Giving small relief to tax payers, Finance Minister P Chidambaram announced a tax credit of Rs 2,000 for persons with income up to Rs 5 lakh.
The proposal, he said, will benefit 1.8 crore tax payers entailing a revenue sacrifice of Rs 3,600 crore. The other slabs and rates have been kept unchanged in view of constrained economy, Mr Chidambaram added. (Calculate your tax liability here)
"In a constrained economy, there is little room to raise tax rates or large amounts of additional tax revenues.
Equally there is little room to give away tax revenues or the tax base. It is time for prudence, restraint and patience," Mr Chidambaram said.
As per the existing slabs, tax on income from 2 lakh to 5 lakh is at 10 per cent, up to Rs 10 lakh at 20 per cent and above 10 lakh at 30 per cent.
In the Budget proposals for the next fiscal year, Mr Chidambaram proposed a surcharge of 10 per cent on persons with income of over Rs one crore. The proposal will cover 42,800 individuals and tax entities.