Ending all speculation, a spokesperson from Ministry of Finance on Wednesday informed that income tax would be levied only on the disbursed arrears, and not on the whole as it was reported earlier that government is mulling to impose income tax on the entire amount of arrears including that would not given this year.
The Finance Ministry on August 30, 2008 at the time of salary fixation has considered to impose the income tax on the whole amount of arrears to be disbursed in two years: 40% of amount this fiscal year while 60% of amount in the next fiscal year.
But, an official of Finance Ministry on September 03 cleared that ministry would follow the general practice of charging tax on the earned amount only, no advance would be levied.
This move of government would provide some relief to nearby 50-lakh of central government employees. However, the tax on arrears will also hit hard to the employees, as their thick portion of amount would be wiped off as tax, especially to those who would qualify the upper tax level.
For Instance, any salaried male employees whose annual total income would reach to Rs.2,80,000 till the end of this fiscal without adding the arrears, would have to pay Rs. 13,000 only.
(Rs.2,80,000-Rs.1,50,000=1,30,000*10%=Rs, 13,000)
Here: Rs. 2,80,000 is total net salary Rs. 1,50,000 is Standard Deduction 10% is the income tax rate that would be levied on income tax ranging from Rs.1,50,001 to Rs, 3,00,000.
But, if one gets Rs.48,000 (40% of the total arrears from Rs.1,20,000 this years), his total salary would cross the barrier of Rs.3,00,000 and then he would have to pay Rs.35,600 as per the declared income tax rule.
Thus the net salary of the employee would be Rs. 12,400 (Rs.48,000-Rs.35,600).
The situation would further be worse for those who will cross the Rs.5,00,000 barrier in this year due to this arrears.
|
|
Comments:
