BUDGET 2008

In a bid to stimulate growth and provide demand side stimulus to economy, Finance Minister P Chidambaram has announced a hike in all income tax exemption limits. Presenting the last budget of the UPA government, the minister announced special sops for women and senior citizens.
With an eye on the election, the Finance Minister has raised the threshold exemption limit from Rs 1.1 lakh to Rs 1.5 lakh for all individual assesses.
The new income tax slabs, effective from the year 2008-09, would be as follows:
10 per cent on income of Rs 1.50-3 lakh;
20 per cent on income of Rs 3-5 lakh;
30 per cent on income above Rs 5 lakh
However, there will be no change in the surcharge of 10 per cent on individual income of over Rs 10 lakh.
As a special incentive for women and senior citizens, the minister also increased the threshold limit for women assesses from Rs 1.45 lakh to Rs 1.80 lakh and for the senior citizens from 1.95 lakh to Rs 2.25 lakh.
The hike in the basic limit from Rs 1.1 lakh to Rs 1.5 lakh implies that there will be a tax saving of Rs 4,000 for individuals, Rs 6,500 for women assesses and Rs 6,000 for senior citizens without accounting for education cess of 3 per cent.
Tax collections
Direct tax collections have exceeded indirect tax collects of late. During the first 10 months of 2007-08, direct tax collections registered a growth of over 40 per cent to Rs 2,18,538 crore. Encouraged by the good compliance, the minister has offered these incentives at the behest of the Prime Minister’s Economic Advisory Council.
All direct taxation changes will be revenue neutral, the Finance Minister announced in the Lok Sabha while presenting the Budget. on.