Finance Minister Pranab Mukherjee on Friday brought cheers to lakhs of tax income payers by increasing the tax limits which he claimed will help nearly 60 per cent of the tax payers while presenting the Budget for 2010-11.
Making the announcement about increasing the tax limits Mukherjee said that those earning up to Rs 1.60 lakh per annum will now have to pay no tax while those earning between Rs 1.60 lakh to Rs 5 lakh per annum will from now on pay tax at the rate of 10 per cent.
Tax on income between Rs 5 lakh per annum to Rs 8 lakh per annum will be 20 per cent while those earning more than Rs 8 lakh per annum will pay tax at the rate of be 30 per cent.
New income tax rates
No income tax for those earning upto Rs 1.60 lakh per annum
For people earning between Rs 1.60 lakh per annum to Rs 5 lakh per annum the tax rate will be 10 per cent
Tax on income between Rs 5 lakh per annum to Rs 8 lakh per annum will be 20 per cent
Income tax on income of Rs 8 lakh and above will be 30 per cent
New tax rates would offer relief to 60 per cent of tax-payers
Additional deduction of Rs 20,000 allowed on long term infrastructure bonds for income tax payers; this is above Rs 1 lakh on saving instruments allowed already
Income Tax department ready with two-page Saral-2 return forms for individual salaried assesses.
Investment linked tax deductions to be allowed to two-star hotels anywhere in the country.
Mukherjee began his budget speech by recalling the hard days of past two years, but with an assurance that the worst was over for the economy and the days ahead were promising though not without challenges.
“Today, as I stand before you, I can say with some confidence that we have weathered this crisis well,” Mukherjee told the Lok Sabha.
“That is not to say that the challenges today are any less than they were nine months ago, when the UPA was voted back to power under the leadership of Sonia Gandhi and Prime Minister Manmohan Singh,” he added.
He said three challenges he had listed last year remained relevant today — those of quickly reverting to a high growth path of 9 percent and cross over to double-digit expansion; making growth more inclusive and developing infrastructure in rural areas; and strengthening food security.
He said in 2009, when he presented the interim budget in February and the full budget in July, the Indian economy was facing grave uncertainty, the economy slowed down and business sentiment was low.
But this year, the budget has came against the backdrop of the Economic Survey for 2009-10, saying India’s growth can go up to double digit levels in four years, with the country emerging as the fastest growing economy in the world.
The initial market reaction, as the finance minister began his budget speech was guarded, with the sensitive index (Sensex) of the Bombay Stock Exchange (BSE) ruling at 16,347.72 points, against the previous day’s close at 16,254.2 points, with a gain of 93.52 points, or 0.58 percent.
Those in the packed house presided over by Speaker Meira Kumar, included Prime Minister Manmohan Singh, United Progressive Alliance (UPA) chairperson Sonia Gandhi and Leader of Opposition Sushma Swaraj.
Although the Budget speech also contained some policy pronouncements and other steps directed at reforms, it is basically an annual statement of accounts for the upcoming fiscal in terms of receipts and expenditure, along with direct and indirect tax proposals.
The Budget was presented after a quick meeting of the Union Cabinet inside Parliament presided over by the Prime Minister for a customary approval for the proposals.