By raising the income-tax exemption limit to Rs 1.5 lakh from Rs 1.1 lakh, the Budget has provided to lower tax rates for income up to Rs 5 lakh. The minimum benefit to a person with an annual income of Rs 1.5 lakh at the threshold will be around Rs 4,000 while a benefit of nearly Rs 50,000 would accrue to a taxpayer having an income of Rs 5 lakh annually, says Raj Malhotra from Chandigarh-based tax firm Rajiv Malhotra and Company.

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 assesses, 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, he says.

Rajiv Mittal, a chartered accountant, explains that according to the new 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.

The tax benefit would be higher for male assesses 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 assesses 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, he says.

For senior citizens 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).