Changes in Direct Income Tax Calculation

Changes in Direct Income Tax Calculation

Budget Highlights - Direct Tax

The key Direct Tax proposals are as follows:

• Basic exemption limit marginally increased to benefit individual tax payers.

Basic annual exemption limits have been altered, as follows:
Current Slabs (INR) Proposed Slabs (INR) * Rate of Tax
Up to 160,000 Up to 180,000 Nil
160,001 to 500,000
180,001 to 500,000 10%
500,001 to 800,000 20%
Above 800,000 30%

Notes:
– Basic exemption limit for resident women below 60 years of age remains unchanged at INR 190,000 per annum.
– Qualifying age for resident senior citizens reduced to 60 years from 65 years and the basic exemption limit increased to INR 250,000 from INR 240,000 per annum.

A special category of ‘Very Senior Citizens’ has been introduced for resident individuals of 80 years or more. The basic exemption limit for such individuals has been increased to INR 500,000 per annum.

• Employer contribution towards pension scheme shall be excluded from the limit of 1 lakh provided under Section 80CCE.

• Specific deduction allowable to the employer on contributions towards the New Pension Scheme upto 10 percent of the salary of the employee.

• Additional deduction of INR 20,000 u/s 80CCF for investment in long term infrastructure bonds is extended for one more year.

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