In a major Rs 26,000 crore bonanza, Finance Minister Pranab Mukherjee announced changes to tax structure giving substantial benefit to individual and corporate tax payers.

While there would be no tax for income up to Rs 1.6 lakh, a tax of 10 per cent would be levied for income up to Rs 5 lakh, 20 per cent for up to Rs 8 lakh and 30 per cent beyond that level.

In addition, he announced that investment up to Rs 20,000 in long term infrastructure bonds would get the exemptions of over and above the existing Rs one lakh.

As per the existing structure, there is no tax on income up to Rs 1.6 lakh, 10 per cent is levied on income up to Rs 3 lakh, 20 per cent up to Rs 5 lakh and 30 per cent thereafter.

Mukherjee also reduced surcharge on corporate tax from 10 per cent to 7.5 per cent. He had already done away with surcharge on income tax last year.

However, the Finance Minister raised minimum alternate tax (MAT) to 18 per cent from the current 15 per cent on the book profits of the companies that are not coming under the tax net because of various exemptions.

Re 1 hike in petrol, diesel

The 2010-11 general budget provided considerable relief to income tax payers by raising the slabs at two levels but hiked the central excise duty on non-petroleum products across the board from 8 to 10 per cent and the basic duty on crude and petroleum products besides effecting a one-rupee increase per litre on petrol and diesel.

The entire opposition walked out of the Lok Sabha during the presentation of budget by Finance Minister Pranab Mukherjee, dubbing it ?highly inflationary? as he partially rolled back the stimulus by hiking the ad velorum component of excise duty on large cars and multi-utility vehicles by two per cent to 22 per cent.

The budget also raised the specific rates of duty on portland cement and cement clinker. The basic duty of 5 per cent on crude petroleum, 7.5 per cent on diesel and petrol and 10 per cent on other refined products is being enhanced.

The central excise duty on petrol and diesel is being enhanced by Re one per litre.

The proposals relating to customs and central excise are estimated to result in a net revenue gain of Rs 43,500 crore for the year. The proposals for service tax, in which government plans to bring in some more services, will result in a net revenue gain of Rs 3000 crore for the year.

While direct tax proposals are expected to result in a loss of Rs 26,000 crore for the year, those relating to indirect tax are estimated to result in a net revenue gain of Rs 46,500 crore.

Taking into account the concessions and measures to mobilise additional resources, the overall revenue gain is estimated to be Rs 20,500 crore for the year.