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Tax payers to gain up to Rs 44,000 under new regime The working class people will stand to benefit by up to Rs 44,000 a year in income tax following the changes proposed by the Finance Minister in the Union Budget for 2008-09, which also provides for a minimum benefit of Rs 4,000. 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 percent, between Rs 3-5 lakh at 20 per cent, while for Rs 5-10 lakh it would be 30 percent. 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 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). However, those with income in excess of Rs 10 lakh would continue to attract an additional surchange of 10 percent. 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. Tags- Source :
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