Offering a major relief to the salaried Indians, P.Chidambaram announced major changes in the personal income tax regime, which will greatly benefit the taxpayers.
While taking care of the farmers, the finance minister did not forget the great Indian salaried class that forms the major chunk of Indian taxpayers.
The slab rate for paying personal tax has been raised from 1.10 lakh to 1.50 lakh for men and for women the rate has been increase from 1.45 lakh to 1.80 lakhs, whereas Senior Citizen will now have the exemption limit of Rs. 225,000 from Rs.195,000.
Rationalising the slabs for personal income tax, Chidambaram announced raising the exemption limit from 1.10 lakhs to 1.50 lakhs, assuring a minimum relief of Rs 4000 to every assessee.
Under the new slab rate, which has been announced, a person earning upto Rs 150, 000 would not fall under the tax ambit.
However, a person earning between 150,001 to 300,000 will need to pay 10 per cent tax; from 300,001 to 500, 000, he will have to pay 20 per cent and those earning above 500,001 will be taxed at the rate of 30 per cent.
An additional deduction of Rs.15,000 under Section 80D has been allowed to an individual who pays medical insurance premium for his/her parent(s).
Senior Citizens Saving Scheme 2004 and the Post Office Term Deposit Account have been added to the basket of saving instruments under Section 80(C) of the Income Tax Act.
Keeping the upcoming election in mind the FM has tried to please a huge spectrum of the population. According to many analysts one of the master strokes of the FM is the move to the increase in the personal income tax thresholds: for individuals from Rs 110,000 to Rs150,000 for women from Rs145,000 to Rs180,000 and for senior citizens from Rs195,000 to Rs225,000 — this will obviously make the "middle class" extremely happy. On direct taxes, the finance minister was generous in raising the exemption slabs which shall put more disposable income in the hands of the households.
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