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A little more cash for common man
March, 17th 2012

For an economy still slowing down and unlikely to see brisk hiring or steep payhikes, finance minister Pranab Mukherjee has given salaried bread-winners a reason to cheer.
To begin with, those earning Rs 2 lakh more need not pay any tax at all, raising the exemption limit by Rs 20,000 from Rs 1

related stories
Pranab plays safe, no bold reforms in budget
.80 lakh.
He also proposed to rejig income tax slabs a move that will leave more money in the hands of the common man.

The new tax slabs could be in line with the Direct Taxes Code (DTC) Bill, which was introduced in Parliament in 2010.

Incomes between Rs 2-5 lakh will be taxed at 10%, income between Rs 5 -10 lakh be taxed at 20% and income above Rs 10 lakh per annum be taxed at 30%.

At present, income between Rs 1.8 lakh and Rs 5 lakh is taxed at 10%, income between Rs 5-8 lakh is taxed at 20%, while annual income of above Rs 8 lakh attracts a tax rate of 30%.

A rejig in tax slabs along with a hike in exemption limits will enhance people's disposable income, which, in turn will boost consumption spending as well as savings.

The government is negotiating a maze of thorny issues ahead of this year's budget amid faltering demand and rising prices that have hit growth in the broader economy, even as prices remain out of control.

Although DTC will not be effective from this year, I propose to introduce the DTC rates for personal income tax These changes will provide substantial relief to tax payers, Mukherjee said in his budget speech.

The parliamentary standing committee on finance has recommended raising the income tax exemption limit to Rs 3 lakh from the existing Rs 1.8 lakh.

The committee headed by  BJP leader and former finance minister Yashwant Singh,  has also recommended a major rejig in tax slabs.

It has recommended 10% tax for those in the income bracket of Rs 3-10 lakh, 20% for Rs 10-20 lakh and 30% for income beyond Rs 20 lakh.

Net Taxable Working Men
Income Old Tax New Tax Saving
2 Lakh 2060 0 2,060
3 Lakh 12360 10,300 2,060
5 Lakh 32960 30,900 2,060
8 Lakh 94760 92,700 2,060
10 Lakh 156560 1,33,900 22,660
25 Lakh 620060 597,400 22,660
50 Lakh 1392560 1,369,900 22,660
Net Taxable Working Women
Income Old Tax New Tax Saving
2 Lakh 1,030 0 1,030
3 Lakh 11,330 10,300 1030
5 Lakh 31,930 30,900 1030
8 Lakh 93,730 92,700 1030
10 Lakh 155,530 133,900 21,630
25 Lakh 619,030 597,400 21,630
50 Lakh 1,391,530 1,369,900 21,630
Net Taxable Sr.Citizen 60to79 years
Income Old Tax New Tax Saving
2 Lakh 0 0 0
3 Lakh 5,150 5,150 0
5 Lakh 25,750 25,750 0
8 Lakh 87,550 87,550 0
10 Lakh 149,350 128,750 20,600
25 Lakh 612,850 592,250 20,600
50 Lakh 1,385,350 1,364,750 20,600
Net Taxable Sr.Citizen 80 and above years
Income Old Tax New Tax Saving
2 Lakh 0 0 0
3 Lakh 0 0 0
5 Lakh 0 0 0
8 Lakh 61,800 61,800 0
10 Lakh 123,600 103,000 20,600
25 Lakh 587,100 566,500 20,600
50 Lakh 1,359,600 1,339,000 20,600
Proposed exemtion limits stand stand at 2lack for working mail/femail, 2.5Lack for a senior citizen from 60 to79 years and 5 lack for senior citizen 80 and above years

 
 
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