How much Income Tax can be saved by you in 2014?

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How does it feel when your hard earned money is paid to the government as income tax each month ? If it feels bad, maybe you need to be aware of how much income tax can be saved by you in a financial year.

If the money was used for the overall development of the country, which is what it was meant for in the first place, then it would have been great. But in our country, the tax we pay does land up in the wrong hands and gets wasted. Well you can do nothing about that.

You cannot also do anything about the money you pay in income tax to the government apart from saving some of it. Beyond a certain amount that everyone can save, you will end up paying tax !

Your tax slab defines how much income tax can be saved by you

 

The government does not levy tax for some of the money that you earn. That for general tax payers and female working women is Rs 2 lakhs for this year ( AY 2013-2014 which is same as FY 2012-2013). For senior citizens, that is Rs 2.5 lakh and for very senior citizens, it is Rs 5 lakh.

Beyond this earnings of yours, you will have to pay tax. The government also says that the more you earn, the more income tax you have to pay.

As you must be aware, and this is common knowledge, that tax is paid at 10%, 20% and 30% on pre-defined income tax slabs that your income falls in.

Look at the general tax payers state for this year. What you can infer from the below table is that for Rs 2 lakh, he does not have to pay tax while for earnings between Rs 2 – Rs 5 lakh, he needs to pay 10% of that amount as tax.

For earnings between Rs 5 lakh – Rs 10 lakh, the tax is to be paid at 20% and anything beyond that, it will be 30%.

	Income tax slab for general taxpayers		Tax
0 to 2,00,000		No tax
2,00,001 to 5,00,000		10%
5,00,001 to 10,00,000		20%
Above 10,00,000		30%

There is a cess of 3% also that is charged on the above, so actually the tax rate comes to 10.30%, 20.60% and 30.90%. All tax payers will necessarily fall in these three brackets.

So the question we are deliberating on today is how much of income tax can you save?

 

 

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