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Now, save up to Rs 50,000 in taxes
March 6
For women under 65
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Tax liability (Rs) |
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Taxable income (Rs) |
2007-08 |
2008-09 (Projected) |
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2,00,000 |
10,815 |
2,060 |
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4,00,000 |
67,465 |
32,960 |
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6,00,000 |
1,29,265 |
84,460 |
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8,00,000 |
1,91,065 |
1,46,260 |
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10,00,000 |
2,52,865 |
2,08,060 |
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12,00,000 |
3,46,132 |
2,96,846 |
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14,00,000 |
4,14,112 |
3,64,826 |
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16,00,000 |
4,82,092 |
4,32,806 |
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18,00,000 |
5,50,072 |
5,00,786 |
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20,00,000 |
6,18,052 |
5,68,766 |
Tax liability includes surcharge and education cess
Generous as this is, it is not all. The tax slabs have been raised as well. Currently, the maximum marginal rate of tax of 30 per cent is applicable from the income level of Rs 2.5 lakh (Rs 250,000), this has been doubled to Rs 5 lakh for the next financial year. This means that instead of incomes over Rs 2.5 lakh being taxed at 30 per cent, now the part of the income that is over Rs 5 lakh will be taxed at 30 per cent. This means an under 65-year-old male taxpayer with a gross income of Rs 4 lakh (Rs 400,000), will now save about Rs 35,020 in income tax. Not bad at all.
Senior citizens are rocking
Senior citizens can open that bottle of bubbly now. Most of their demands have been met. With the threshold level of tax rising to Rs 2.25 lakh, a senior citizen can now get a minimum tax-free monthly income of Rs 18,750 per month. Let's assume that she is able to invest another Rs 1 lakh (Rs 100,000) in Section 80C product, her tax-free monthly income zooms to Rs 22,700.
The government now includes the term deposits of the post office and Senior Citizens' Saving Scheme (SCSS) under Section 80C. In case of the time deposit scheme, the tax exemption would be available only for the 5-year scheme, which offers 7.5 per cent interest. The SCSS is also for five years and offers 9 per cent interest. Incidentally, the interest earned from both of these schemes would be taxable in the hands of the investor.
Health insurance also got a boost. The budget has introduced additional benefit under Section 80D to the extent of Rs 15,000 for premium paid for medical insurance taken for parents. This will act as an impetus to taxpayers to provide medical cover to their parents, pushing the total limit of deduction allowed for medical insurance premium to Rs 30,000.
Good times for tax payers: Senior citizens. Click here...
Also read: A bagful of goodies from Chidambaram
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