As the process of filing Income Tax Returns (ITR) continues, Finance Minister Sitharaman has made a significant announcement regarding tax exemptions.
More than one crore individuals have already filed their ITRs, and the deadline to file for the financial year 2022-23 is July 31st. It is crucial to meet this deadline to avoid any potential fines.
Additional Exemption of 2.5 Lakhs for ITR Filers
Under the old tax regime, individuals below the age of 60 were required to pay taxes on income exceeding Rs 2.5 lakhs annually.
The Ministry of Finance’s rules state that a 5% tax is applicable on income between Rs 2.5 lakhs and Rs 5 lakhs.
The Finance Minister announced this during the budget speech.
Extra Deduction of 50,000 Rupees for Senior Citizens
For individuals aged between 60 and 80, there is a tax exemption limit of up to Rs 3 lakhs. Any income above this limit is subject to taxation. Additionally, senior citizens in this age bracket receive an extra rebate of Rs 50,000 under the old tax regime.
2.5 Lakh Additional Deduction for Very Senior Citizens
Very Senior Citizens, those aged 80 and above, enjoy further tax benefits. They fall into the tax bracket only if their annual income exceeds five lakh rupees.
Hence, these individuals receive an additional exemption of Rs 2.5 lakhs compared to regular taxpayers.
If an individual’s annual income is Rs 10 lakhs and they claim up to Rs 5 lakhs under income tax exemptions, they will be liable for zero tax on the remaining income of Rs 5 lakhs.
Despite their taxable income being Rs 2.5 lakhs, the exemption of Rs 12,500 eliminates the need to pay any tax.
These announcements by the Finance Minister aim to provide relief and reduce the tax burden for various categories of taxpayers, ensuring a more equitable system based on age and income levels.
