The finance Minister, in his budget speech, announced marginal tax benefits for individual tax payers. He increased the basic exemption limit for male taxpayers and female taxpayers by Rs 10,000 and that of senior citizens by Rs 15,000. There is no change in the Corporate Tax rates while there has been a modest hike in the exemption limit on personal Income Tax. The exemption limit for Senior Citizens has been increased from Rs. 2.25 lakh to Rs. 2.40 lakh. For Women tax payers the exemption limit has been increased by Rs.10,000 to from Rs.1.80 lakh to Rs. 1.90 lakh and from Rs. 1.50 lakh to Rs.1.60 lakh for all other categories of individual taxpayers. He abolished the surcharge of 10% on income over Rs 10 lakh.
The new tax slabs now stand as follows:
Male taxpayers
| Income Level | Tax Rate |
| Upto 1,60,000 | Nil |
| 1,60,001 to 3,00,000 | 10% |
| 3,00,001 to 5,00,000 | 20% |
| Above 5,00,000 | 30% |
Female taxpayers
| Income Level | Tax Rate |
| Upto 1,90,000 | Nil |
| 1,90,001 to 3,00,000 | 10% |
| 3,00,001 to 5,00,000 | 20% |
| Above 5,00,000 | 30% |
Senior citizens
| Income Level | Tax Rate |
| Upto 240000 | Nil |
| 240000 to 300000 | 10% |
| 300001 to 500000 | 20% |
| Above 500000 | 30% |
In addition to this, an education cess of 3% on the tax amount continues. But a 10% surcharge on income over Rs 10 lakh has been abolished.
Saving from revised Tax rates
With the help of below given Table you can understand, what will be your saving from the revision
For men and women
| Taxable income (Rs) | Tax - before budget | Tax -after budget | Difference | | | |
| | Male | Female | Male | Female | Male | Female |
| 2,00,000 | 5150 | 2060 | 4120 | 1029 | 1030 | 1031 |
| 5,00,000 | 56650 | 53560 | 55620 | 52529 | 1030 | 1031 |
| 10,00,000 | 211150 | 208060 | 210120 | 207029 | 1030 | 1031 |
| 12,00,000 | 300245 | 296845 | 271919 | 268829 | 28326 | 28016 |
| 15,00,000 | 402215 | 398815 | 364619 | 361529 | 37596 | 37286 |
| 20,00,000 | 572165 | 568765 | 519119 | 516029 | 53046 | 52736 |
| 25,00,000 | 742115 | 738715 | 673619 | 670529 | 68496 | 68186 |
| 40,00,000 | 1251965 | 1248565 | 1137119 | 1134029 | 114846 | 114536 |
For senior citizens
| Taxable income (Rs) | Tax before budget | Tax after budget | Difference |
| 2,00,000 | Nil | Nil | Nil |
| 5,00,000 | 49875 | 47379 | 2496 |
| 10,00,000 | 203424 | 201879 | 1545 |
| 12,00,000 | 291746 | 263679 | 28067 |
| 15,00,000 | 393716 | 356379 | 37337 |
| 20,00,000 | 563667 | 510879 | 52788 |
| 25,00,000 | 733617 | 665379 | 68238 |
| 40,00,000 | 1243467 | 1128879 | 114588 |
Below given are the changes announced in Budget 2009 - 2010 that will have some impact on your personal taxation.
1. Marginal Increase in Tax Exemption: Personal income tax exemption limit raised for senior citizens by Rs 15,000 and for all others by Rs 10,000.
2. Higher Deduction under Section 80DD: Annual deduction relating to maintenance, including medical treatment, for a dependent with severe disability (more than 80%) has been raised to Rs 1 lakh from the current Rs 75,000.
3. Expanded Scope of Section 80E: Annual deduction in respect of interest on loans taken for higher education purposes has been expanded from the current limited list of courses to cover all fields of studies, including vocational studies, pursued after completion of schooling.
4. Elimination of Surcharge: The 10% surcharge on taxes for those earning annual income above Rs 10 lakhs will no longer exist. This will lead to a tax saving for higher income earners
5. Abolishment of Fringe Benefit Tax (FBT): FBT on the value of fringe benefits provided by employers to employees has been abolished. Reimbursements will be taxed as perquisites at the marginal tax rate. This might increase the tax burden on employees.
6. Increase in Wealth Tax Exemption: The exemption limit for wealth tax has been increased from Rs 15 lakhs to Rs 30 lakhs.
7. Automation of Tax Filing Procedure: Reiteration of the re-engineering of the key business processes around the filing of direct taxes. Expect simplified tax filing in the near future, with the prospect of quicker refunds.
Corporate Tax rates
- Corporate Tax rates - No Changes in corporate Tax, it continues to stand at 30% plus surcharge of 10% of the corporate tax (for companies with profits above Rs 10 million) along with an education cess that amounts to 3% of corporate tax, totalling to 33.9%.
- Fringe Benefit Tax (FBT) - Fringe Benefit Tax is abolished
- Minimum Alternate Tax (MAT) - Increased to 15% of book profit
- Commodity transaction tax (CTT) – CTT is cancelled
- Goods and Services Tax (GST) – GST is to be implemented by April 2010, cumulative incidence of GST expected to be around 18%
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