Points to Remember:
- Indian Income Tax Slabs for FY 2019-20
- Deductions under Section 80C
- Tax Calculation based on Slab Rates
Introduction:
This question requires a factual and analytical approach to calculate the income tax payable for a 45-year-old employee earning â¹12 lakhs annually in FY 2019-20 (Financial Year 2019-20, assessment year 2020-21), without considering house rent allowance or savings. We will use the income tax slabs and deduction limits applicable for that financial year to determine the tax liability. It’s crucial to note that this calculation is a simplified estimation and doesn’t account for any other potential deductions or exemptions an individual might be eligible for.
Body:
1. Applicable Income Tax Slabs (FY 2019-20):
The income tax slabs for FY 2019-20 for an individual below 60 years of age were as follows:
| Income Slab (â¹) | Tax Rate (%) |
|—|—|
| 0 – 2,50,000 | 0 |
| 2,50,001 – 5,00,000 | 5 |
| 5,00,001 – 10,00,000 | 20 |
| Above 10,00,000 | 30 |
2. Gross Total Income:
The employee’s annual gross total income is â¹12,00,000.
3. Deductions under Section 80C (Not Applicable in this case):
Section 80C of the Income Tax Act allows deductions for investments in specified instruments like PPF, ELSS, etc., up to a maximum limit. Since the question explicitly states “without any savings,” we will not consider any deductions under Section 80C.
4. Taxable Income:
Since no deductions are applicable in this scenario, the taxable income is equal to the gross total income, which is â¹12,00,000.
5. Income Tax Calculation:
Based on the income tax slabs:
- Tax on â¹2,50,000 – â¹0
- Tax on â¹(5,00,000 – 2,50,000) = â¹2,50,000 @ 5% = â¹12,500
- Tax on â¹(10,00,000 – 5,00,000) = â¹5,00,000 @ 20% = â¹1,00,000
- Tax on â¹(12,00,000 – 10,00,000) = â¹2,00,000 @ 30% = â¹60,000
Total Tax Payable = â¹0 + â¹12,500 + â¹1,00,000 + â¹60,000 = â¹1,72,500
6. Cess:
A 4% cess is applicable on the total tax payable. Therefore, Cess = â¹1,72,500 * 4% = â¹6,900
7. Final Tax Liability:
Total Tax Payable + Cess = â¹1,72,500 + â¹6,900 = â¹1,79,400
Conclusion:
The estimated income tax payable for a 45-year-old employee earning â¹12 lakhs annually in FY 2019-20, without any house rent allowance or savings, is â¹1,79,400. This calculation is based on the income tax slabs and rules prevalent during that financial year and excludes any other potential deductions or exemptions. It is highly recommended that individuals consult with a tax professional for personalized advice, as tax laws are complex and subject to change. For future planning, exploring avenues for tax savings through eligible investments and deductions under various sections of the Income Tax Act can significantly reduce the overall tax burden, promoting better financial management and holistic development.
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