Articles
Budget 2008 Impact of Income Tax Slab / Bracket Changes on You
This article illustrates the positive impact of the changes made in the personal income tax slabs / brackets in the Budget 2008.
| In the budget of 2008, the finance minister P. Chidambaram has proposed changes to the slabs for personal income tax. Although the rate of income tax for each slab has not been changed, the increase in the limit of each slab would result in a very significant saving in the income tax for ALL taxpayers. |
(Ready to file your income tax return, but confused which form to use? Please read "Income Tax (IT) Return Filing Which ITR form to use?")
(Confused about filling the income tax return form - ITR? Want step by step guidance, and a video tutorial? Please read "How to fill Income Tax Return Form 1 (ITR1)")
Proposed Income tax
slabs for FY 2008-09:
|
Rate |
Income |
||
|
Men |
Women |
Senior Citizens |
|
|
0% |
Less than 1,50,000 |
Less than 1,85,000 |
Less than 2,25,000 |
|
10% |
1,50,001 to 2,50,000 |
1,85,001 to 2,50,000 |
2,25,001 to 2,50,000 |
|
20% |
2,50,001 to 5,00,000 |
2,50,001 to 5,00,000 |
2,50,001 to 5,00,000 |
|
30% |
5,00,001 and above |
5,00,001 and above |
5,00,001 and above |
Income tax slabs for FY 2007-08:
|
Rate |
Income |
||
|
Men |
Women |
Senior Citizens |
|
|
0% |
Less than 1,10,000 |
Less than 1,45,000 |
Less than 1,95,000 |
|
10% |
1,10,001 to 1,50,000 |
1,45,001 to 1,50,000 |
NA |
|
20% |
1,50,001 to 2,50,000 |
1,50,001 to 2,50,000 |
1,95,001 to 2,50,000 |
|
30% |
2,50,001 and above |
2,50,001 and above |
2,50,001 and above |
Impact of this change
This change in slabs for personal income tax would positively
impact ALL taxpayers.
The table below illustrates the impact of this step it has
the income tax calculated for various income levels as per the old and new
slabs. This calculation is for a male assessee who is
not a Senior Citizen, but the saving would be more or less same even for women
and Senior Citizens.
|
Income |
Tax FY07-08 |
Tax FY08-09 |
Saving in Tax |
|
1,00,000 |
0 |
0 |
0 |
|
1,50,000 |
4000 |
0 |
4000 |
|
2,00,000 |
14000 |
5000 |
9000 |
|
2,50,000 |
24000 |
10000 |
14000 |
|
3,00,000 |
39000 |
20000 |
19000 |
|
3,50,000 |
54000 |
30000 |
24000 |
|
4,00,000 |
69000 |
40000 |
29000 |
|
4,50,000 |
84000 |
50000 |
34000 |
|
5,00,000 |
99000 |
60000 |
39000 |
|
More than 5,00,000 |
- |
- |
39000 |
Analysis
- A tax payer at ANY income level would benefit from this change
- The benefit is relatively smaller at lower incomes, and increases as the income increases
- The maximum benefit is for people earning Rs. 5 Lakhs per year or more these people would save Rs. 39,000 in income tax
Thus, the finance minister has put more money in our hands. So, go ahead and spend it. But dont spend it all dont forget to invest a decent portion of it!
Happy investing!
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Note: Please treat the opinion expressed here as a broad suggestion. Please consult your financial planner / investment advisor before making any investment decision.
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Comments
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Author:
subhash
Apr 21, 2009
Apr 21, 2009
Re: am i liable for tax
Hi Subhash,
Was this your only income in these 11 years? Were you paying any income tax? It looks like you were not.
In that case, you can have a stand that you earned income in each year, but didn't pay tax or file returns as it was below the threshold of paying tax. Now, you are getting the entire amount as a lump sum, and do not need to pay tax on it.
Was this your only income in these 11 years? Were you paying any income tax? It looks like you were not.
In that case, you can have a stand that you earned income in each year, but didn't pay tax or file returns as it was below the threshold of paying tax. Now, you are getting the entire amount as a lump sum, and do not need to pay tax on it.
Author:
Suraksha
Jun 16, 2009
Jun 16, 2009
TAX Calcuation on EPF Settlement
Dear Sir
I am looking PF Trust and one employee has joined in year 2005 and left the organization in year 2007 and now he want to withdraw his PF amount from our Trust. We have not his Form 16 for the same and his member contribution for all the year is 12000 and i want to know on what percentage we calucate reversal rebate.
At the time of settlement his income is taxable and we have to deduct tax on maximum rate and pls clarify on which maximum rate will be given.
Thanks & Regards
Suraksha
I am looking PF Trust and one employee has joined in year 2005 and left the organization in year 2007 and now he want to withdraw his PF amount from our Trust. We have not his Form 16 for the same and his member contribution for all the year is 12000 and i want to know on what percentage we calucate reversal rebate.
At the time of settlement his income is taxable and we have to deduct tax on maximum rate and pls clarify on which maximum rate will be given.
Thanks & Regards
Suraksha
Re: TAX Calcuation on EPF Settlement
Hi Suraksha,
I am sorry, but I do not know much about taxation of PF withdrawal from the company's point of view.
I am sorry, but I do not know much about taxation of PF withdrawal from the company's point of view.
Author:
dheerajmishra
Dec 07, 2009
Dec 07, 2009
tax saving
hi ,i want to know about the tax saving under 80DD PLEASE SEND
(Follow Me)
I am one of the partners in a rice mill from past 11 years and I am not a Income Tax Assee, the above said rice mill has given for lease till to date and so far I have not taken my share, as I disered to use it for my daughter's marriage and the total amount comes to about 6lakhs (including interest@18%pa). Am I liable to pay Income Tax?