Articles
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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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
Add a new Comment
Author:
Sunil Khandelwal
Mar 02, 2010
Mar 02, 2010
Author:
Raman
Mar 04, 2010
Mar 04, 2010
80DDB
Dear Mr. Raagav,
Is it possible to claim using 80DDB along with form 16 for the incometax year of 2009-2010?
Is it possible to claim using 80DDB along with form 16 for the incometax year of 2009-2010?
Service Tax on sale of property
Dear Sir,
Guide me on new tax proposed on sale of property in FY 2010-2011
Abhay
Guide me on new tax proposed on sale of property in FY 2010-2011
Abhay
LTCG from sale of house
Sir,
First off all thank you for wonderfull sheet on calculation of LTCG from sale of house. I have calculated my LTCG as Rs. 42 Lacs from sale of house. The period is from 1990-91 to 2009-2010. My questions are
1. Whether this LTCG will be distributed over this period for calculation of Tax?
2. Whether donations out of this LTCG to my son and daughter will be helpfull in saving tax?
3. How to save tax on this? I am planning to construct another house costing about 11 lacs.
Abhay
First off all thank you for wonderfull sheet on calculation of LTCG from sale of house. I have calculated my LTCG as Rs. 42 Lacs from sale of house. The period is from 1990-91 to 2009-2010. My questions are
1. Whether this LTCG will be distributed over this period for calculation of Tax?
2. Whether donations out of this LTCG to my son and daughter will be helpfull in saving tax?
3. How to save tax on this? I am planning to construct another house costing about 11 lacs.
Abhay
(Follow Me)
It would mean proceed from PF/PPF/LIC may be taxable at the time of maturity and since these may be large amount one may have to pay tax in 20-30% slab.
Capital gains would be added to income (no more tax free long term gain on MF/Stocks).
The option for user is to plan real long term in investments which can be sold in part (like MF Units/Stocks). Even sell of house/property would attract large tax compare to what we are used to with existing tax laws.
I would appreciate if you could write on these issue in near future so that people can replan their investment strategy.
Regards,
Sunil