No income tax till Rs 111,250

Union Finance Minister P Chidambaram, on August 26, exempted income up to Rs 111,250 from tax, and deferred till April one next year the proposal to withdraw the tax exemption on aircraft leasing and interest on NRI deposits.

This is part of 55 official amendments incorporated in the Finance Bill, which was passed in the Lok Sabha without discussion amidst an Opposition boycott.

The relief to income tax payers is likely to cost the exchequer Rs 300 crore in a full year.

The Budget had originally proposed tax exemption up to Rs 100,000 and this had resulted in an anomalous situation wherein those having marginally higher income beyond Rs 100,000 would have to pay huge tax up to Rs 9,000 resulting in real income, much less than those having an income of Rs 100,000.

Tax on NRI and NRE deposits had been deferred till April 2005. Earlier interest on NRI deposits was to be taxed from September 1, 2004.

Finance Minister P Chidambaram. Photograph: Sebastian D'Souza/AFP/Getty Images

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