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Budget 2010-2011: More money for you due to Income Tax slab / bracket changes

This article tells you how much extra money you would get in your pocket because of the changes made in the personal income tax slabs in the Budget 2010-2011.



In the budget of 2010-11, the finance minister Pranab Mukherjee 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
the slabs would result in a very significant saving in the income tax for >almost 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 2010-11:

>

Rate

Income

Men

Women

Senior
Citizens

0%

Less than
1,60,000

Less than
1,90,000

Less than
2,40,000

10%

1,60,001
to 5,00,000

1,90,001
to 5,00,000

2,40,001
to 5,00,000

20%

5,00,001
to 8,00,000

5,00,001
to 8,00,000

5,00,001
to 8,00,000

30%

8,00,001
and above

8,00,001
and above

8,00,001
and above

Income tax slabs for
FY 2009-10:

>

Rate

Income

Men

Women

Senior
Citizens

0%

Less than
1,60,000

Less than
1,90,000

Less than
2,40,000

10%

1,60,001
to 3,00,000

1,90,001
to 3,00,000

2,40,001
to 3,00,000

20%

3,00,001
to 5,00,000

3,00,001
to 5,00,000

3,00,001
to 5,00,000

30%

5,00,001
and above

5,00,001
and above

5,00,001
and above


Impact of this change

This change in slabs for personal income tax would positively
impact all taxpayers having an income of more than Rs. 3,00,000.

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 the same even for women
and Senior Citizens.

>

Income

Tax
FY09-10

Tax
FY10-11

Saving
in Tax

1,00,000

0

0

0

1,50,000

0

0

0

2,00,000

4000

4000

0

2,50,000

9000

9000

0

3,00,000

14000

14000

0

3,50,000

24000

19000

5000

4,00,000

34000

24000

10000

4,50,000

44000

29000

15000

5,00,000

54000

34000

20000

5,50,000

69000

44000

25000

6,00,000

84000

54000

30000

6,50,000

99000

64000

35000

7,00,000

114000

74000

40000

7,50,000

129000

84000

45000

8,00,000

144000

94000

50000

More than
8,00,000

-

-

50000


Analysis

  • All tax payers having an income level of Rs. 3,00,000 per year or more 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. 8 Lakhs per year or more – these people would save Rs. 50,000 in income tax every year

Thus, the finance minister has put more money in our hands. So,
go ahead and spend it. But don’t spend it all – don’t forget to invest a decent
portion of it!

Happy investing!

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