Budget Provisions - The budget proposes to change the tax brackets:
For individual or HUF or every association of persons or body of individuals
| Proposed | Existing |
| Slabs | Tax rate | Slabs | Tax rate |
| upto Rs 160000 | Nil | upto Rs 160000 | Nil |
| Rs 160001 - 500000 | 10% | Rs 160001 - 300000 | 10% |
| Rs 500001 - 800000 | 20% | Rs 300001 - 500000 | 20% |
| above Rs 800001 | 30% | above Rs 500001 | 30% |
For woman individual
| Proposed | Existing |
| Slabs | Tax rate | Slabs | Tax rate |
| upto Rs 190000 | Nil | upto Rs 190000 | Nil |
| Rs 190001 - 500000 | 10% | Rs 190001 - 300000 | 10% |
| Rs 500001 - 800000 | 20% | Rs 300001 - 500000 | 20% |
| above Rs 800001 | 30% | above Rs 500001 | 30% |
For senior citizens (individuals of age of 65 years or above)
| Proposed | Existing |
| Slabs | Tax rate | Slabs | Tax rate |
| upto Rs 240000 | Nil | upto Rs 240000 | Nil |
| Rs 240001 - 500000 | 10% | Rs 240001 - 300000 | 10% |
| Rs 500001 - 800000 | 20% | Rs 300001 - 500000 | 20% |
| above Rs 800001 | 30% | above Rs 500001 | 30% |
Impact:
The change in slab rates would lead to savings in taxation:
| Income (in Rs) | Savings (in Rs) |
| 500000 | 20600 |
| 600000 | 30900 |
| 700000 | 41200 |
| 800000 onwards | 51500 |
(the gains are inclusive of the education cess of 2% and Secondary and Higher education Cess of 1%).
2. The budget proposes to insert new section 80CCF to provide that subscription during the financial year 2010-11 made to long-term infrastructure bonds (as may be notified by the Central Government), to the extent of Rs. 20,000, shall be allowed as deduction in computing the income of an individual or a Hindu undivided family. This deduction will be over and above the existing overall limit of tax deduction on savings of upto Rs.1 lakh under section 80C, 80CCC and 80CCD of the Act.
Impact:
The overall limit of tax deduction on savings would increase to Rs 120000 from Rs 100000 earlier, giving further benefits to individuals & HUF for investments and tax relief.
3. The budget proposes to include contribution to The Central Government Health Scheme (CGHS) under the provisions of section 80D. Section 80D. Under the existing provisions of section 80D, deduction in respect of premium paid towards a health insurance policy upto a maximum of Rs 15,000 is available for self, spouse and dependent children. A further deduction of Rs 15,000 is also allowed for buying an insurance policy in respect of dependent parents. The deduction is enhanced to Rs 20,000 in both cases if the person insured is of age of 65 years or above.
Impact:
The purview of Section 80D would increase.
4. Rationalization of provisions of TDS
| Section | Nature of Payment | Threshold limit |
| | Existing | Proposed |
| 194B | Winning from lottery or crossword puzzle | 5,000 | 10,000 |
| 194BB | Winnings from horse race | 2,500 | 5,000 |
| 194C | Payment to contractors | | |
| - for single transaction | 20,000 | 30,000 |
| - for aggregate of transactions during the year | 50,000 | 75,000 |
| 194D | Insurance commission | 5,000 | 20,000 |
| 194H | Commission or Brokerage | 2,500 | 5,000 |
| 194-I | Rent | 120,000 | 180,000 |
| 194J | Fees for professional or technical services | 20,000 | 30,000 |
Impact:
This would reduce the compliance burden of deductors and taxpayers. These amendments are proposed to take effect from 1st July, 2010.
5. The budget proposes to increase the threshold limit under section 44AB for requirement to get the accounts audited to Rs 60 lakh from Rs 40 lakh for total sales, turnover or gross receipts in business and Rs 15 lakh up from Rs 10 lakh for a person carrying on a profession. it is also proposed to increase the maximum penalty, leviable under section 271B for failure to get accounts audited under section 44AB or to furnish a report of such audit, from one lakh rupees to one lakh fifty thousand rupees.
Impact:
The provision would reduce compliance burden of small businesses and professionals
6. The budget proposes to increase the threshold limit of total turnover or gross receipts to Rs 60 lakh from Rs 40 lakh for the purpose of presumptive taxation under section 44AD.
Impact:
The provision would reduce compliance burden of small businesses.
Outlook
The direct tax proposals are estimated to result in a revenue loss of Rs 26000 crore. Sizeable portion of these are due to the effective reduction in the personal income tax incidence. On the other hand, the proposals relating to customs and central excise are estimated to result in a net revenue gain to the government of Rs 43500 crore. So, while every one makes some sacrifice, sizeable portion of the sacrifice is shared with a few income tax payers, and the balance retained at the government's hand.
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