On populist track, income tax slabs raised

New Delhi: Finance Minister P Chidambaram announced major – and arguably populist – changes in the income tax slab.

The threshold of exemption for all income tax assesses has been raised from Rs 1,10,000 to Rs 1,50,000.

The minimum benefit to a person with an annual income of Rs 1.5 lakh at the threshold will be around Rs 4,000.

New tax slabs will be:

• 10 per cent for 1,50,000 to 3,00,000
• 20 per cent for 3,00,000 to 5,00,000
• 30 per cent above 5,00,000

Threshold for small service providers has been raised from Rs 8 lakh to Rs 10 lakh.

For women, the income tax limit goes up from Rs 1.45 lakh to Rs 1.80 lakh.

An additional deduction of Rs 15,000 under Section 80D has been allowed to an individual who pays medical insurance premium for his/her parents.

Senior Citizens Saving Scheme 2004 and the Post Office Term Deposit Account have been added to the basket of saving instruments under Sec.80(C) of the Income Tax Act.

Chidambaram also introduced an additional deduction of Rs 15,000 for taxpayers towards payment of medical insurance for parents. This would be in addition to the Rs 1 lakh limit for savings under Section 80C of the Income Tax Act.