Budget for salaried class: Income tax unchanged, pre-FY10 tax demands withdrawn and more

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The salaried class, who have been consistently lauded for their contribution towards the nation's tax pool, were keenly awaiting the announcements to be made by Finance Minister Nirmala Sitharaman as part of the Interim Budget she presented on February 1.

Here's a look at the big takeaways from Sitharaman's budget presentation for the salaried class:

No changes in income-tax rates and slabs

The government has decided to not tinker with the existing direct and indirect taxation rates. The income tax slabs have also been left untouched, with Sitharaman saying that the Centre has opted for continuing the existing taxation policy.

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Currently, under the old tax regime, no tax is levied on annual income of less than Rs 2.5 lakh, a tax of 5 percent is imposed on income between Rs 2.5 lakh and Rs 5 lakh, 20 percent on Rs 5-10 lakh, and 30 percent on those earning a yearly income of over Rs 30 lakh.

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Under the new tax regime, nil tax is levied on annual income up to Rs 3 lakh, 5 percent on income between Rs 3 lakh and Rs 6 lakh, 10 percent on income of Rs 6-9 lakh, 15 percent on earning of Rs 9-12 lakh, 20 percent on Rs 12-15 lakh, and 30 percent on income beyond Rs 15 lakh.

Pre-FY10 disputed tax demands of upto Rs 25,000 withdrawn

Sitharaman, during her Budget speech, said the government has decided to withdraw certain "petty" tax disputes in order to relieve the taxpayers. Disputes amounting up to Rs 25,000, and pertaining to the period before fiscal year 2009-10, will be withdrawn, along with the disputes amounting up to Rs 10,000 and pertaining to the period between FY11 and FY15.

"There here are a large number of petty, non-verified, non-reconciled or disputed direct tax demands, many of them dating as far back as the year 1962, which continue to remain on the books, causing anxiety to honest tax payers and hindering refunds of subsequent years," Sitharaman said.

"I propose to withdraw such outstanding direct tax demands up Rs 25,000 pertaining to the period up to financial year 2009-10 and up to Rs 10,000 for financial years 2010-11 to 2014-15."

The move is expected to benefit about one crore tax-payers, she underlined.

LTA benefits

Sitharaman's Budget speech focussed on the development of tourism hubs in India, which in turn is expected to benefit employees claiming LTA or leave travel allowance.

"To address the emerging fervour for domestic tourism, projects for port connectivity, tourism infrastructure, and amenities will be taken up on our islands, including Lakshadweep. This will help in generating employment also," she said.

Scheme for buying homes

Sitharaman said that the government will come up with a new scheme for building or buying homes for those currently living or renting in chawls and slums.

The announcement also assumes significance as the section of salaried class, who are living on rent, can purchase house under the upcoming scheme and save tax on the basis of their home loans.