The government has proposed to dilute the controversial Fringe Benefit Tax, exempt savings account from the 0.1 per cent banking cash transaction tax and raise income tax exemption limit for women and senior citizens.

Amendments to the Finance Bill, 2005, circulated on Monday to Members of Parliament, indicate that while withdrawal from savings bank accounts will be totally exempted.

For current account holders, withdrawals of over Rs 25,000 will be taxed. Similarly, withdrawals of more than Rs 100,000 by companies and others will attract the 0.1 per cent tax.

Withdrawal from term deposits will also attract this tax.

Tax relief for women, senior citizens!

Giving further relief to women and senior citizens, Finance Minister P Chidambaram proposes to raise the Income Tax exemption limit for women by another Rs 10,000 to Rs 135,000 and for senior citizens by additional Rs 35,000 to Rs 185,000.

In the budget proposals, the finance minister has proposed to hike exemption limit for women to Rs 125,000 and senior citizens to Rs 150,000.

Correspondingly the income tax rates have been revised for women and senior citizens, Chidambaran said, adding that women earning between Rs 135,000 and Rs 150,000 will attract 10 per cent tax and between Rs 150,000 and Rs 250,000 will attract 20 per cent. Beyond Rs 250,000, it would be 30 per cent.

For senior citizens, Income between Rs 185,000 and Rs 250,000 will attract 20 per cent and beyond Rs 250,000, it would be 30 per cent.

In the Finance Bill, Chidambaram had originally proposed 0.1 per cent banking cash transaction tax on all withdrawals beyond Rs 10,000.

FBT to remain at 30%: Click here for details