Income Tax Slab For 2018-19: Will Arun Jaitley Increase Tax Exemption Limit or Reduce Tax Rate in Budget?

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Income Tax Slab For 2018-19: Will Arun Jaitley Increase Tax Exemption Limit or Reduce Tax Rate in Budget?

New Delhi, Jan 12: Union Finance Minister Arun Jaitley will present the Union Budget 2018-19 on February 1. Ahead of the presentation of the Budget 2018, speculations are rife that the government may increase the income tax slabs from a minimum of Rs 2.5 lakh per annum to Rs 3 lakh. FM Arun Jaitley may also reduce […]

New Delhi, Jan 12: Union Finance Minister Arun Jaitley will present the Union Budget 2018-19 on February 1. Ahead of the presentation of the Budget 2018, speculations are rife that the government may increase the income tax slabs from a minimum of Rs 2.5 lakh per annum to Rs 3 lakh. FM Arun Jaitley may also reduce the tax rate for individuals earning annual income between Rs 2.5 lakh and Rs 5 lakh.

It is speculated that the government might increase the tax exemption limit from Rs 2.5 lakh to Rs 3 lakh. This might be done to counterbalance rising inflation. Last year, ahead of the Budget, reports emerged that the government would increase the tax exemption limit from Rs 2.5 lakh to Rs 4 lakh. However, no such announcement was made by Arun Jaitley.

In Budget 2017-18, Arun Jaitley had proposed a reduction of 5 per cent in income tax rate for individuals with income ranging between Rs 2.5 lakh to Rs 5 lakh. He had also announced surcharge of 10 per cent for those whose annual income is Rs 50 lakh to Rs 1 crore. The 15 per cent surcharge on Rs 1 crore or more was not touched in the Budget for the financial year 2017-18.

Below is the current Income Tax Slabs:

Three are slabs — 5 per cent income tax for individuals with annual income between Rs 2.5 lakh and Rs 5 lakh, 20 per cent on annual income from Rs 5 lakh to Rs 10 lakh, and 30 per cent on income above Rs 10 lakh.

Income  Income Tax rate for 2016-17 Income Tax rate for 2017-18
Individual tax payers
Up to Rs 2,50,000 No tax No tax
Rs 2,50,001 to Rs 5,00,000 10% 5%
Rs 5,00,001 – 10,00,000 20% 20%
More than Rs 10,00,000 30% 30%
Senior citizens who are 60 years old and above but less than 80 years
Up to Rs 3,00,000 No tax No tax
Rs 3,00,001 to Rs 5,00,000 10% 10%
Rs 5,00,001 to Rs 10,00,000 20% 20%
More than Rs 10,00,000 30% 30%
Senior Citizens who are 80 years old and above
Up to Rs 5,00,000 No tax No tax
Rs 5,00,001 to Rs 10,00,000 20% 20%
More than Rs 10,00,000 30% 30%
(Surcharge of 10 per cent on income of all individuals above Rs 50 lakh and less than Rs 1 crore and surcharge of 15 per cent on income above Rs 1 crore).

In Budget 2018-19, the government may bring a new tax slab for people with income between Rs 5 and 7.50 lakh annually. These people are required to pay 20 per cent income tax. The government may decrease their tax from 20 to 10 per cent.