Which Income Tax slab suits me best?

  • Life Insurance Articles

As soon as the month of March dawn upon us (end of financial year), everyone runs helter-skelter collecting proofs of investment, submitting bills & claiming reimbursement for transport, & majorly making tax declarations. However, majority of people are completely oblivious about the amount of investment they need to declare in order to qualify for income tax benefits. This implies that they fail to make timely investments during the year. Hence, when the accountant declares that a major chunk of your salary will be deducted because of taxation; people are left confused and dissatisfied.

The first step lies in figuring out the tax slab which is applicable to one's income. This will assist in clearing the confusion about the exact amount of income tax that can be saved per year. According to the Union Budget 2015-2016, there were no major changes in tax calculation and they are expected to carry on with the same tax slabs that were announced in the last financial year. The income tax slabs are bifurcated into categories: General, women, senior citizens and very senior citizens (above 80 years who can show an income)

Below is the tax slabs division for general income category:

Tax slab (in Indian Rupees)

Tax charged (in % of annual income)

0 to 2,50,000

 

NIL

2,50,001 to 5,00,000

10%

5,00,001 to 10,00,000

20%

10,00,001 and above

30%

The tax slabs for senior citizens (age 60 to 79) are as follows:

Tax slab (in Indian Rupees)

Tax charged (in % of annual income)

0 to 3,00,000

NIL

 

3,00,001 to 5,00,000

10%

5,00,001 to 10,00,000

20%

10,00,001 and above

30%

Similarly, the tax slabs for very senior citizens (age 80 and above) are as follows:

Tax slab (in Indian Rupees)

Tax charged (in % of annual income)

0 to 5,00,000

NIL

5,00,000 to 10,00,000

20%

10,00,000 and above

30%

Saving tax by investing

There are different methods to cut down the taxable component of one's income, so that one does not have to pay lot of taxes at the end of the financial year. Birla Sun Life Insurance (ABSLI) has highly effective tax saving plans that affords you with tax exemption under Sec 80C of the Income Tax Act, 1961. The tax benefit can be enjoyed if your premiums paid are restricted up to 10% of the real sum assured and up to Rs 1, 50,000 in a financial year.

However, one should not look at life insurance as an investment or a tax saving option.

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