Budget proposes a 10% surcharge on income above Rs 50 lakh up to Rs 1 crore
Alongside, the Finance Minister proposed to levy a surcharge of 10% of tax payable on individuals whose annual taxable income is between Rs 50 lakh and Rs 1 crore.
The Finance Minister, however, decided to cap the rebate benefit to Rs 2,500 to assesses up to Rs 3.5 lakh to avoid the duplication of benefit. This means that an individual earning up to Rs 3 lakh per year need not pay any tax. The tax liability will only be Rs 2,500 for people with income between Rs 3 and Rs 3.5 lakhs.
Jaitely said that if taxpayers in this bracket fully avail the deduction limit of R s 1.5 lakh under Section 80C of the Income Tax Act, the tax liability would come down to zero for those with income of Rs 4.5 lakhs.
He said that the new structure would in effect mean that, taxpayers in slabs above Rs 5 lakh will also get tax benefit of Rs 12,500.
Jaitley continued with the existing surcharge of 15% of tax on people earning more than Rs 1 crore.
There was an expectation that the Section 80C limit will be raised. But it did not materialize. There was also an expectation that the Finance Minister will revisit the existing deduction such as medical reimbursement of Rs 15,000 per year, which was fixed in 1999. However, this too, remained unchanged. The Finance Minister also chose to ignore the demand of reintroducing Standard Deduction for the salaried class.