new tax regime will be only for those people whose annual income is up to Rs 7 lakh. You will have to pay tax as soon as you go above this. That is, if you have bought your own house and invest in a savings scheme, then the old regime is still beneficial for you. The Finance Minister has said that no tax will be levied on income up to Rs 7 lakh. But if your income is more than 7 lakhs, then you will not have to pay any kind of tax up to three lakh rupees. From three to six lakhs you will have to pay 5 percent tax and from 6 to 9 lakhs you will have to pay 10 percent tax.

Now this will be the tax calculation in the new tax regime

On income up to 0 to 3 lakh – zero tax
Income from 3 to 6 lakhs – 5% tax
Income from 6 lakh to 9 lakh – 10% tax
9 lakh to 12 lakh-15% tax
12 lakh to 15 lakh – 20% tax
30% income tax on above 15 lakhs

Old tax regime

Income up to 2.5 lakh – zero tax
Income from 2.5 lakh to 5 lakh – 5% tax
Income from 5 lakh to 10 lakh – 20% tax
Income from 10 lakh to 20 lakh – 30% tax
Income above 20 lakh – 30% tax

According to the Finance Minister, this time when you will pay income tax through the Income Tax website, you will get boy default new regime selected from old and new tax regime. Earlier, the old tax regime boy was selected by default. Here you have to be careful in the selection of tax regime.

If your income is more than 7 lakhs and you invest in different schemes, then you will have to continue the old tax regime. If you have left the new tax regime selected here, then you will have to pay heavy tax.

The post Big news for Tax Payers! You will not get tax exemption of up to 7 lakhs due to this one mistake of yours! first appeared on Rightsofemployees.com.

If you are planning to make a fixed deposit to meet your child’s better future and related needs. But confused about whether the interest earned every year on FD will be taxed? Since the interest on FD is available after the entire tenure. If you want, you can take a certificate from the bank every year. Income options need to be evaluated on various grounds to reduce the tax liability.

A taxpayer has the option to present his income in two ways, either on cash basis or on two other basis, viz., profit from business and profession and profit from other mode. Tax deduction on bank deposits is generally allowed on income from other sources.

have to adopt these options

Since the fixed deposit is being made in the name of your minor son, the income earned from the FD during his minor son will be clubbed with your income till he attains majority. But if you are following cash basis for interest income then the interest will be added to your child’s income at the time of maturity of the fixed deposit when he becomes an adult. Keep in mind that the method adopted once has to be followed continuously year after year.

To ensure that the interest for the entire years is taxable in the hands of your child at the time of maturity. For this, the original tenure of the FD should be till he attains majority. If the tenure of the FD is less than that and the fixed deposit gets renewed during the tenure of your son’s minor, then the interest on such FD should be added to your income as the interest is deemed to have been received by you. Hence, you need to evaluate the income options on different basis to reduce the tax liability.

Let us tell you that the earning from FD is Income Tax The returns are added to your total income every year. If the bank does not deduct TDS on FD interest, then the interest earned is added to your total earnings and tax is calculated accordingly. Always keep in mind that every year the interest earned should be shown in the ITR and not wait for the maturity of the FD.

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The process of filing income tax return has started from July 15. If you have not yet filed your tax, then fill it immediately. Meanwhile, the government has also made it clear that now the deadline for filing income tax returns will not be extended. That is, only a few days are left for the last date to come. On the other hand, if you file ITR after this, then you will have to pay a penalty. Let us tell you that this time some people will also get an additional exemption of Rs 2.5 lakh in filing ITR. Come on, how are you Janet?

Tax slab starts from 2.5 lakhs 

It is worth noting that generally people below 60 years of age fall in the tax bracket if their annual income is more than 2.5 lakhs. That is, if their income is more than 2.5 lakhs annually, then they start getting tax. In general, 5 percent tax is deducted on Rs 2.5 lakh to 5 lakh per annum.

Who and how will get the extra discount?

Now let’s talk about who and how will get extra discount? Senior citizens, whose age is between 60 years and 80 years, also have to pay tax. But for people in the age group of 60 to 80 years, the tax bracket starts when there is an annual income of Rs 3 lakh. Accordingly, these people will have to pay tax after earning an annual income of Rs 3 lakh. That is, these people get an extra discount of 50 thousand rupees.

How to get extra discount of Rs 2.5 lakh?

Apart from this, some people have also been kept in the category of Very Senior Citizen, that is, those who are above 80 years of age have also been given extra exemption in filing tax. That is, people with such Very Senior Citizen category come in the tax bracket only if they have an annual income of more than five lakhs. Now according to this, these people get an additional exemption of 2.5 lakhs as compared to the ordinary taxpayer.

The post Income Tax Slab: 2.5 lakh exemption will be available if you fill ITR, tax calculation will be done after 5 lakh, know how first appeared on Rightsofemployees.com.