Tax exemption limit hiked to Rs 2 lakh

Finance Minister aka Pranab da, in his seventh budget speech, today, has hiked the exemption limit for general category individual tax payers to Rs 2 lakh from the earlier Rs 1.8 lakh. This measure will provide tax relief upto Rs 2,000 to every tax payer in this category.

He also proposed that the upper limit of the tax slab be increased to Rs 10 lakh - from Rs 8 lakh earlier.

A 10 percent tax rate has been proposed for the income bracket between Rs 2-5 lakh, 20 percent for those in the bracket of Rs 5-10 lakhs and 30 percent for those earning above Rs 10 lakh.

 Tax exemption limit hiked to Rs 2 lakhIn another relief to individual taxpayers, a deduction of upto Rs. 10,000 has been proposed for interest income from savings bank accounts. This would help a large number of small taxpayers with salary incomes upto Rs 5 lakh and interest from savings bank accounts upto Rs 10,000 as they will not be required to file income tax returns.

According to CNBC-TV18 experts, salaried individuals who were earning Rs 10 lakh, were were paying a tax of Rs 1.52 lakh. This will now reduce to Rs 1.3 lakhs, a savings of Rs 22,000.

The finance minister has also proposed a deduction of Rs 5,000 for preventive health check ups.

For senior citizens not having an income from business, an exemption from payment of advance tax has been proposed.

The increase in tax slabs was pretty much on the wishlist of experts as persistently high infaltion was taking a toll on the common man.

(With inputs from PTI)

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Updated Date: Dec 21, 2014 04:42:11 IST