Beyond that, the following tax rates would apply:

In addition, you will have to pay an education cess of 2%. This will be calculated on your tax amount.

If you are earning an income of over Rs 10 lakh, you will also have to pay a surcharge of 10%, over and above the education cess.

Will you file a return of income?

One by six is a criterion that needs to be met when you file your returns. In simpler terms, if you fulfill any one of the six criteria, you will have to file a return of income tax even though your income maybe below the tax-free limit of Rs 1 lakh. At the moment the six criteria are mobile phones, travel abroad, credit card, car, immoveable property, and club membership.

In this Budget, the finance minister has replaced mobile phones with electricity bill exceeding Rs 50,000 per annum. So if you had been filing tax returns because you own a cell phone, even though your annual income is below Rs 1 lakh, you need not do so in the future. As against that, if your electricity bill exceeds Rs 50,000 every year, you will be brought under the net of filing returns.

Also Read: Know Your In-hand Salary

Income Slab	Tax Rate %
Rs.1,35,000	0
Rs.1,35,001 to Rs.1,50,000	10
Rs.1,50,001 to Rs.2,50,000	20
Rs.2,50,001 and above	30

Deductions and Exemption

The recent budget has prescribed a consolidated ceiling of Rs 1 lakh as investments allowable deduction under the new section 80C. What this means is that out of your total taxable income, up to Rs 1 lakh will be deductible if you invest in certain specified instruments.

While a number of instruments have been included in this section, the good part is that there are no sub ceilings within these instruments. So you can choose to invest the entire sum of Rs 1 lakh in any one of these instruments or diversify the amount among these instruments in the proportion that you desire.