Government increases income tax exemption limit

Finance Minister P Chidambaram spread cheer all around with Budget 2008-09, the last full-fledged Budget of the UPA government. A hike in the income-tax exemption limit was one of the key highlights of the Budget.

The finance ministry raised the income-tax exemption limit from Rs 1,10,000 to Rs 1,50,000. Exemption limit for women was raised from Rs 1,45,000 to Rs 1,80,000 and exemption for senior citizens was raised from Rs 1,95,000 to Rs 2,25,000.

Direct tax collections have been buoyant this fiscal year, registering a growth of over 40% to Rs 2,18,538 crore in the first 10 months.

The slabs were introduced three years ago, but the Prime Minister’s Economic Advisory Council has suggested a change in the structure. For income upto Rs 1,50,000 tax liability will be nil, between Rs 1,50,000 and Rs 3,00,000 tax liability will be 10%, from 3 lakh to 5 lakh tax liability will be 20%, from 5 lakh upwards it will be 30%.