The only tax guide you need

Brut India

If you earn up to Rs. 7 lakh, you don't have to pay taxes. But what if you earn Rs. 8 lakh? This CFA breaks down the new tax regime.

Transcript

00:00The new tax rates are

00:02The first question that we ask is

00:04How much tax will be left?

00:08Let me remind you that tax slabs

00:10are progressive taxes. Pure salary

00:12would be broken down into the tax

00:14slabs and each slab would be

00:16taxed accordingly. Persons in the new

00:18tax regime with income

00:20up to 7 lakhs will not

00:22have to pay any tax at all

00:24How is that possible if the

00:26income tax slab from 3 to

00:286 lakhs per annum is at 5%

00:32The first 3 lakhs of the

00:347 lakhs is taxed at 0%

00:36which means 0 tax liability

00:38The next 3 lakhs would be taxed

00:40at 5% leading to a

00:4215,000 in tax liability

00:44Final amount left is 1 lakh

00:46out of the 7 lakhs which will be taxed

00:48at 10%. So that tax liability

00:50is 10,000. The total is

00:5215,000 plus 10,000 which is

00:5425,000. And here comes

00:56the section 87A

00:58which becomes applicable and your

01:00entire tax liability becomes 0

01:04But what about if I earn 8 lakhs

01:06per annum? Will I still get the

01:0887A deduction?

01:10The answer is no. Your tax

01:12liability at 8 lakhs would be

01:140 plus 15,000

01:16plus 25,000 which is

01:1835,000

01:21An individual with an

01:23annual income of 9 lakhs

01:25will be required to pay

01:27only 45,000 rupees

01:29From 0 to 3 lakhs you are

01:31paying no taxes. For the

01:33next 3 lakhs you are paying

01:355% which is 15,000

01:37For the next 3 lakhs you are

01:39paying 10,000 because it

01:41falls under the 6 to 9

01:43So that makes your total tax

01:45liability to be 0 plus

01:4715,000 plus 30,000

01:50which is 45,000 as indicated

01:52in the budget

01:54But now you will say

01:56Shivi, if I take all these

01:58exemptions, ATC, HRA etc.

02:00in the old tax regime, my tax

02:02liability is going to be exactly

02:04the same or almost the same

02:06And you will be exactly right

02:08We are also making the new income

02:10tax regime as the default tax

02:12regime. However,

02:14citizens will continue to have

02:16the option to avail the benefit

02:18of the old tax regime

02:20See, looking at the big picture,

02:22the big government has to ensure

02:24that the tax revenue collection

02:26is adequate. They also

02:28want to incentivize people to

02:30pay taxes on time and incentivize

02:32them to actually pay the taxes

02:34so they don't evade taxes

02:38Provide more liquidity in the

02:40hands of the taxpayers. And now

02:42I am more likely to go and

02:44buy movie tickets and buy popcorn

02:46And hence contributing more

02:48to the economic growth

02:50Increasing disposable incomes in the

02:52hands of the masses is one of the

02:54classic levers used by the government

02:56to spur economic development

03:00I propose to reduce

03:02the highest surcharge rate

03:04from 37%

03:06to 25%

03:08Because if the taxes for high net

03:10worth individuals is too high

03:12they are more likely to take their

03:14businesses elsewhere or evade taxes

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