2012 Income Tax Allowance Planning
What was the tax rate in 2012?
Federal Income Tax Brackets for 2012
| Tax Bracket | Married Filing Jointly | Single |
|---|---|---|
| 10% Bracket | $0 – $17,400 | $0 – $8,700 |
| 15% Bracket | $17,400 – $70,700 | $8,700 – $35,350 |
| 25% Bracket | $70,700 – $142,700 | $35,350 – $85,650 |
| 28% Bracket | $142,700 – $217,450 | $85,650 – $178,650 |
What are the three basic tax planning strategies?
There are a number of ways you can go about tax planning, but it primarily involves three basic methods: reducing your overall income, increasing your number of tax deductions throughout the year, and taking advantage of certain tax credits.
What are the rules for tax planning?
5 Rules of Tax Planning
- It is wise to divide your income among family members. The first step in tax saving is to adopt the concept of divide and rule. …
- Advantages Of All Tax Exemptions. …
- Advantage of permissible tax deductions. …
- Optimum Use of Tax-Exempted Income. …
- Don’t Overdo It — Keep Tax Planning Simple.
What is the tax slab for old regime?
Scenario 1: Someone claiming few exemptions and deductions
| Tax Slab | Old Rates | Tax (Old) |
|---|---|---|
| 0 – 2,50,000 | 0% | |
| 2,50,000 – 5,00,000 | 5% | 12,500 |
| 5,00,000 – 7,50,000 | 20% | 34,000 |
| 7,50,000 – 10,00,000 | 20% |
What was the tax rate in 2013?
Income Tax Slab & Deductions FY 2013-14
| For Men below 60 years of age | For Senior Citizens (Age 80 years or more) | |
|---|---|---|
| Rs. 2,00,000 | Nil | Nil |
| Rs. 2,00,001 – Rs. 500,000 | 10% | 20% |
| Rs. 500,001 – Rs. 10,00,000 | 20% | 30% |
| Above Rs. 10,00,000 | 30% | |
What was the tax free threshold for 2011?
Nominal (before offsets) Current Tax Free Thresholds and First Step Marginal Tax Rates
| Financial Year | Tax Free Threshold | First Step Marginal Tax Rate |
|---|---|---|
| 2012-13 | $18,200 | 19% |
| 2011-12 | $6,000 | 15% |
| 2010-11 | $6,000 | 15% |
| 2009-10 | $6,000 | 15% |
What are the 5 D’s of tax planning?
The Five Pillars of Tax Planning are these: Deducting, deferring, dividing, disguising and dodging to save tax.
What are the types of tax planning?
Types of Tax Planning
- Short-range tax planning. Under this method, tax planning is thought of and executed at the end of the fiscal year. …
- Long-term tax planning. This plan is chalked out at the beginning of the fiscal and the taxpayer follows this plan throughout the year. …
- Permissive tax planning. …
- Purposive tax planning.
Who needs tax planning?
Tax planning can benefit any person that wants to increase their income by minimizing their tax liability. Whether you are a U.S. resident or citizen, U.S. expatriate, or the owner of an international business, tax planning will likely benefit you or your business in more ways than one.
Which is better old tax regime or new tax regime?
The new tax regime is different in two ways from the old one. Firstly, it has more slabs with lower tax rates. And secondly, all the major exemptions and deductions available to taxpayers in the existing (old) tax regime are not allowed if the new tax regime is chosen.
Should I choose old tax regime or new?
If your income is Rs 15 lakh and you are eligible for deductions of over Rs 2.5 lakh, again, you should stick to the old regime. If you have not maximised the tax benefits offered in the old, with-exemptions regime, try to do so before contemplating a switch to the new regime.
Can we switch between old and new tax regime every year?
As per the laws, the employees have to choose between the old and the new tax regime and inform their employers about their choices, however, if one is not certain with the choice then he/she can certainly change his/her decision at the time of ITR filing.
Which tax regime is better for 30 lakhs?
Tax slabs and rates under the new tax regime
| Annual income | Old tax rate | New tax rate |
|---|---|---|
| Rs. 7.5 lakhs to Rs. 10 lakhs | 20% | 15% |
| Rs. 10 lakhs to Rs. 12.5 lakhs | 30% | 20% |
| Rs. 12.5 lakhs to Rs. 15 lakhs | 30% | 25% |
| Rs. 15 lakhs and above | 30% | 30% |
Which tax regime is better for 20 lakhs?
