Union Budget 2012: New tax slabs announced, exemption limit raised

In a move that is bound to bring cheer to millions of households, Finance Minister Pranab Mukherjee has cut personal income tax across various slabs, a populist move aimed at the galleries but also one that takes into account the fact that inflation is still not at comfort levels.

Mr Mukherjee has raised the exemption limit to Rs 2 lakh for all individual tax payers. This will result in a savings of a minimum of Rs 2,000 for all tax payers.
The upper limit of 20% tax slab has been raised from Rs 8 lakh to 10 lakh - a saving of Rs 22,000 for people in this tax bracket.

The  proposed tax slabs are as follows:
  • Income up to Rs 2 lakh - nil
  • Income between Rs 2 lakh to Rs 5 lakh - 10%
  • Income between Rs 5-10 kakh - 20%
  • Inncome above Rs 10 lakh - 30 %

Interest of up to Rs 10,000 from saving accounts will now be exempt from tax. A deduction of up to Rs5,000 has  also been allowed for health check-ups.

The Finance Minister announced no change in corporate tax slabs.

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