The income tax and savings

There is a happy news for all the salaried people (at last … ). Our finance minister in his budget ( I can call it an election campaign) has given some relief for salaried employees.

Effective from 2008 April, the tax slabs are changed and also there is an increase in medical insurance claim.

Upto Rs. 1.5 lakhs: No tax.
1.5 to 3 lakhs: 10%.
3 to 5 lakhs: 20%.
Above 5 lakhs: 30%.

More Smiles for women though

For women the first slab ends at Rs. 1.8 lakhs and for senior citizens, Rs. 2.25 lakhs. Applicable from the April 1 2008 to March 31 2009.
Surcharge of 10% for earnings above Rs. 10 lakhs stays.

No change in the 3% cess either.

Now if you plan properly, you can end up paying very less tax compared to last financial year.

If you make a simple calculation,

A person with 5 lakh as an annual income will straight away save 44000 Rs because of this new tax slabs.

So, if he invests 1 lakh in tax saving investements, he can save some money there also.

Additionally, you can also invest in mediclaim insurance where you can get benefits upto 35000 Rs.