budget 2016, the finance minister has increased the tax rebate given to
individuals with net income equal to or less than Rs 5 lakh under section 87A from Rs 2000 to Rs 5000.
Currently, under this section a resident individual with income up to or equal
to Rs 5 lakh can get a rebate in tax equal to 100 per cent of the income tax
payable or Rs 2000 whichever is less. This low cap of Rs 2000 has now been
increased to Rs 5000. This is expected to provide a relief of Rs 3000 in tax to
over 2 crore tax payers, according
to the finance minister.
In the budget 2016, the finance minister has also increased the surcharge on income tax levied on individuals earning income of Rs 1 crore or more from 12 % at present to 15%. This move is aimed at taxing the super rich.
Currently, for HUFs and a resident individual below 60 years of age, income up to Rs 2,50,000 is exempt from tax, income from Rs 250,001 to Rs 5,00,000 is taxed at 10%, from Rs 5,00,001 to Rs 10,00,000 at 20% and above Rs 10 lakh at 30%. A total cess of 3% of the income tax payable is also levied. On income above Rs 1 crore a surcharge of 12% of income tax is additionally levied on the income tax computed and then the 3% cess is further levied on the total of tax.