Income Tax Salary-Wise Details: How to Calculate Tax for Salaries Over ₹12.75 Lakh Finance Minister Nirmala Sitharaman Announces Tax Cuts for Middle Class in Union Budget
Income Tax Salary-Wise Details: How to Calculate Tax for Salaries Over ₹12.75 Lakh
Finance Minister Nirmala Sitharaman recently unveiled tax cuts for the middle class during her eighth consecutive Union Budget presentation. For those earning an annual salary exceeding ₹12.75 lakh, understanding the nuances of income tax calculation is crucial.
Understanding the Tax Slabs
Under the new tax regime, the income tax slabs are structured as follows:
– **Income up to ₹2.5 lakh**: Nil
– **Income from ₹2.5 lakh to ₹5 lakh**: 5%
– **Income from ₹5 lakh to ₹10 lakh**: 20%
– **Income above ₹10 lakh**: 30%
For a salary exceeding ₹12.75 lakh, the applicable tax rate will be 30% on the income exceeding ₹10 lakh.
Calculating Income Tax for ₹12.75 Lakh Salary
Let’s break down the tax calculation for an annual salary of ₹12.75 lakh:
1. **Total Income**: ₹12,75,000
2. **Deductions**: Assuming you utilize standard deductions (₹50,000), your taxable income will be ₹12,25,000.
3. **Tax Calculation**:
– Income up to ₹2.5 lakh: ₹0
– Income from ₹2.5 lakh to ₹5 lakh: ₹12,500 (5%)
– Income from ₹5 lakh to ₹10 lakh: ₹1,00,000 (20%)
– Income from ₹10 lakh to ₹12.25 lakh: ₹67,500 (30%)
Total tax: ₹0 + ₹12,500 + ₹1,00,000 + ₹67,500 = ₹1,80,000
Tax Benefits and Deductions
It’s essential to explore available deductions under sections like 80C, 80D, and others to reduce your taxable income. These deductions can further lower your tax liability, making it advantageous to plan your finances effectively.
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In conclusion, with the right understanding of tax slabs and deductions, navigating your tax liabilities can be manageable even for those with a salary over ₹12.75 lakh. Stay informed and optimize your finances today!
