IT slabs for financial year 2008-09

Today I was just busy entering my declarations for this financial year. The 3rd party vendor which provides the payroll processing for our organization knows the domain and their tasks very well. They have actually provided a wizard where in you just need to enter your declarations under different sections and the tax payable gets calculated momentarily.

I found this tool to be too convenient for an individual to handle their budget and expenses. You can make changes any no. of times in a day throughout the year and your latest declaration till particular date of a month would be considered for tax calculation for that month.

Still to keep the readers of this blog aware of the slabs for this financial year, I am mentioning below the slabs for financial year 2008-09,


Taxable income slab (Rs.) Rate (%)
Up to 1,50,000 NIL
Up to 1,80,000 (for women) NIL
Up to 2,25,000 (for resident individual of 65 years or above) NIL
1,50,001 – 3,00,000 10
3,00,001 – 5,00,000 20
5,000,001 upwards 30*

*A surcharge of 10 per cent of the total tax liability is applicable where the total income exceeds Rs 1,000,000.
Education cess is applicable @ 3 per cent on income tax, inclusive of surcharge if there is any.

Now how about the HRA exemption calculation. I feel pitty about the people who don't understand such a simple calculation and have been paying tax for years. For all those dear friends of mine here is how the HRA exemption from tax is calculated,

If you happen to be a salaried employee claiming House Rent Allowance (HRA) from your employer, you are eligible for an Income Tax exemption under Section 10(13A) of the Income Tax Act.

Find the minimum of the following three options:

1. Actual house rent allowance received from your employer
2. Actual house rent paid by you minus 10% of your basic salary
3. 50% of your basic salary if you live in a metro or 40% of your basic salary if you live in a non-metro
This minimum figure is the allowed income tax exemption on house rent allowance.

I think it is prudent to work this HRA exemption factor out so that you can structure the other components of your variable pay better.

So guyz keep rocking and save as much tax as you can!!