New Delhi: In a relief to individual tax payers, the government changed the slabs cutting the rate to 10% for income up to Rs5 lakh, while leaving the threshold limit for tax-free income unchanged at Rs1.6 lakh.
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Income between Rs5 lakh to Rs8 lakh will attract 20% tax against the current slab of Rs3 lakh to Rs5 lakh. Hitherto, the income between Rs1.6 lakh and Rs3 lakh was taxed at the rate of 10%.
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In case of income over Rs8 lakh, tax would be levied at a rate of 30% -- which was hitherto applicable on income above Rs5 lakh.
The tax concessions would put more money in the hands of consumers.
Finance minister Pranab Mukherjee also extended income tax exemption to investment in infrastructure bonds by up to Rs20,000 over and above the existing limit of Rs1 lakh.
In a major relief to the corporate sector, the government proposed to reduce the surcharge on corporate tax to 7.5% from 10% now.
However, it has increased the Minimum Alternate Tax (MAT) from existing 15% to 18% on book profits of those companies which do not pay tax because of various exemptions.