The abolition of 10 per cent surcharge on income tax will bring considerable benefits to those with incomes above Rs 10 lakh a year.
The abolition of the surcharge, which is levied on those with income above Rs 10 lakh a year, will result in a saving of Rs 25,000 for those with an income of Rs 11 lakh. And then the benefit increases with the addition of every lakh.
However, women with an income of Rs 11 lakh would save a little less at Rs 24,926 and senior citizens about Rs 24,978. The taxable slab for women is higher than general taxpayers while that of senior citizens is even more.
The higher tax benefits given in the tax exemption limits lead to a decline in the incremental benefit derived for a taxpayer.
Finance Minister Pranab Mukherjee, while presenting the Budget for 2009-10, said that the surcharge on direct taxes needs to be removed.
"I propose to phase out the surcharge on various direct taxes by eliminating the surcharge of 10 per cent on personal income tax," Mukherjee said.
The move was welcomed by tax experts, who said that similar treatment should be given to all others including corporates.
"This is a move which paves the way for rationalisation of tax rates. Similar treatment should be given all including corporates," said tax law firm partner from Amarchand Mangaldas Aseem Chawla.
