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Economy

Budget 2008: Income Tax Slabs Changed

Update: Click here to find out how much you save on tax in [the year starting April] 2008. compared to 2007.

Just finished the Budget speech. Income tax slabs have been changed.

  • Upto Rs. 1.5 lakhs: No tax. Yay.
  • 1.5 to 3 lakhs: 10%.
  • 3 to 5 lakhs: 20%.
  • Above 5 lakhs: 30%.

For women the first slab ends at Rs. 1.8 lakhs and for senior citizens, Rs. 2.25 lakhs. Applicable from the April 1 2008 to March 31 2009.

Surcharge of 10% for earnings above Rs. 10 lakhs stays.

No change in the 3% cess either.

Savings:
1. Earn a net income (after all deductions, 80Cs etc.) of Rs. 2 lakhs and you’d save Rs. 4,000 in taxes. (4K vs. 9K)
2. For Rs. 4 lakhs, you save about Rs. 34,000 as compared to last year. (35K vs 69K)
3. For Rs. 8 lakhs, your saving is Rs. 44,000. (1.45L vs. 1.89L)
4. For Rs. 12 lakhs you save about 49K. (2.91L vs. 340L) [This has a 10% surcharge so savings are higher]

Higher incomes would save about the same – about 4K a month, approximately. Net effect of this is positive for people, and hugely positive for people earning below 5 lakhs (effectively half their taxes are saved).

[Will cover rest of the budget items separately]

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