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Income Tax and Related Terms

Seeing his fr...

Question

Seeing his friend Saurav in trouble, Anshul went up to him and asked him the reason.
Saurav : My income is Rs. 240000 per annum. I am afraid the Government will take most of my money in taxes.
Anshul (replied) : Your income is below the basic exemption limit. Even if it was above that limit, the government only takes a fraction of your money to spend on developmental projects.

Was Anshul correct?

A

Yes

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B

No

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Solution

The correct option is A Yes
No tax is levied up to a certain level of income. This is known as the basic exemption limit. Saurav's income is below the basic exemption. Hence he need not worry. There are taxable income slabs in which the rate of taxation progressively increases, which is a fraction (5 - 30%, depending on the slab) of an individual's income. Hence, Anshul was absolutely correct.

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