Annual earnings of salaried people in the range of Rs 3 and 8 lakh will now attract 10.3 and 20.6 per cent income tax respectively, against 20.60 and 30.90 per cent in the fiscal ending today. These rates are inclusive of 3 per cent education cess.
Finance minister Pranab Mukherjee had announced the new income tax rates in his budget. While the Finance Bill 2010 is yet to approved by Parliament, the changes in the direct taxes will remain effective from tomorrow.
However, those earning up to Rs 3 lakh annually will have to pay the same amount of tax, though persons with annual income exceeding Rs 8 lakh will benefit marginally.
Besides the personal income tax, the other direct tax proposals, including higher incidence of MAT, will come into effect from tomorrow, subject to modification and approval of the Finance Bill. Unless the rates are modified by the finance minister, the corporates will be required to pay minimum alternate tax (MAT) at 18 per cent as compared to 15 per cent.
MAT is the minimum tax that all companies are required to pay on book profit.
Although Mukherjee is likely to modify the some of the tax proposals and rectify the anomalies on the basis of post-budget memorandum by industry chambers and other stakeholders at the time of the consideration of the Finance Bill in Parliament, no major changes are expected.
The direct tax proposals, as per his budget speech, would entail a revenue sacrifice of Rs 26,000 crore during 2010-11.
Most of the indirect tax proposals, excluding those concerning service tax, came into effect from the date of the presentation of the budget on February 26.