lets do some maths: under current system, let a person earns 6 lakhs per annum. He saves 1 lahks under section 80c. He gets tax benefit on 10,000 rupees per month due to HRA exemption (so total 1.2 lakhs per year) Net taxable salary= 6 lakhs- 1 lakhs- 1.2 lakhs = 3.8 lakhs Tax paid on this= 10% from 1.6 to 3 lakh = 14000 20% from 3 to 3.8 lakhs = 16000 =30,000
under new tax code: HRA is not covered under tax limits. So assuming same saving pattern, net taxable salary = 6 lakhs- 1 lakh = 5 lakhs Tax payable= 10% from 1.6 to 5 lakhs = 34,000
So u end up paying more under new tax code.
Now, some people here will jump up n down stating that u can save upto 3 lakhs under the new tax code. If a man earning 6 lakhs per annum has a family to support, how do u expect him to save 3 lakhs per annum? In addition, home loan payment is no more exempted from tax. Even under the 3 lakhs saving bracket, there is no provision for saving under principal paid for home loan.
I dont mind to pay a flat 30% tax, if govt provides the following,
1. Free QUALITY education atleast upto graduation. 2. Free QUALITY medical service. 3. Better roads WITHOUT toll booths. 4. Honest, polite and QUICK response from govt departments. 5. Good employment options based on talent (not be quota) 6. Finally, a good social environment for peaceful living.
Request FM to make Income Tax Act as simple as that anyone can fill his return without a support and feel pride. Put tax on total and raise the tax limits. No exemptions except of retiral benefits.
As per the current taxation system, a person earning Rs.6 Lac as annual salary will only pay around Rs.12,000 as annual tax if he makes proper investment and utilises section 80. But the same person will have to pay Rs.44,000 as tax in the proposed taxation system. In the propsed taxation system, even PF amount is taxable. In the current system, the deduction would be for 1.6 PF (both employee and employer contribution) Rs.1 Lac as per section 80 Rs.9600 for conveyance Rs.10,000 as medical benefits for parents HRA (Upto max 50% of Basic). After all these deductions, a person with Rs.6 Lac pay will have to pay tax only for Rs.1-2 Lac max depending on his investment and that would be a very negligible amount. Jai Ho!
Re: Misleading
by Ramdas Nayak on Aug 19, 2009 09:50 AM
I presume you have reproduced the contents of a rediff article published a few days ago giving the above example. Only Jai Ho was added that too was a straight lift from AR music! Be simple do not complicate things.
Re: Re: Misleading
by teja B on Aug 20, 2009 10:27 AM
whatever it may be."SIMPLE" has has illustrsted rightly.Passing on info is sign of good mentality rather than criticising it.There are other so many who may not know this.
Dear Friends, I have one doubt in my mind that whether principal amount of home loan inclusion is available in Rs. 3.0 Lacs savings in New tax code or not. Pl. advice.
Re: Principal amount of home loan
by asad hgjkf on Aug 19, 2009 07:44 PM
As far as I know, only 4 avenues are available to save in the 3.0 lakhs savings bracket: 1. Pension funds 2. Superannuation funds 3. Insurance 4. PF
The exemption on house loans is likely to be removed.
Re: Principal amount of home loan
by Mahesh Parihar on Aug 19, 2009 09:43 AM
All tax rebates including interest on home loan is included in the 3 Lac savings bracket
New tax slab will definitely bring most of the black money in india to the main stream which will boost the money circulation and actively take part in country's GDP.this is an extreme measure for an economic revolution.another doubt also arise,why this slab is jumped so much? may be swiss bank is getting ready to list all the depositers details if not now or in mere future.Congress had ruled the country for more than 50 years.so naturally congress and their supporting men,would have deposited large amount in swiss bank.Now they may plan to get the money back to india.such flexible tax slab would help them. Regarding the house prices i think the price will go up.though there is no tax advantage for house loan,lot of black money will come play in to the open market,we indians have investing option only in gold or land.we know lot of millioneries are in india,and please note that the home loan interest for rented houses can get tax exempted.so what our black money people will do,they will pump the money and purchase houses and leave for rent. However this is definitely a revoltionary move.
the New IT code is not helpful. It removes all investment options including Housing Loan interst payment, but also seeks to tax the present non taxable allowances like HRA etc. The fact is we will end up almost double the tax what we are paying now. u can write your suggestions to finmin on the new tax code at : directtaxescode-rev@nic.in
