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  • Category: Miscellaneous

    A time pass exercise to prepare you for tax calculation.

    Members,
    I do not know how many ISCians are tax payers. This thread is to make you perfect in simple tax calculations without the help of any CA or expert. The tax calculation should be as per the new tax regime announced during 2020-2021 budget.

    Please work out the exact amount of tax to be paid by each individual.

    1. If the monthly salary of a person is Rs. 50,000 per month.

    2. If the monthly salary of a person is Rs. 70,000 per month.

    3. If the monthly salary of a person is Rs. 90,000 per month.

    No additional income or interest earned. Calculate only the salary into account.

    The first and fast accurate amount posting member will be appreciated and awarded.
  • #722616
    The new regime tax rates are -
    Rs 0.0 - Rs 2.50 Lakhs --- NIL
    Rs 2.50 lakhs- Rs 5.00 Lakhs --- 5% (tax rebate u/s 87a is available)
    Rs. 5.00 lakhs- Rs 7.50 Lakhs --- 10%
    Rs 7.50 lakhs - Rs 10.00 Lakhs --- 15%
    Rs 10.00 lakhs - Rs. 12.50 Lakhs --- 20%
    Rs. 12.50 lakhs- Rs. 15.00 Lakhs --- 25%
    > Rs. 15.00 Lakhs --- 30%

    Using the above rates and assuming no savings for reduction in total earnings, the tax will be -

    (1) For Rs 50000 per month (Rs 6 lakhs for the year):
    Tax = 5% of (5.0 - 2.5) + 10% of (6.0-5.0) = 22500
    Add 4% surcharge to above and final tax would be = 23400

    (2) For Rs 70000 per month (Rs 8.4 lakhs for the year):
    Tax = 5% of (5.0-2.5) + 10% of (7.5-5.0) + 15% of (8.4-7.5) = 51000
    Add 4% surcharge to above and final tax would be = 53040

    (3) For Rs 90000 per month (Rs 10.8 lakhs for the year):
    Tax = 5% of (5.0-2.5) + 10% of (7.5-5.0) + 15% of (10.0-7.5) + 20% of (10.8-10.0) = 91000
    Add 4% surcharge to above and final tax would be = 94640

    Note:
    1. For senior citizens the basic exemption limit would change from 2.5 lakh to 3.0 lakh.
    2. If eligible savings are there then up to Rs 150000 can be deducted from total earning and then only tax is to be calculated on the reduced earnings.
    3. If taxable income is less than or equal to Rs 5 lakhs then tax would be NIL.

    Knowledge is power.

  • #722620
    Umesh,
    Are you sure of the note 1 about senior citizen exemption limit is 3 lakhs? I don't think so. It is applicable to old tax regime only.

    No life without Sun

  • #722632
    Sun,
    Your observation is correct. Thanks for pointing out the mistake. In the new income tax regime applicable from FY 2020-21 (AY 2021-22), in addition to removal of deductions and exemptions, the basic limit is also made Rs 2.5 lakhs for all the persons including seniors. So point number 1 in my earlier response does not stand and is to be deleted. Members using my response may please note that.

    Knowledge is power.


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