Budget 2018: Know your savings if FM Jaitley changes tax exemption limit

Business Standard takes a look at the likely scenarios of change in the personal income-tax exemption limit and how your wallet would be impacted in each of those scenarios

There have been reports that Budget 2018 could bring a huge relief for the middle class, with Finance Minister Arun Jaitley increasing the personal tax exemption limit and tweaking tax slabs. This is the last full Budget of the Narendra Modi-led National Democratic Alliance (NDA) govt in its present term.
 
The finance inistry has received proposals that the tax exemption limit should be increased to at least Rs 300,000 per year, if not Rs 500,000, from the existing Rs 250,000.
 
A tinkering of the tax slab, should that happen, would also give a substantial relief to the middle-income group, especially the salaried class, which has been hit by the impact of retail inflation lately.
 
Business Standard takes a look at the likely scenarios of a change in the personal income tax exemption limit and how your wallet would be impacted in each of those scenarios.

Particulars	Current Basic Exemption Limit Rs 250,000
Total Income	500,000	1,000,000	2,000,000	5,000,000
Deduction possible u/s 80C	150,000	150,000	150,000	150,000
Taxable Income	350,000	850,000	1,850,000	4,850,000
Exemption Limit	250,000	250,000	250,000	250,000
Tax Liability	2,575	84,975	378,525	1,305,525
Tax Liability under Current provisions	N.A.	N.A.	N.A.	N.A.
Tax Savings	N.A.	N.A.	N.A.	N.A.

Particulars	Probable Basic Exemption Limit Rs 300,000
Total Income	500,000	1,000,000	2,000,000	5,000,000
Deduction possible u/s 80C	150,000	150,000	150,000	150,000
Taxable Income	350,000	850,000	1,850,000	4,850,000
Exemption Limit	300,000	300,000	300,000	300,000
Tax Liability	0	82,400	375,950	1,302,950
Tax Liability under Current provisions	2,575	84,975	378,525	1,305,525
Tax Savings	2,575	2,575	2,575	2,575

Particulars	Probable Basic Exemption Limit Rs 400,000
Total Income	500,000	1,000,000	2,000,000	5,000,000
Deduction possible u/s 80C	150,000	150,000	150,000	150,000
Taxable Income	350,000	850,000	1,850,000	4,850,000
Exemption Limit	400,000	400,000	400,000	400,000
Tax Liability	0	77,250	370,800	1,297,800
Tax Liability under Current provisions	2,575	84,975	378,525	1,305,525
Tax Savings	2,575	7,725	7,725	7,725

Particulars	Probable Basic Exemption Limit Rs 500,000
Total Income	500,000	1,000,000	2,000,000	5,000,000
Deduction possible u/s 80C	150,000	150,000	150,000	150,000
Taxable Income	350,000	850,000	1,850,000	4,850,000
Exemption Limit	500,000	500,000	500,000	500,000
Tax Liability	0	72,100	365,650	1,292,650
Tax Liability under Current provisions	2,575	84,975	378,525	1,305,525
Tax Savings	2,575	12,875	12,875	12,875

Note: Rebate u/s 87A is available as lower of Rs. 2,500 or actual tax liability, provided the Total Income is below Rs 500,000.