Budget 2010: Income Tax Comparison between 2010 and 2009

Dr Pranab Mukherjee presented the budget today for this year. And, like all years, the one thing that Aam Aadmi like me looks in the budget is Income Tax related changes.
This year also Pranab da changed few things in Income tax which actually looks good to me so far.
  • One of my favourite finance bloggers Deepak put a very basic tax calculator / comparison tool where you can compare how much benefit or tax saving you will have this year viz-a-viz last year.
I took lead from him and put my own excel to chart out the differences for INDIAN MAN having annual taxable income between 2.5L to 10L . (emphasis is on “MAN” as women and senior citizens have slightly different income tax rates)
The results of this excel may not be rocket science, but to the excel fanatic I am – it provides a easy to understand representation of how this budget benefits different income slabs in India. (like they say – I am the “visual” kind of person)
Here is Income Tax Slab for last year [Source:wiki]
  • No income tax is applicable on all income up to Rs. 1,60,000 per year. (Rs. 1,90,000 for women and Rs. 2,40,000 for senior citizens)
  • From 1,60,001 to 3,00,000 : 10% of amount greater than Rs. 1,60,000 (Lower limit changes appropriately for women and senior citizens)
  • From 3,00,001 to 5,00,000 : 20% of amount greater than Rs. 3,00,000 + 14,000 (slightly less for women and further less for senior citizens)
  • Above 5,00,000 : 30% of amount greater than Rs. 5,00,000 + 54,000 (slightly less for women and further less for senior citizens)
And the new announced tax slabs for 2010-11 are as follows:
  • No income tax is applicable on all income up to Rs. 1,60,000 per year.
  • From 1,60,001 to 5,00,000 : 10% of amount greater than Rs. 1,60,000
  • From 5,00,001 to 8,00,000 : 20% of amount greater than Rs. 5,00,000 + 34,000
  • Above 8,00,000 : 30% of amount greater than Rs. 8,00,000 + 94,000
Note – there is one interesting thing I noticed this time that there is no “women” or “senior citizen” specific announcements this year. No comments on that for now.
Before we proceed any further, the usual Disclaimer: This is NOT tax advice. This is educational material only. Use your own mind before you make any decisions. I am anything but not a tax expert 🙂
Few other things to note-
1. This excel is based on Taxable Income – so it is not your Gross Salary or CTC.
To explain this, say you are getting a salary of 5 Lakhs per annum, but you have invested 1 Lakh in Section 80c and 1 Lakh as Home Loan Interest. That means your taxable income is 3 Lakhs per annum (not 5 Lakhs).
2. In my excel I have not factored in the additional Rs 20,000 tax deduction announced today related to Infrastructure bonds. That will surely put additional tax benefits on your hand, in my opinion lots of people will utilize that to lower their taxable income by additional Rs 20K.
So, whatever … the thing we all love about excel is you can printout charts to visualize things – so the first chart I pulled out was to show how much additional income people will get per month in their paychecks.
As you can see, anyone earning below 3 Lakhs will NOT get any additional money on their hand this year compared to last year. (on a sidenote that means this budget should NOT be nicknamed “Aam Aadmi Budget”, because that will infer that “Aam Aadmi = people having taxable income more than 3 Lakhs” – which I think is far from the reality… isnt it :-))
The good news – everyone above 3 Lakhs per annum will get some benefit on his take home salary, which will keep increasing till 8 Lakhs per annum and then will go constant at Annual benefit of Rs 51,500
Other thing I calculated was “Effective Tax%age” which is by dividing “Annual Tax” to that of “Annual taxable income”.
On that I noticed that people having taxable income 3L will get 0.33% benefit this year – last year they were paying 5.32% tax (effectively) and this year they will be paying 4.98% (effectively)
That will keep growing till 8L income when people will have 6.44% benefit!! – last year they were paying 18.54% tax (effectively) and this year they will be paying 12.10% (effectively)
After that since the tax amount remains constant, but the base increases … so the “Effective Tax %age Difference” comes down, but still it means everyone above 8L taxable income will get Annual benefit of Rs 51,500
I think there are other parts of the Budget which I will blog about in coming days… but that’s it for a Friday evening.

The iPad Hulla Bol!

There was too much hype about the tablet from Apple to be released in January 2010 – and release they did – The iPad.

Well … I didnt like it in the first impression itself.
I still remember the iphone presentation by Steve Jobs which I saw 3 years ago. Jobs presentation skills deserve a separate post, but let’s focus on the product in this post.
At that time, just looking at the product/presentation, I knew this is going to be a superhit with consumers and will grab a good share of the smartphone market (taking marketshare from smartphones like BB, palm treo etc) … and it did. When I saw that presentation iphone was not released and there was not too much mention of it in mainstream media (geek blogs were full of it though) … but my geeky sense told me it’s gonna be something.
But my geeky sense is not that sure about the iPad. 😐
It is still a month away till iPad will be released and only then we’ll be able to know how it performs. Still, in last month, there were too many interesting reviews on iPad (mostly negative) and related tablet market . I will use this post mostly to aggregate those links.
The first one is review of iPad by none other than Hitler. (i have seen so many versions of this Hitler video, but the iPad one is best)
Next comes what I really felt about iPad – it is nothing but a bigger iPhone. [Source]
Can’t wait to get your hands on an iPad? Miffed that Amazon.de took down the iPad preorder page? Generally at the end of your rope?Fortunately, there’s an app a peripheral for that: the iPhad. “Turn your iPhone into a full-fledged iPad with this easy to install add-on.”Unfortunately, the “add to cart” button for the iPhad appears to be broken at Seven’s Heaven,the home of illustrator Metin Seven.Some might say that tacking a magnifying glass onto an iPhone to turn it into an iPad is unwieldy — even satirical! — but we’re holding out hope.
The reviews on Lifehacker were the best one I read –
There was another thing which I read about iPad is it doesnt support flash (means will not play youtube videos, just for example). Moreover I read about Steve Jobs supporting that decision – rather than fixing it – saying HTML5 will have the functionalities that flash has. http://www.slate.com/id/2243422/
But I dont buy that argument. I think Jobs is overdoing his future-looking-thing, it might take a while for HTML5 to replace flash – and even if it does say in 5 years. Till that time Tablet market will be claimed.
Then there was one of the most comical comparison I saw – iPad vs Stone Tablet
There is hardly any difference between the two – except stone can do multitasking … LOL 🙂
Lastly there was a youtube video summarizing it best – iPad Keynote in less than 180 Seconds: Incredible, Beautiful, Amazing!
This might be usual part of any presentation where you praise your product, but it definitely felt like Jobs and his team is pushing hard this product. They are doing it the INFOMERCIAL-way … not doing the apple way – where you just create a good product and capture consumers imagination.
Anyways, let’s now look at the competition, because almost every company is jumping on Bandwagon. First one I saw was Google’s own tablet (still in concept stage)
Next one I read was “Made in India” Adam … and I have read good reviews about this tablet so far, still I am keeping my fingers crossed.
Hmm – long story short, the tablet market is just starting now, and I think it will create a marketplace of its own. But I dont think it will cannibalize notebook or netbook market, (umm maybe it will a little), but I think these all products will co-exist, your notebook/netbook will not be rendered useless.