Income Tax for 2010
Income tax has been the most important topic of deliberation since the announcement of the Union Budget by current Finance Minister Pranab Mukherjee. On hindsight, the scenario looks favorable for the middle class, promising a windfall of savings through widened tax slabs.
Income Tax Slab Reviews
The revised tax slabs under the Union Budget 2010 promise savings as high as Rs.50,000 for salaried individuals with an income over Rs.3,00,000 per annum. The taxable incomes specified for different categories in the new budget are fixed at:
| Income Level | Category |
| Individuals | 1,60,000 |
| Women | 1,90,000 |
| Senior Citizens | 2,40,000 |
For all salaried employees exceeding this minimum exemption limit, the taxability has been revised as follows:
| Income Range (in rupees) | Tax Liability (as a percent of income) |
| Up to 5,00,000 | 10 |
| 5,00,000-8,00,000 | 20 |
| Above 8,00,000 | 30 |
Note: Under the previous budget, the 20% tax liability started at income level over Rs.3,00,000 and 30% at income level above Rs.5,00,000.
Revisions on Income Tax Deduction
The scope of savings on income tax is even greater under the new budget, with additional provisions and extensions for claiming deduction. This includes:
- Investment in infrastructure bonds up to Rs.20,000
- Payment of rent, under section 80GG, increased from Rs.1,20,000 to Rs.1,80,000 per annum
- Contribution towards insurance policy (by government staff), under section 80D, increased from Rs.15,000 to Rs.20,000
Additionally, the filing for TDS (Tax Deducted at Source) has been simplified, with the issue of Saral II forms. A two-paged document, the Saral II form enables tax payers to enter relevant details in a simplified format.
A Final Word on Union Budget 2010
While the picture looks completely optimistic, there are several glitches with the new budget for the average taxpayer. Financial experts have estimated that most daily use
[...] Income tax is paid by an individual during an assessment year, on the income earned during the previous year. As a result, tax collection is delayed until the conclusion of the previous year. TDS (Tax Deduction at Source) is a method of collecting income tax from salaried individuals, wherein the applicable tax amount is deducted at the time of computing the income itself. An individual who has authorized TDS receives his/her salary after deduction of the tax. The tax deducted from the assessee’s (tax-payer) salary account is deposited with the Government treasury within a specified time, helping in faster collections. [...]
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