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Few important income tax rules for individuals which will change from the new financial year.
With the onset of the new financial year, some tax rules for individuals are also going to change.
These changes were proposed by Finance MinisterArun Jaitley in the Budget 2017, and with the passage of the Finance Bill in Lok Sabha recently, these tax proposals have now become law.
The rate of taxation for individual assesses between the income of Rs 2.5 lakh and Rs 5 lakh will from the next financial year get reduced to 5% from the present 10%.
This would reduce the tax liability of all persons below Rs 5 lakh income either to zero (with rebate) or 50% of their existing liability, while all the other categories of taxpayers in the subsequent slabs will get a uniform benefit of Rs 12,500 per person.
With a view to avoiding duplication of benefits, Finance Minister Arun Jaitley in the Budget 2017 proposed to reduce the benefit of tax rebate from the existing 5000 to Rs 2500 for assesses with total income up to Rs 3.5 lakh. This means that there will be zero tax liability for individuals with income up to Rs 3 lakh per annum, while the tax liability will be Rs 2500 for those with income between Rs 3 and Rs 3.5 lakh.
A surcharge of 10% of tax payable on categories of individuals whose annual taxable income is between Rs. 50 lakh and Rs 1 crore will be levied. The existing surcharge of 15% of tax on people earning more than 1 crore will continue.
For filing income tax return, the Income Tax Department will be introducing a one-page form for those having taxable income of up to Rs 5 lakh, other than business income. Also, a person filing an I-T return for the first time under this category would not be subjected to any scrutiny in the first year unless there is specific information available with the I-T Department regarding his high-value transactions.
In a bid to give a boost to the National Pension System (NPS), Finance Minister Arun Jaitley in the Budget 2017 offered tax sops on the partial withdrawal of the contribution made by a salaried person. According to the proposal, partial withdrawals to the extent of 25 percent of the contributions will not be taxed, which is in addition to the exemption of 40% of the corpus at the time of withdrawal.
From the new financial year, no deduction will be granted through any fresh investment made by an individual in the Rajiv Gandhi Equity Savings Scheme (RGESS). Earlier, the deduction was granted under Section 80CCG of the I-T Act which was over and above the limit of Section 80C of the I-T Act. However, if an investor has claimed for the tax deduction in the current financial year, then he will get the benefit for the next two years.
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