New Delhi: Finance Minister Pranab Mukherjee on Friday gave relief to individual tax payers by raising personal tax slabs while introducing a simpler format of filing tax returns from the next assessment year.
Mukherjee said there would be no tax for annual income up to Rs 160,000. The tax would be at a rate of 10 percent between Rs 160,001 and Rs.500,000, 20 per cent between Rs 500,001 and Rs 800,000 and 30 per cent for income higher than Rs 800,000 per year.
"The proposal to raise the tax slabs will benefit 60 percent of all tax payers," said Mukherjee.
Mumbai-based corporate and personal tax consultant J.P. Purohit said: "The decision to make changes in the taxable slabs will prove beneficial for individuals."
"For instance, levying 10 percent tax on income between Rs.160,001 and Rs.500,000 would mean an individual earning Rs.50,000 a month would be required to pay around Rs.3,000 per month as income tax, which will not pinch much. Earlier, this limit was for income was between Rs.160,000 and Rs.300,000."
The budget for 2010-11 also proposes to allow a deduction of up to Rs.20,000 for investments in long-term infrastructure bonds. The deduction would be in addition to Rs.100,000 allowed under section 80C of the Income Tax Act.
The government will also introduce Saral 2 - a simpler format of filing tax returns - from the next assessment year. Salaried tax payers currently use Income Tax Return-1 forms to file returns.
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