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 |
(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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