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Minor gains for salaried class
New Delhi, Feb 28: The proposals of finance minister Jaswant Singh like increasing standard deduction upto Rs 30,000 or 40 per cent of the salary -- whichever is less -- and abolition of income tax security surcharge has brought relief to the salaried class, but only a mite.
New Delhi, Feb 28: The proposals of finance minister Jaswant Singh like increasing standard deduction upto Rs 30,000 or 40 per cent of the salary -- whichever is less -- and abolition of income tax security surcharge has brought relief to the salaried class, but only a mite.
He also proposed raising the limit of deduction under Section 80l for interest on securities dividends and other such income to Rs 12,000 from the current Rs 9,000.
The abolition of IT surcharge would bring a benefit of Rs eight to a maximum of Rs 11,450 for those earning between Rs 60,010 and Rs 850,000, a range for which the surcharge has been waived. But employees earning more than Rs 850,000 are in fact being made to pay an increased surcharge of ten per cent against the previous five per cent.
The increase in standard deduction would benefit only those earning more than Rs 150,000 as those earning below this level are already entitled for a standard deduction of Rs 30,000.
People with income between Rs 150,000 and Rs 300,000, were earlier getting a standard deduction of Rs 25,000 and now with the announcement of the finance minister, they would get income tax benefit only on an additional Rs 5,000.
A majority of the salaried class has income upto Rs 300,000.
Up to Rs 20,000 in standard deduction was available for those earning between Rs 300,000 and Rs 500,000. Now they will benefit by Rs 10,000.
The maximum benefit is for those earning more than Rs 500,000 as no deduction was allowed previously for people under this bracket. But the number of salaried class people in this bracket is the lowest.
Though the finance minister announced income tax benefit on educational expense upto Rs 12,000 each for two children (a maximum of Rs 24,000), by putting that under the purview of Section 88, he has denied tax payers the real benefit. The new proposal would at best help these people reduce their investment burden and not the real tax burden.
Reduction in the rate of interest of short-term investments, not raising the income tax slabs and keeping the rate of income tax benefits on investments unaltered were certain measures, which did not enthuse the salaried class as it would adversely affect their returns on savings.
Bureau Report
People with income between Rs 150,000 and Rs 300,000, were earlier getting a standard deduction of Rs 25,000 and now with the announcement of the finance minister, they would get income tax benefit only on an additional Rs 5,000.
A majority of the salaried class has income upto Rs 300,000.
Up to Rs 20,000 in standard deduction was available for those earning between Rs 300,000 and Rs 500,000. Now they will benefit by Rs 10,000.
The maximum benefit is for those earning more than Rs 500,000 as no deduction was allowed previously for people under this bracket. But the number of salaried class people in this bracket is the lowest.
Though the finance minister announced income tax benefit on educational expense upto Rs 12,000 each for two children (a maximum of Rs 24,000), by putting that under the purview of Section 88, he has denied tax payers the real benefit. The new proposal would at best help these people reduce their investment burden and not the real tax burden.
Reduction in the rate of interest of short-term investments, not raising the income tax slabs and keeping the rate of income tax benefits on investments unaltered were certain measures, which did not enthuse the salaried class as it would adversely affect their returns on savings.
Bureau Report