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Income Tax Slabs for a Young Lady in the Financial Year 2012-2013

    IndianMoney.com Research Team | Tuesday, April 16,2013, 06:18 PM
 

Tax Calculations are so complicated...I am so busy …Where do I have the time for all these tax calculations. It is normal to hear people complaining about the amount of taxes they pay. Come on have a heart...Even Mr Obama the US President pays his taxes. Taxes are the price we all pay for civilization. We must have all heard a famous quote." The Best Things In Life Are Free But Sooner or Later The Government Will Find A Way To Tax Them. I would like to remind all of you that the team of Financial Planners at IndianMoney.com are always there for you to plan your Tax Planning needs in a most effective and efficient manner. You can explore this unique Free Advisory Service just by giving a missed call on 022 6181 6111.

Income Tax slab rates for Male/Females Less Than 60 Years:FY 2012-2013

Annual Income

Tax Rate

Up To INR 2 Lakhs

NIL

INR 2 Lakhs - INR 5 Lakhs

10%

INR 5 Lakhs - INR 10 Lakhs

20%

INR 10 Lakhs and above

30%

Let us consider the following case to understand taxation. Mrs Sumita married and 40 years old works for an Advertising and Marketing firm and has a pay package of INR 12 Lakhs per annum. Let  us  consider Mrs Sumita  does not avail  of her Income  tax deductions. What  Would Be The Tax She
Would Pay?

Table - 1

Heads

% of Income Tax

Income Tax

Up To INR 2 Lakhs

NIL

NIL

INR 2 Lakhs - INR 5 Lakhs
Here we a range of 200000 to 500000
which gives us 300000
(500000-200000)
We then calculate 10% of 300000

10%

INR  30000 (a)

INR 5 Lakhs - INR 10 Lakhs
Here we a range of 500000 to 1000000
which gives us 500000
(1000000-500000)
We then calculate 20% of 500000

20%

INR 100000 (b)

INR 10 Lakhs and above
Here Mrs Sumita  earns 1200000
Here we have a range of 1000000 to 1200000
which gives us 200000
We then calculate 30% of 200000

30%

INR 60000 (c)

Total

 

INR 190000 (a)+(b)+(c)

Educational Cess (190000*3%)

3% of total tax
(190000*3%)

INR 5700 (d)

Net Tax Payable

 

INR 195700
(a)+(b)+(c)+(d)

Here we notice that Mrs Sumita would have to pay INR 195700 as Income Tax if she does not avail of the income tax deductions.

What does Mrs Sumita Do about Her Tax Deductions?

Mrs Sumita and her spouse have taken a home loan of 30 Lakhs .Mrs Sumita is the co applicant of the home loan

Now Let Us See What Are The Deductions Available Under Section 24 and Section 80 C

  • Under Section 24 Interest portion of EMI is tax deductible up to an amount of 1.5 Lakhs
  • Principal portion of EMI can be claimed up to a maximum of INR 1,00,000 under Section 80C

However Mrs Sumita has taken up only INR 50000 deductions on the Principle Component of her EMI. Her Tax deductions under these sections are a sum of INR 2 Lakhs

Section 80 CCF:

Here Mrs Sumita has Tax deductions under Section 80 CCF a sum of INR 20000 invested in Infrastructure Bonds.

Section 80 D :(Mediclaim Benefits)

Under this section Mrs Sumita claims a tax deduction for mediclaim benefits for herself, spouse and children. Here the tax deductible amounts are INR 15000 per annum

LIC Traditional Participation Plan

Here Mrs Sumitha wants to financially secure her 8 year old sons college Education.She wants a corpus of about 10 Lakhs for her son’s college education. She pays a premium of INR 50000 towards this policy, tax deductible under Section 80C.

Table - 2

Heads

Amounts

Gross Taxable Income

INR 12,00,000  (a)

Under Section 24 interest portion of EMI is tax deductible up to an amount of 1.5 Lakhs

INR 1,50,000 (b)

Principal Portion of EMI  of INR 50000 under section 80C

INR 50000 (c)

Infrastructure Bond deductible 80 CCF

INR 20000 (d)

Medical Benefits 80 D

INR 15000 (e)

LIC Child policy

INR 50000 (f) (g)=(b)+(c)+(d)+(e)+(f)=285000

Total Taxable Income

INR 9,15,000
(a)-(g)=915000

Heads

% of Income Tax

Income Tax

Up To INR 2 Lakhs

NIL

NIL

INR 2 Lakhs - INR 5 Lakhs
Here we a range of 200000 to 500000
which gives us 300000
(500000-200000)
We then calculate 10% of 300000

10%

INR 30000 (a)

INR 5 Lakhs - INR 9,15,000
Here we a range of 500000 to 915000
which gives us 415000
(915000-500000)
We then calculate 20% of 415000

20%

INR 83000 (b)

Total Tax

 

INR 113000 (a)+(b)

Education Cess

3% on Total Tax
(113000*3%)

INR 3390 (c)

Net Tax Payable

 

INR 116390
a)+(b)+(c)

  • Here we have Net Income Tax Payable INR 195700 (TABLE -1) where Mrs Sumita has not done any tax deductions as per the various sections available to her.
  • Here we have Net Tax Payable INR 116390 (TABLE - 3) where we calculate the amount Mrs Sumita saved as she made use of the Tax Saving Instruments available to Her.
  • Here the difference between TABLE 3 and TABLE 1 is the yearly amount Mrs Sumita saved on tax using the tax deductions available to her. This translates to an amount of INR 79310 saved due to these deductions.

Here I hope this article has proved to be highly informative to understand how tax deductions can save our precious monetary resources and also gain us returns as we see in the Infrastructure Bonds, LIC Policy and medical reimbursements when we need them. We all know how costly medical treatment is and premiums paid towards this not only guarantee us tax benefits but also timely medical aid when we need it. On a lighter note "Beware Of Strong Drink It Can Make You Shoot At Tax Collectors And Miss" .Here I would like to remind our readers to lookup IndianMoney.com for their queries regarding Income Tax.

IndianMoney.com Research Team

The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.

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