Taxpayers are hoping for positive changes as Union Finance Minister Nirmala Sitharaman is scheduled to announce the final interim budget before the general elections in 2024 on February 1. However, let's take a closer look at some of the most important terminology utilized in the budget.
Deduction for Taxes
Consider tax deductions as a way to lower your overall tax burden. A standard deduction of ₹50,000, for instance, decreases your overall income and, as a result, the amount that is taxable. Under section 80C, investments in tax-saving FDs, PPFs, and NSCs are eligible for deductions.
Rebate
This is a reduction in total income tax that stimulates economic activity by lessening the tax burden for taxpayers.
Tax Surcharge
Since the surcharge is an additional tax on top of the current tax rate, it only applies to those making more than ₹50 lakh. The overall tax liability increases to 33 percent when a 30 percent tax rate is combined with a 10 percent surcharge.
Cess on tax
This is an extra tax imposed on income in order to pay for particular goals such as education and health. Currently at 4%, this is assessed on the entire tax liability, including the surcharge.
New tax Regime
Seven tax slabs with discounted rates are part of the new tax system, which went into effect in 2022. It replaced the previous tax regime as the default starting in the 2023–2024 fiscal year.
Old Tax Regime
Under the previous tax system, there were four tax slabs, with the highest tax rate being 30% for incomes above ₹10 lakh.
TDS
This is a method of obtaining revenue at the point of income generation, like when banks transfer interest income after deducting tax.
Tax Saving Instruments
These let taxpayers to claim deductions in their income tax, and they include PPF, NSC, and NPS.
Tax Collection at Source (TCS)
This is an additional sum that a seller collects from the buyer at the moment of sale as tax. It is kept on file with the tax department.