For a salary ranging between Rs 20 lakhs and Rs 25 lakhs, the applicable tax rate under the new tax regime would be the highest, that is 30%.
Which deductions are allowed in new tax regime?
For own contributions, an individual can avail tax benefits up to Rs. 1.5 lakh u/s 80CCD (1) and Rs. 50,000 u/s 80CCD (1B). The new tax regime does not offer tax benefit on the employee’s own contribution but if it an employer’s contribution to the employee’s account, it is eligible for deduction u/s 80CCD (2).
Which tax regime is better for 50 lakhs?
Lower tax rates
| Income level (INR) | Old tax rate regime* | New tax rate regime |
|---|---|---|
| Up to 2,50,000 | 0% | 0% |
| 2,50,001 to 5,00,000 | 5% | 5% |
| 5,00,001 to 7,50,000 | 20% | 10% |
| 7,50,001 to 10,00,000 | 20% | 15% |
Is there standard deduction of 50000 in new tax regime?
So, Standard Deduction (Section 16 (ia) of the Income Tax Act) of Rs 50,000 for FY 2020-21 / AY 2021-22 is not available under the New Income Tax Regime.
Which tax regime is better for 8 lakhs?
If an individual has a salary of Rs 8 lakh per annum, and he/she has opted for a new income tax slab regime, then an income tax will be Rs 46,800. It is calculated without any exemptions and deductions. An individual can save Rs 28,600 more as compared to an old tax regime.
How can I save tax if I earn 8.5 lakhs?
If you earn an annual salary up to Rs. 7.75 lakh, here’s how you can pay zero tax
- Highlights.
- People earning up to Rs. 5 lakh are now exempt from paying tax.
- Salaried individuals earning up to Rs. 7.75 lakh can also pay zero tax.
- To reduce taxable income to Rs. 5 lakh, invest fully in Sections 80C, 80D, 80CCD(1B), 80TTA.
How can I save tax over 10 lakhs?
How to Save Tax for a Salary Above Rs 10 Lakhs?
- Reduce Your Taxable Income by Up To Rs 1.5 Lakhs (Section 80C, 80CCC, 80CCD) …
- Additional Reduction of Up To Rs 50,000 for NPS Investors (Section 80CCD. …
- Reduce Your Taxable Income by Up To Rs 75,000 (Section 80D) …
- Reduce Your Taxable Income by Up To Rs 2 lakhs (Section 24)
How can I save tax on 12 lakhs?
Tax Deductions under Section 80(C)
- Investments in PPF (Public Provident Fund)
- Investments in EPF (Employee Provident Fund)
- Investments in ELSS funds (Equity-Linked Savings Scheme)
- Investments in NSC (National Savings Certificates)
- Payment of premiums against Life Insurance Policies.
How do I reduce my taxable income?
How to Reduce Taxable Income
- Contribute significant amounts to retirement savings plans.
- Participate in employer sponsored savings accounts for child care and healthcare.
- Pay attention to tax credits like the child tax credit and the retirement savings contributions credit.
- Tax-loss harvest investments.
How can I save my maximum income tax?
Tax Saving Schemes
- Public Provident Fund (PPF)
- Sukanya Samriddhi Yojana (SSY)
- National Pension System (NPS)
- Employees’ Provident Fund (EPF)
- Sukanya Samriddhi Yojana Interest Rate.
- National Savings Certificate.
- House Rent Allowance.
- NSC Interest Rate.
How can I reduce my income tax from salary?
15 Tips to Save Income Tax on Salary
- House Rent Allowance (HRA)
- Leave Travel Allowance (LTA)
- Employee Contribution to Provident Fund (PF)
- Standard Deduction.
- Professional Tax.
- Exemption of Leave Encashment.
- Exemption Under Section 89(1)
- Exemption from the Receipt Upon Opting for Voluntary Retirement.
What is the best salary structure to save tax?
Deduction u/s 80D
| Basic | 600000 | |
|---|---|---|
| Contribution of Employer to Superannuation Fund | 150000 Exempt | Nil |
| Contribution of the employer to NPS(80CCD2) | 110000 | 110000 |
| Contribution of the employee to NPS(80CCD1) | 110000 | 110000 |
| Additional Contribution of the employee to NPS{80CCD(1B)} | 50000 | 50000 |