New Delhi: Finance Minister P Chidambaram has brought cheer to the individual taxpayer by raising the basic income tax exemption limit from Rs1,10,000 to Rs1,50,000. The move will see the individual save at least Rs4,000 in taxes in financial year 2008-09.
The exemption for women asseesees has been raised from Rs1,45,000 to Rs1,80,000, while that for senior citizens from Rs1,95,000 to Rs2,25,000.
Chidambaram has also changed the slabs at which the various tax rates will apply but has not tinkered with the surcharge. General assesees will pay no tax for income up to Rs1,50,000.
Beyond Rs1,50,001 and up to Rs3,00,000, a tax rate of 10% is applicable. The 20% tax rate is applicable in the Rs3,00,001-5,00,000 slab and anything beyond Rs5,00,000 will be taxed at 30%.
The 3% surcharge on tax at all levels remains.
As far as exemptions are concerned, senior citizens get further reprieve. the Senior Citizens Savings Scheme and some other post office products have been brought under the ambit of Section 80C, and any investment made in these instruments will qualify as deduction from the senior citizens’ total income.
And all classes of assesses are entitled to additonal relief under Section 80D. If the medical premium expenses incurred under that section are for the benefit of the taxpayer’s parents, the maximum exemption under that section will be Rs50,000 instead of the earlier Rs15,000.
Bad news, though, for those who earn their living playing on the stock market. The FM has raise the rate of short-term capital gains tax on the sale of listed shares from 10% to 15%.