Income Tax Slabs: There are some tax slabs in the country in which no change has been made for the last 10 years. The last changes in the tax slabs of 20 per cent and 30 per cent were made in 2013. Currently, an income of Rs 5 lakh or more is taxed at 20 per cent and income above Rs 10 lakh is taxed at 30 per cent. Taxpayers can understand this in such a way that when their income is adjusted according to inflation, then their 'real' rate tax increases further. Significantly, the highest marginal rate of income tax is 30 per cent with applicable surcharge and cess. But the tax brackets haven't changed since 2013, so people in the 30% bracket are paying slab rates of 42% to 50%. While anyone with a taxable income of Rs 12 lakh is paying an additional tax of Rs 49,327 or Rs 4111 per month. Let us know what needs to be done to deal with this problem.
Need to increase tax bracket
There is a need to increase the old tax slabs that have been running for the last 10 years. Because whatever changes have been made in the tax slabs for the last 10 years, they have been changed keeping in mind the needs of people earning less than Rs 5 lakh. For those whose income comes in the tax slab of 20 per cent and 30 per cent, no change has been made in the last 10 years. However, as compared to the last decade, people's income as well as income has increased today, so tax brackets should be increased and taxes should be reduced for all income levels.
How much tax do people pay?
A person with a taxable income of Rs 10 lakh today pays Rs 2333 per month as additional tax. The taxpayer pays an excess of Rs 15,661 per month on a taxable income of Rs 25 lakh. Whereas if a person earns Rs 50 lakh, then he pays Rs 37,784 more tax per month. In the 30 per cent slab, the taxpayer pays tax at the real rate of 42-50 per cent without inflation adjustment.
Old tax bracket is not enough
The old tax regime attracts the taxpayers the most. However, this shows that the new tax bracket is not enough to woo most tax payers. By the way, the new tax regime, helps taxpayers to reach the inflation adjustment rate of tax, but despite this, most of the taxpayers choose the old system only.