The finance minister Nirmala Sitharaman did not announce any change in the tax slabs or rates in her Budget 2022. This dashes the high hopes of the hardworking salaried taxpayer.Thus, with no change in the income tax rates and slabs, an individual taxpayer will continue to have the same tax rates depending on the tax regime that will be chosen for FY 2022-23. The FY 2022-23 will start from April 1, 2022.

Effective from April 1, 2020, an individual salaried taxpayer has been given the option to continue with the old tax regime and avail deductions/tax exemptions such section 80C, 80D deductions, HRA, LTA tax exemptions etc. or to opt for the new tax regime and forgoing approximately 70 deductions and tax exemptions. The new tax regime offers lower tax rates as compared to the old tax regime.

Under both the income tax regimes, tax rebate of up to Rs 12,500 is available to an individual taxpayer under section 87A of the Income-tax Act, 1961. This would effectively mean that individuals having net taxable income of up to Rs 5 lakh would not pay any income tax irrespective of the tax regime chose by them.

Another thing to keep in mind is that under the old income tax regime, basic tax exemption limit for an individual taxpayer depends on their age and residential status. However, in the new tax regime, the basic exemption limit is Rs 2.5 lakh in a financial year.

The Long-term capital gains (LTCG) over Rs 1 lakh on listed equity shares per financial year is taxable at the rate of 10% without the benefit of indexation.

Tax Rebate up to Rs 12,500/- under section 87A is still available for Individuals with taxable income up to Rs 5 lacs per annum. Implying, Individuals with Income up to Rs 5 lacs will have zero tax liability for the Financial Year 2022-23 & Assessment Year 2023-2024. Standard Deduction of Rs 50,000/- is also available under the Old Tax regime. Income Tax Deductions under Section 80C to 80U is available under the Old System for the Salaried Individuals.

Salaried Individuals may reduce their tax liability considerably by availing the tax deductions under the Old Tax System for the Financial Year 2022-23. In fact, Individuals with Income up to Rs 13 lacs may claim full exemption from paying tax by availing all the deductions eligible for the Financial Year 2022-23.

India’s history hails from a culturally enriched background where elders are paid respect and love. They are taken care of to guide the generations on both happy and odd events. The government working in tandem to keep the culture and moral values intact offer special income tax benefits for senior citizens. Their idea is to relieve them from stress at this phase of life. If you or your senior citizen parents are planning their funds, then it is crucial to know about the tax benefits for senior citizens that can be availed.

• Benefits under Medical Insurance
• The Elementary Exemption Benefit
• Privilege on Interest Income
• No Advance Tax
• Allowance on the treatment of specified diseases
• Income Tax Return benefits
• No tax under the Reverse Mortgage Scheme
• Standard Deductions from Pension Income

NPS exemption for the self employed

Employees of state governments will be able to claim a tax benefit of 14% on the NPS contribution made by their employer, i.e., state government from FY 2022-23 onwards. Currently, only central government employees are eligible to claim tax benefit of 14% for the employer’s contribution to the NPS account of an employee. In case of private sector employees, the tax benefit is limited to 10%.

“The tax deduction limit in National Pension System (NPS) has increased from 10% to 14% for state government employees. This is a significant announcement to bring State Government employees on par with the Central Government employees and this will help State Government employees getting extended social security benefits in line with their counterparts in the Union Government,” says PFRDA Chairperson, Supratim Bandyopadhyay.

Longer lock-in for bonds under 54EC

Capital gain bonds or 54EC bonds are the fixed income instruments that provide capital gains tax exemption under section 54EC to the investors. The tax liability on long-term capital gains from sale of immovable property can be reduced by purchasing 54EC bonds. The owner of the bonds are the debtholders or creditors of the issuer. These bonds are issued by infrastructure companies that are backed by the government. Hence, the risk factor gets mitigated by buying such bonds. The capital gain bonds are redeemable before maturity. One cannot sell these bonds as they are not listed in the stock exchange. The interest is reduced to 5% p.a. from 6% p.a. and are fully taxable in your hands.