In a relief to individual tax payers, the Government on Friday changed the slabs cutting the rate to 10 per cent for income up to Rs 5 lakh, while leaving the threshold limit for tax-free income unchanged at Rs 1.6 lakh.
Income between Rs 5 lakh to Rs 8 lakh will attract 20 per cent tax against the current slab of Rs 3 lakh to Rs 5 lakh. Hitherto, the income between Rs 1.6 lakh and Rs 3 lakh was taxed at the rate of 10 per cent.
In case of income over Rs 8 lakh, tax would be levied at a rate of 30 per cent — which was hitherto applicable on income above Rs 5 lakh.
The tax concessions would put more money in the hands of consumers.
Finance Minister Pranab Mukherjee also extended income tax exemption to investment in infrastructure bonds by up to Rs 20,000 over and above the existing limit of Rs 1 lakh.
In a major relief to the corporate sector, the Government proposed to reduce the surcharge on corporate tax to 7.5 per cent from 10 per cent now.
However, it has increased the Minimum Alternate Tax (MAT) from existing 15 per cent to 18 per cent on book profits of those companies which do not pay tax because of various exemptions.
New Income Tax slabs
General tax payers
Up to Rs 1,60,000 — NIL
Rs 1,60,001 to Rs 5,00,000 — 10 per cent
Rs 5,00,001 to Rs 8,00,000 — 20 per cent
Rs 8,00,000 and above —30 per cent
Women
Up to Rs 1,90,000 — NIL
Rs 1,90,001 to Rs 5,00,000 —10 per cent
Rs 5,00,001 to Rs 8,00,000 — 20 per cent
Rs 8,00,000 and above — 30 per cent
Senior citizens of 65 years and above
Up to Rs 2,40,000 — NIL
Rs 2,40,001 to Rs 5,00,000 — 10 per cent
Rs 5,00,001 to Rs 8,00,000 — 20 per cent
Rs 8,00,000 and above — 30 per cent
