There is just one word which can describe the year 2008-2009 tax structure … GREAT. This article will tell you everything about tax in 2008. Following things will be discussed :
1. Tax Slab in 2008 for salaried employees
2. How much will you save?
The exemption limit for the year 2008 is 1.5 lacs, which means that if your taxable income is upto 1.5 lacs, you don’t pay any tax.
What is Taxable Income?
The pay which you get has many components, like HRA, conveyance allowance and others.
Out of this income, some things are deductible on your hand and after deducting you arrive at an amount called Taxable income, on which you have to pay income tax.
Taxable Income = Your Gross Salary – (HRA) – (Investments under Sec 80 C) – (Conveyance allowance) – (Health insurance Premium, Sec 80D) and some more things which you may claim.
The slab for the year 2008-09 is as follows:
Exemption Limit for Men = 1.5 lacs
The Exemption Limit for Women = 1.8 lacs
Exemption limit for Senior Citizens = 2.25 lacs
3% Education cess also on the tax amount after tax and surcharge (if any)
What is surcharge?
* If salary is above 10 lacs, a 10% surcharge will also be applicable.
Example : Ajay earns Rs 14 lacs
Total Income (14 lac ) – amount under sec 80c (1 lac) – HRA (Rs 70k , for example) – Conveyence allowance (9,600 , 800*12) – health Insurance (10k , max 15k) under sec 80D (its seperate from sec 80C) = 14 lacs – 1,94,800 = 12,05,200
Now lets do tax calculation :
0 – 1.5 : 0
1.5 – 3 : 15,000 (@ 10%)
3 – 5 : 40,000 (@ 20%)
5+ : 2,11,560 (@ 30%)
= 2,66,560 + surcharge (10% of this amount)
= 2,66,560 + 26,656
= 2,93,216
Now education cess will also be applied : @ 3% , so 2,93,216 + 3%
= 2,93,216 + 8796.48
= Rs. 302012.48
This is the total tax payable.
Note: education cess is charged after surcharge is applied and not before.
I would be happy to read your comments or disagreement on any topic. Please leave a comment.