New Delhi, Feb. 28: Your income-tax is down.
Once the celebrations are over, get ready to learn how to invest without the government's help.
The budget has spread cheer by restructuring tax slabs but it has also done away with concessions that had made savers grow accustomed to a host of government-guaranteed investment options.
The finance minister doubled the basic income-tax exemption limit from Rs 50,000 to Rs 1 lakh. The threshold level for women has been raised to Rs 1.25 lakh and for senior citizens (65 years) to Rs 1.5 lakh.
Incomes between Rs 1 lakh and Rs 1.5 lakh will now attract 10 per cent tax (earlier it was 20 per cent), Rs 1.5 lakh-Rs 2.5 lakh 20 per cent (earlier 30 per cent) and above Rs 2.5 lakh 30 per cent.
The 10 per cent surcharge will now apply only to incomes above Rs 10 lakh. Marginal relief will be given to ensure that the additional income-tax payable, including surcharge, on income over Rs 10 lakh is limited to the excess amount. However, no marginal relief will be given on the 2 per cent education cess.
The finance minister removed the standard deduction and reduced the plethora of exemptions to six as a 'clean-up' operation.
Rebate under Section 88 and Section 80 (L) has been eliminated. These sections had provided investors with an avenue to invest in government-covered instruments carrying tax incentives.
Today's budget allows a deduction of up to Rs 1 lakh from the taxable income if the amount is invested in savings. However, with the familiar government-guaranteed options losing the tax relief benefit, savers will have to look for other options like mutual funds.
Without saying so, the finance minister seems to be nudging savers to transform themselves into investors and bank on market-related instruments as is the practice in developed countries.
However, six deductions, including interest paid on housing loan for self-occupied property, medical insurance premia and loans for higher studies, will stay.
Cell phone subscribers need not file returns if their income is non-taxable. However, those incurring an annual expenditure of more than Rs 50,000 on consumption of electricity should file their returns, irrespective of their level of income.