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How much tax will you pay now

July 08, 2004 14:11 IST
Last Updated: July 08, 2004 14:21 IST

The government on Thursday raised the income tax exemption limit to Rs 100,000 while imposing a 2 per cent education cess on taxable income.

Finance Minister P Chidambaram, presenting the Union Budget for 2004-05 in the Lok Sabha said the proposal to raise the IT exemption limit to Rs 1 lakh (Rs 100,000) would give relief to 1.4 crore assessees.

A person having taxable income exceeding Rs 1 lakh will now be required to pay in additional to income tax (after rebate), an education cess at the rate of 2 per cent.

The tax proposals specify that a person having income exceeding Rs 8.50 lakh would be required to pay 10 per cent surcharge on the total income tax payable after the rebate, and also the education cess.

For example, an individual with a taxable income of Rs 1 lakh (after standard deductions at the old rate) will not be required to pay any income tax, while a person having

taxable income of Rs 1.50 lakh will now have to pay an income tax of Rs 19,380 (including the education cess).

An individual having a taxable income of Rs 8.50 lakh will have to pay an income tax of Rs 2,33,580 (Rs 4,580 more than what he paid last year).

Family pension received by widows, children and nominated heirs of members of the armed forces and the paramilitary forces killed in action will be exempted from income tax.

The benefit of Section 80 DD and Section 80U is being extended to people suffering from autism, cerebral palsy and multiple disability.

Compensation for acquisition of agricultural land in certain urban agglomerations is to be exempted from capital gains tax in cases where the compensation or the enhanced compensation has been received on or after April 1, 2004.

Gifts from unrelated persons above the limit of Rs 25,000 is to be taxed as income while gifts received from blood relations, lineal ascendants and lineal descendants and gifts received on the occasion of marriage up to a limit of Rs 1 lakh will continue to be exempt from tax computation.

Tax on long-term capital gains from securities transactions is to be abolished and instead a tax on transactions in securities on stock exchanges is to be levied on the buyer at the rate of 0.15 per cent of the security value.

This means that a transaction involving securities valued at Rs.one lakh will now bear a small tax of Rs 150 and this will be levied on the buyer. The rate of tax on short-term capital gains from securities has been reduced to a flat rate of 10 per cent.

Announcing these measures, the finance minister said that out of nearly 3.40 crore (34 million) people filing income tax returns, only 2.70 crore (27 million) assessees are tax payers and the new proposals will give relief to 1.40 crore (14 million) assessees.

Chidambaram assured the House that if the tax compliance improves, he may revisit the subject.

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Number of User Comments: 97

Sub: Income Tax Calculations for FY2004-2005

Can someone assit in letting me know as to how much I need to save & what is the amount over which i need to ...

Posted by APGGN

Sub: there is no benifit for the tax payers in this budget.

dear sir, in my opinion there is no use of increasing the tax limit from 50000 to 100000 rs. because in this there is no ...

Posted by owes zia

Sub: Discrimanation On Tax liability

Hi friend its discrimanation ... if person is having the income of 1.5 lakh has to pay tax of Rs.19538 and person having the income ...

Posted by Sanjay

Sub: What does the gret Indian middle class get from the Govt?

Paying your taxes is fine.We have been paying it for so long, we will continue to pay.Its time we asked ourselves as to what we ...

Posted by wilson

Sub: budget. Good or bad. ????????

At the onset i would say that budget is good, but it could have stilll better as almost every person is earning more than 1 ...

Posted by vijay sharma


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