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F inance Minister Pranab Mukherjee took the first step towards implementation of the Direct Taxes Code (DTC) on Friday. While retaining the
basic exemption limits for all income levels (as in the DTC), he increased the other slabs.
For instance, while the basic exemption limit for individuals has been retained at Rs 1.6 lakh, the 10 per cent rate will now be applicable for the Rs
1.6 lakh-Rs 5 lakh bracket. Earlier, the 10 per cent rate was applicable for income of Rs 1.6-Rs 3 lakh. The hike in the slab means that the
Further, he has also increased the limit for the next income slab -- that is, the 20 per cent tax rate will be applicable for incomes of Rs 5 lakh-Rs 8
lakh instead of Rs 3 lakh-Rs 5 lakh. And the highest rate of 30 per cent will be applicable on incomes of over Rs 8 lakh (earlier Rs 5 lakh).
The maximum benefit that will come because of the increase in slabs would be Rs 51,500. "With the consumer inflation index rising at 14.97 per
cent (December-end), this move will help reduce some of the burden by leaving more cash at the individual's hands," said a financial planner.
In addition, the finance minister has also increased the limit of investments under Section 80C by Rs 20,000 -- from Rs 1 lakh to Rs 1.2 lakh.
However, the benefits will only be given to people who invest in infrastructure bonds. A separate Section 80CCF has been introduced under
For the taxpayer in the higher income tax bracket, if one adds the tax benefit of Rs 51,500 with the 80CCF benefit (Rs 6,180), the total reduction
On a total income of Rs 10 lakh there will be effective tax saving of Rs 57,680 to an individual.
LESS TDS Figures in Rs
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