When planning your finances, it is important for you to understand tax slabs and deductions. The tax slab for FY 2014-2015 and AY 2015-2016 has given an attractive option and presents more avenues to save tax.To understand this, let us first understand what tax slabs are and how this year will be beneficial.
Income tax in India is proportionate to your earnings. The more you earn, the more you pay. It is divided into different categories of income and is distinct for men, women and senior citizens. It also varies with age – less than 60 years, 60-80 years and more than 80 years.
There are four income tax slabs in India – income not taxed, income taxed at 10%, income taxed at 20% and income taxed at 30%. The tax slabs change every year. The Finance Minister and his team are responsible for this and it is announced in the annual budget.
The income considered is the annual income accumulated through all sources. The sources include salary, property, business profits, capital gains, etc. If your income is low than the minimum income tax slab, then you are exempted from paying any tax. You also enjoy certain deductions if you invest your money in specified plans.
For the FY 14-15, the exemption limit has been increased from Rs. 2,00,000 to Rs. 2,50,000 for men below 60 years of age.
Presently income of Rs. 2,50,000 – Rs. 5,00,000 is charged at 10%, Rs. 5,00,001 – Rs. 10,00,00 is charged at 20% and above Rs. 10,00,000, it is charged at 30%.You will not be charged for the first slab, for the second slab you will be charged at 10%, then 20% and remaining 30%.
For instance, if your taxable income falls under the second bracket, say it is Rs. 4,00,000, then you will be exempted for the initial Rs. 2,50,000. For remaining Rs. 1,50,000, you will be charged at 10%. This is the method used for higher slabs as well. Additional surcharge and educational cess (3%) might also be applicable.
As per the current year, the tax saving investment options are:
•Under Section 80C, you can save upto Rs. 46,350 on investment of Rs. 1,50,000 on life insurance plans.
•Under section 80CCC, you can save up to Rs. 30,900 on investment of Rs. 1,00,000 on all pension plans.
•Under Section 80D, you can save upto Rs. 10,815 on investment of Rs. 35,000 on health insurance plans.
These deductions are applicable on all income slabs.These benefits makes the current year more promising. FY 2014-15 provides better tax saving options and wider avenues to meet one’s financial goals.
About HDFC Life
HDFC Life, one of India’s leading private life insurance companies promoted by HDFC Ltd. & Standard Life Ltd., offers a range of individual and group insurance solutions.
