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Wednesday, February 8, 2012

Minor hike tax in exemption limit on cards. Likely to be Rs 2 lakh

The government is likely to provide slight relief to individual income tax payers in the coming budget. The tax exemption limit is likely to be raised to Rs 2 lakh from the existing 1.8 lakh. The slabs for different tax brackets are also to be increased. There may not be different limit for the women.

The changes are in accordance with the proposed Direct Taxes Code (DTC). The DTC Bill, currently with a Parliament standing committee, proposes to tax annual income over Rs 2 lakh up to Rs 5 lakh at 10 per cent, more than Rs 5 lakh up to Rs 10 lakh at 20 per cent and income above Rs 10 lakh at 30 per cent a year. Currently, income over Rs 1.80 lakh up to Rs 5 lakh attracts 10 per cent income tax, over Rs 5 lakh up to Rs 8 lakh is taxed at 20 per cent and income above Rs 8 lakh is taxed at 30 per cent.

However the chances of lower tax rates are remote under the current fiscal situation.

The Union Budget this year will be delayed due to the elections in five states and will presented by the finance minister on March 16. The budget session, which normally commences in the third week of February, will start only on March 12

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