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While raising the income tax exemption limit to Rs 1.5 lakh from 1.1 lakh, Finance Minister P Chidamabaram also provided for lower tax rates for income up to Rs 5 lakh.
Earlier, the minimum exemption limit stood at Rs 1.1 lakh for all classes of individuals. For women, the exemption limit has been raised to 1.8 lakh from 1.45 lakh previously, while for senior citizens it has been hiked from Rs 1.95 lakh to Rs 2.25 lakh.
For an income of Rs 10 lakh a year, an individual would have to pay a tax of Rs 2,05,000, as against Rs 2,49,000 under the previous tax structure. For women assessees, a similar income would attract a tax of Rs 2,02,000 under the new regime, down from Rs 2,45,500 previously, while the tax for senior citizens would drop to Rs 1,97,500 from Rs 2,36,000 earlier.
The minimum benefit to a person with an annual income of Rs 1.5 lakh at the threshold will be around Rs 4,000, Finance Minister P Chidambaram said, while presenting the Budget 2008-09 in Lok Sabha.
According to the proposals, income between Rs 1.5-3 lakh will be taxed at 10 per cent, between Rs 3-5 lakh at 20 per cent, while for Rs 5-10 lakh it would be 30 per cent.
Based on this structure, an individual having an income of Rs 10 lakh would pay no tax on income up to Rs 1.5 lakh, Rs 15,000 between Rs 1.5 lakh to Rs 3 lakh, Rs 40,000 between Rs 3-5 lakh and Rs 1,50,000 between Rs 5-10 lakh. Previously, the tax amounts for these four slabs were Rs 4,000, Rs 35,000, Rs 60,000 and Rs 1,50,000 respectively.
The tax benefit when compared to the previous regime would be higher for male assessees, as compared to women and senior citizens.
While men with an annual income of Rs 10 lakh stand to gain Rs 44,000, the same for women and senior citizens with similar income is Rs 43,500 and Rs 38,500 respectively.
In case of women assessees with annual income of Rs 10 lakh, the tax amounts for income slab of up to Rs 1.8 lakh would be nil, Rs 12,000 between Rs 1.8-3.0 lakh, Rs 40,000 for Rs 3-5 lakh and Rs 1,50,000 for Rs 5-10 lakh. Earlier, the tax rates for these slabs stood at Rs 6,500, Rs 29,000, Rs 60,000 and Rs 1,50,000 respectively.
For senior citizes with similar annual income, the tax for income up to Rs 2.25 lakh would be nil (Rs 6,000 previously), Rs 7,500 (down from Rs 20,000) for Rs 2.25-3.00 lakh, Rs 40,000 (down from Rs 60,000) for income between Rs 3-5 lakh and Rs 1,50,000 for income between Rs 5-10 lakh (unchanged).
However, those with income in excess of Rs 10 lakh would continue to attract an additional surchange of 10 per cent.
Chidambaram also introduced an additional deduction of Rs 15,000 for taxpayers towards payment of medical insurance for parents. This would be in addition to the Rs 1 lakh limit for savings under Section 80C of the Income Tax Act.
Mobiles to cost more, cars to cost less
The results of the budget speech are slowly coming to fore with mobile and car companies deciding on thier future moves. Mobile phone users would now have to shell out more money for buying new handsets, with the government proposing to levy one per cent excise duty on them.
In his Budget speech, Finance Minister P Chidambaram said: "Excise duty of one per cent, called National Calamity Contingent Duty, is now imposed on polyester filament yarn, which is the only yarn suffering this excise duty. I propose to remove that duty and shift the levy to cellular mobile phones."
"It will definitely increase the prices of mobile phones," LG Business Group Head (GSM) Anil Arora said when asked about the impact of the proposed move.
The proposal may translate into a corresponding one per cent hike in price of mobile handsets. However, a full impact of this needs to be reviewed, a Nokia spokesperson said.
Echoing similar sentiments, Indian Cellular Association President Pankaj Mohindroo said the proposed move of levying one per cent excise duty would increase the prices of mobile phone sets.
When asked how much the prices would go up, he said, "The price rise will not be killing... it will be minimal."
Global cellular handsets majors Nokia, Samsung, Motorola and LG have their mobile manufacturing plants in India.
On the other hand, much to the delight of prospective small car buyers, leading manufacturers Hyundai Motor India and General Motors on Friday said they would slash prices by up to Rs 16,000 to pass on benefits from the excise duty cut announced in the budget.
Finance Minister P Chidambaram, in his budget speech, has proposed to cut excise duty from 16 per cent to 12 per cent on small cars.
"We have decided to pass on the benefit of the excise duty cut to customers on three models – Santro, i10 and the Getz--effective April 1," a Hyundai official said.
The price cut on Santro could be between Rs 12,000 and Rs 14,000, while that on Getz would be between Rs 14,000 and Rs 16,000.
Price cut on the newly launched i10 could be between Rs 12,000 and Rs 16,000, the official added.
General Motors is also cutting he price of its small cars Spark and Aveo U-VA.
"We will be cutting the prices of our small cars between Rs 7,500 and Rs 14,000," GM India Vice-President P Balendran said.
Meanwhile, rival Maruti officials said the company was studying the impact of the excise cut before taking any steps.
