Tuesday, July 7, 2009

New Income Tax Slabs

In the union budget for financial year 2009-10, the Finance Minister has announced new tax slabs.

Till 1,60,000 – 0%
1,60,001 – 3,00,000 – 10%
3,00,001 – 5,00,000 – 20%
Above 5,00,000 – 30%

Till 1,90,000 – 0%
1,90,000 – 3,00,000 – 10%
Remaining tax rates are same as general

Senior Citizen
Till 2,40,000 – 0%
2,40,001 – 3,00,000 – 10%
Remaining tax rates are same as general

As you can see, compared to the last change, there is a 10,000 rupees increase in the first slab across all categories, while the remaining slabs remain unchanged. This would lead to a maximum savings of 1000 rupees for a tax payer whose income falls above Rs. 1,60,000. This may not be a significant saving for many.

However the interesting thing to note is that there is no 10% surcharge for incomes above 10 lakhs. This is a welcome move because I feel progressive taxation is counter productive to an aspiring population. Eventhough these tax sops would make holes in government's revenues, I guess the government is looking to increase the expendable surplus of the populace so as to boost up the economic downturn.