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IT slabs untouched, but cess hiked

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IT slabs untouched,  but cess hiked
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Arun Jaitley's budget for FY 2017-18 has been described as making no change in income tax slabs, against some pre-budget speculations that the ceiling would be raised from the current 2.5 lacs to 3 lacs. But as it turned out, Jaitley left untouched the slab structure.

But there is one item where he has touched, though not the subject of media focus, and with some eventual damage to the tax-payers pocket, i.e. Education Cess on the tax payable. While the existing cess on income tax payable is 3%, Jaitley has raised it to 4% with a new name "Health and Education Cess". Thus the tax liability for an assessee in the highest tax bracket (say 15 lakh annual income) will go up by Rs 2,625. For those whose income falls between Rs 5 lakh and Rs 10 lakh, the tax liability will go up by Rs 1,125, and for the lowest income bracket (Rs 2.5 lakhs to Rs 5 lakhs) by Rs 125.

Currently, the cess charged is 3% of the income tax payable os ,ade i[ pf 2 [er cemt edicatopm cess and 1 per cent of senior education education cess.

The lowest income tax bracket (Rs 2.5 lakh to Rs 5 lakh, for senior citizens Rs 3 lakh to 5 lakh)) attracts a tax rate of 5%, which was 10% until last year when it was lowered to 5%. From 5 lakh to 10 lakh income per year the rate is 20% and for incme above 10 lakh it is 30%.

For super senior citizens the lowest taxed slab is Rs 5 lakh to 10 lakh at 10 % and for anything over 10 lakhs it is 30%.

In addition to these taxes, a surcharge is payable income above Rs 50 lakh, which 10% of tax for annual income upto 1 crore, and 15% for income over 1 crore.

FM mentioned also that the proposed increase in cess will fetch the exchequer an additional revenue of Rs 11,000 crore. It remains to be seen however, whether as as per the usual practice of giving some sops of tax reliefs during subsequent budget discussions, the government will forgo this gain and withdraw the cess hike.

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