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RatingFM Realy rich people man. If car price cut but bus's wlll not able to run in the Road. already so mach traffic cons. No body thinking cycle man. You media people also going now the days by car you will also support big people like TATA - Reli
What is missing in this is a 'separate' tax exemption limit for minoroties. While the country as a whole MUST support women (and other weaker sections including minoritis) to come out of their shackles and be productive at their best, a separate exemption 'limit' is indicative of the 'reservation' mindset and even may be contrary to the constitutional principles rather than constructive solutions to address inequalities, which unforuniatelt the political class does not seem to be getting.
There is no point in writing to the Hindu which censors every letter and does not accept at all.I hope you do nothave such a dictatorial editoriall policy
Well I certainly don't mind paying less tax. Good that the limits have been increased. This might actually make black money converted to white and increase the tax revenue. Also it is time the government start investing in some non-petroleum power research. It is too early a stage for a reliable source of energy after petrol and India can leverage a huge advantage at this time if we can find an alternative.
Ki pag ghungharu bandh Sonia naachi thi, aur Chidambaram nache bin ghungharu ke, O teer bhala kis kaam kaa hai, zo teer nishaane se chuke, chuke, chuke re; Hummm, aap andar se kuch aur, bahar se kuch aur nazar aate hai; ba khuda sakl se to, chor nazar aate hai; umr gujri hai sare chori me, saare sukh chaiyn band jurm ki tijauri me; aapke to lagta hai bus yahi sapna, Sonia naam japna paraayaa maal apna; vatan kaa khaaya namak to, namak halaal bano, farz imaan ki zindaa yahaan, mishaal bano; paraayaa dhan, paraai naar pe nazar mat daalo, buri aadatt hai ye, aadatt abhi badal daalo; kyonki, ye aadatt to o aag hai zo, ek din apnaa ghar phunke, phunke, phunke re; ki pag ghungharu bandh Sonia naachi thi, aur Chidambaram naache bin ghungharu ke.
Mr. lame duck PM, Chidu has done his job as per your and sonia's dictat, finally Communists have been able to literally run the govt. every time congress tried to get on its feet. but it is nothing short of giving communists what they want to hear and you've started dancing to their tunes. Let see how much you can extract from your Red czar in foreign policy, bastrads communists have are yet to endorse your program for arunachal openly, at least karat brother
FM has presented an excellent budget. He has given a great relief to middle class and farmers. Over the last few years FM has definitely shown that he is a good economist and a politician. Achieving a growth rate of more than 8% for the last five years is a tremendous achievement. Kudos to Chidambaram and Manmohan Singh.
The Finance minister has done a great job to save at least Rs.44000/- to the wage earners. However, I feel this whole amount will be gobbled up by the increase in the real estate prices. It would make all the savings meaningless. Will the government do something so that people can aspire to have a decent roof over their head on the strength of their earnings alone? A democracy cannot be proud of itself as long as more than 70 per cent of its population has to live in slums deprived of all dignity. If our youths get attracted to violence, influenced by those who do not believe in democracy, our carefully prepared budget would become meaningless to the masses whom it wants to please.
ver fine budget for employee , wish him (FM) to present more more budget in future
Today's budget is totally political and soft as was expected keeping an eye on the polls next year, but one thing commendable is that UPA govt. has been consistently performing well even though it faces strong expected differences from its alliances. What commends is that it doesnot hurt the common man and it has achieved that in the last five years, all round growth has been seen in all the sectors of industry and speaks well of the UPA govt.kudos to sonia, manmohan singh, pc, etc. They really deserve a second term if the industry has to do well.
the decision to withraw farmer's loan is good,but how it will increase the production.
5% tax slab should have been introduced upto 1.50lac and Sec 80c Limit should have been enhanced to 1.50 lacs-People and Govt Win-Win
Section 80C of the Income Tax Act - Public should have been allowed to go in for more savings by putting upper limits under Sec. 80C upto 2 lakhs; and thus more liberal in accepting the savings, which could have been used in Nation building. People are liberal in spending any money but they should be habituated to go in for bigger savings, which will not only help the economy but the individual himself in the long run. The Finance Minister can consider this even now....better late than never..Give Savings a slogan "CHECK DE SAVINGS'
This Budget is for common man. Hike of Tax Exemption limit is appreciable. Addition of Rs. 15000/- ( for medical insurance in the name of parents) under 80c is highlight.
The reduction of the direct income tax rates was expected last year. Having coffers full (40% beyond expectation) It is the smart political move by the government to woo the common man. First to increase to the sky level and reduce it by few inches, Good only fools are living in this country to believe and to elect the government of this kind!!!
The budget is overall good for the am admi. It will boost agriculture production, contain inflation. But the move to waive farmers loans to such a large extent may have adverse effect.
Good move to encourage IT payer.
I am very much happy with this Budget esp. Income tax exemption limit raised
Good step taken by honourable FM. Now more people will file ITR
Date: Feb 29, 2008Dear Sir,Let it be possible for mankind per se to reduce effect of money in due course of time. Let entire universe benefit by ushering in "Information society".Sincere prayer that a beggining be made right at home. Let sixth pay commission be avoided. Let common man not be burdened even more and let sins not get increased. Let it be possible to achieve 4th, rd, 2nd, 1st, 0th pay commission.Let honesty, dedication, virtues, zeal etc flourish and reap benefits to all. Let simplicity be winning proposition in society. Let effect of money gradually decrease. Let this begin with the most protected lot.Thank You,P. Suresh
but no more tax exempt for physically handicapped
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