New Delhi:

Indian Finance Minister P Chidambaram on Friday raised the basic exemption limit from Rs 1.1 lakh to 1.5 lakh for all individual assesses while presenting the Union Budget for 2008-09 in the Lok Sabha.

The minister also increased the limit for women assess from Rs 1.45 lakh to 1.80 lakh and for the senior citizens from 1.95 lakh to 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%.

The new IT slabs, effective from the next fiscal year, would be as follows:

• 10% on income of Rs 1.50-3 lakh;
• 20% on income of Rs 3-5 lakh;
• 30% on income above Rs 5 lakh

There will be no change in the surcharge of 10% on individual income of over Rs 10 lakh.
This new slab gives huge benefit to Indian middle class. It also gives benefit to people who earn more than 5 lakh per annum as it saves almost Rs. 45,000/- per year. It is like getting one month's salary as a bonus!