The Budget announcement that an annual income of Rs 12 lakh will not be taxed has been met with cheer. For salaried employees, this nil tax limit will be Rs 12.75 lakh per annum, after taking into account standard deduction of Rs 75,000.
But what if there is an increment around the corner for your fine performance at work that pushes you into a higher tax slab? Suppose, your boss gives you a 10% hike on Rs 12.75 lakh, to, say, about Rs 14 lakh a year? The tax department could then take away Rs 82,000.This would leave you with Rs 13.18 lakh in hand – still a small hike, but nothing to jump about.
If your bosses are even more impressed (you might want to pray they are not) and you get a 20% hike on Rs 12.75 lakh, to, say, about Rs 15.3 lakh, this could mean that you might be shelling out tax of about Rs 1.02 lakh, leaving you a less exciting Rs 14.27 lakh in hand. This could mean you could end up with less in the pocket than you first thought.
