Tax Exemption Limit increased, surcharge removed - F/y 09-10

Last updated: 07 July 2009

Tax Exemption Limit increased, surcharge removed for F/y 2009-10.

The amendments have been made in the Income Tax Act by the Finance Bill, 2009 with a view to as stated in the Memorandum :

(i)Lowering the burden on the individual taxpayers by increasing the basic exemption limit available to the taxpayers.

(ii) Introducing simplified presumptive tax scheme for small businesses.

(iii) Encouraging the growth of foreign investment in India by providing for a speedy dispute resolution mechanism.

(iv) Improving efficency of the tax system by providing for investment linked tax incentives for certain sectors.

(v) Focussing on tax administration by improving the standards of service delivery and transparency in the functioning.

(vi) Simplification and rationalization of provisions relating to TDS.

The above points are discussed in details to give a wholesome picture of how the union has worked on to take care of the above 6 broad headlines.

Lowering the burden on the individual taxpayers by increasing the basic exemption limit available to the taxpayers.

Why surcharge has been removed and exemption limit increased for F/y 2009-10?

For resident tax payers, some of the rates have been reduced in order to converge most rates to 10 per cent.

Surcharge and Education Cess—

Levy of surcharge has been withdrawn for personal income tax payers . Earlier surcharge was levied at 10% having total income exceeding Rs. 10,00,000/- on such cases.

“Education Cess on Income-tax” and “Secondary and Higher Education Cess on income-tax” shall continue to be levied at the rate of two per cent and one per cent respectively of income-tax.

Income-Tax rates-

Basic exemption for individual tax payers and women was increased by Rs 10,000 and Rs 15,000 for senior citizens (i.e. 65 years and above).

Hence, The basic exemption is proposed to be increased from Rs. 1,50,000/- to Rs. 1,60,000/- .

The new rates of income-tax on total income for individual tax payers and women shall be as under—

Total Income	Tax Rate
Upto Rs. 1,60,000/-	Nil.
Rs. 1,60,001/- to Rs. 3,00,000/-	10 %.
Rs. 3,00,001/- to Rs. 5,00,000/-	20%.
Above Rs. 5,00,000/-	30%.

In the case of every individual, being a woman resident in India, and below the age of sixty-five years at any time during the previous year, the exemption limit is proposed to be raised from Rs. 1,80,000/- to Rs. 1,90,000/-.

The new rates of income-tax on total income being a woman resident in India will be as under—

Total Income	Tax Rate
Upto Rs. 1,90,000/-	Nil.
Rs. 1,90,001/- to Rs. 3,00,000/-	10 %.
Rs. 3,00,001/- to Rs. 5,00,000/-	20%.
Above Rs. 5,00,000/-	30%.

In the case of every individual, being a resident in India, who is of the age of 65 years (is a senior citizen) or more at any time during the previous year, the exemption limit is proposed to be raised from Rs. 2,25,000/- to Rs. 2,40,000/-.

The new rates of income-tax on total income for senior citizens will be as under—