Salary earners with an annual income between Rs 3 lakh and Rs 8 lakh will be saving more money, as the new income tax rate structure will come into effect from tomorrow. Finance Minister Pranab Mukherjee had announced the new income tax rate structure in his budget.
Though the Finance Bill 2010 has to be approved by Parliament, the direct tax structure will be effective from tomorrow. In the new tax structure, salaried people in the range of Rs 3 lakh and Rs 8 lakh will be paying about 10.3 and 20.6 percent as against the previous rate of 20.60 and 30.90 percent. People earning less than Rs 3 lakh annually will have to pay 10.3 percent tax and people earning above Rs 8 lakh will benefit marginally.
Other than personal income tax, the modified minimum alternate tax (MAT) will also be effective from tomorrow. MAT is the minimum tax that all companies are required to pay on book profit. MAT has also been altered and increased from 15 percent to 18 percent.
No major change in tax structure is expected though there might be some minor alterations taking into consideration the industry chambers and other stakeholders at the time of the consideration of the Finance Bill in the Parliament. The direct tax proposals, as per his budget speech, would entail a revenue sacrifice of Rs 26,000 crore during 2010-11.