New Delhi, February 28
Finance Minister Pranab Mukherjee has raised the Income tax exemption limit marginally for individual tax payers, reduced the surcharge on corporate tax and raised the minimum alternate tax (MAT) on corporates. The proposals on direct taxes will result in a net revenue loss of Rs 11,500 crore.

In his Budget proposals, the Finance Minister did not carry out too many changes in the direct tax structure as he announced that the Direct Taxes Code (DTC), which will replace the Income Tax Act, is proposed to be implemented from April 1, 2012.

In the DTC Bill, which was introduced in Parliament last year, the annual I-T exemption limit is proposed at Rs 2 lakh. Under the Bill, the government seeks to widen tax slabs to levy 10 per cent tax on income between Rs 2 lakh and Rs 5 lakh, 20 per cent on Rs 5-10 lakh and 30 per cent above Rs 10 lakh.

The FM said that to take the IT exemption closer to DTC rates, the exemption limit is being hiked from Rs 1.6 lakh to Rs 1.8 lakh. This will provide a uniform tax relief of Rs 2,000 to every tax payer in the country.

For senior citizens, the qualifying age has been reduced from 65 to 60 years and the exemption limit enhanced from Rs 2.4 lakh to Rs 2.5 lakh. A new category of very senior citizens for 80 years and above has also been created which will get higher exemption limit of Rs 5 lakh.

In a move that pleased India Inc, the surcharge tax limit on corporate tax has been lowered to 5 per cent from 7.5 per cent even while marginally raising the Minimum Alternate Tax.

The government retained the corporate tax at 30 per cent, to be paid by domestic firms earning total income of over Rs 1 crore a year.

It increased the Minimum Alternate Tax (MAT) to 18.5 per cent from 18 per cent on book profits. The minister also proposed to bring developers in Special Economic Zones (SEZs) under the MAT.