What's in store for a Salaried Employee in Budget 2008 - 2009

Good News finally from the Budget of this year. our FM has reduced the tax we are paying by Rs.44000/- for people earning above Rs.5 Lakhs.

The snippet on Income tax ..,

I propose to make some changes in the slabs for personal income tax. I propose to increase the threshold limit of exemption:

• In the case of all assesses, from Rs. 1,10,000 to Rs. 1,50,000, thus giving every assessee a relief at a minimum of Rs.4000/- Consequently, the four slabs and rates will be as follows:
• Upto Rs.1,50,000 - NIL
• 1,50,000 to 3,00,000 - 10% tax
• 3,00,000 to 5,00,000 - 20% tax
• Above 5,00,000 - 30% tax.
• Women Assessee - 1,45,000 to 1,80,000 -Minimum slab.
  
• Senior citizen - 1,85,000 to 2,25,000 - Minimum slab.
  

The Income tax for almost everyone has been decreased at least to some extent after the budget.

Here comes the bad news for short term traders/Speculators.(Investors?)

Dividends that are distributed attract a tax of 15%. Short term capital gains attract a tax of 10% under Section111A. There is merit in equating the rates and hence I propose to increase the rate of tax on short term capital gains under section 111A and section 115AD to 15%. This will also encourage investors to stay invested for a longer term.

Simply put, The short term capital gains tax is increased from 10% to 15%.
Also, dividends attract a tax of 15%. Can we say no to dividend giving companies? :-)

There is no change on Long term capital gains tax (which is NIL, of course)

He has also increased the Mediclaim premium that can be paid under 80D by 15000/-
Is there any change on the 80C limit of 1Lakh? No.

Complete Budget speech is available at MoneyControl

Over all, the Income tax is reduced a lot when compared with the last year.