This article illustrates the positive impact of the changes made in the personal income tax slabs / brackets in the Budget 2008.
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In the budget of 2008, the finance minister P. Chidambaram 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?“)
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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 don’t spend it all – don’t forget to invest a decent
portion of it!
Happy investing!
Other articles you might be interested in:
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- Cost Averaging
- Start saving early and gain from Compounding – Early bird gets the worm
- Saving enough is not enough – Effect of Inflation on Savings
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- Life after life – Why you should buy Life Insurance
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sir,
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?
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.
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
Hi Suraksha,
I am sorry, but I do not know much about taxation of PF withdrawal from the company’s point of view.
hi ,i want to know about the tax saving under 80DD PLEASE SEND