Personal Income Tax to go down after the budget

by Manshu on February 26, 2010

in Tax

The Indian budget was positively received by most people today, and it has got a bit of good news for people who pay income tax.

The tax slabs have changed, and it translates into a Rs.50,000 savings for incomes up to Rs. 8 lakhs. Any amount over that will continue to be taxed at the earlier rate.

The new slab is as follows:

Income up to 1.6 lakhs: 0

From 1.6 to 5 lakhs: 10%

5 to 8 lakhs: 20%

Above 8 lakhs: 30%

This is a welcome change and if you compare it with the earlier slab – someone earning 8 lakhs will save Rs.50,000. This is of course a simplification, as it does not take into account the deductions you get from investments, EMI payments or other things like the LTA tax or HRA tax for example.

I feel happy to be able to write about this good news especially because I recently had a post an another bit of good news for Indian savers.

The bad news is that fuel prices will go up a bit, but in the larger scheme of things deregulation of fuel prices is a good thing for the Indian economy.

{ 6 comments… read them below or add one }

Indian Thoughts February 27, 2010 at 12:55 am

I also feel fuel deregulation was essential even if it means little budget modifications to start with.

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Manshu February 27, 2010 at 10:33 pm

Yeah, deregulation along with implementation of the new tax code will be two major things as far as I am concerned.

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Financial Samurai February 28, 2010 at 9:43 am

Hi Manshu,

thanks for the heads up on the taxes. Can you do me a favor and explain to me how many rupees one lakh is? And the one crore?

Thanks

Reply

Manshu February 28, 2010 at 11:08 am

10 lakhs is a million, and 1 crore is 10 million, and a billion is 100 crores.

You really are quite interested in this stuff aren’t you πŸ™‚ The only time I saw people remotely interested in what a lakh was when Tata Nano was launched and promoted as the 1 lakh car.

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Karunakaran January 24, 2011 at 8:24 am

Is There any chance that 1.6 L celing will go up to 2.5 some where because people who are in the category of 2 to 3 L find it diffucult with preaviling inflation and fule price.

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Manshu January 24, 2011 at 11:14 pm

Karunakaran – This post was written for last year’s budget, so this is a bit dated. The big thing now is to hope that the Direct Tax Code brings in some relief to taxpayers year after next.

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