The Union Budget has raised the tax-exemption limit for individuals by Rs 10,000.

With rise in the exemption limit the minimum tax-payable by individuals in low-to-middle-income groups will come around Rs 1,030, while for senior citizens the payable amount will be at least Rs 1,545 less.

While presenting the Union Budget 09-10, on Monday, 6 July, 2009 the Union Finance Minister Pranab Mukherjee, said "I propose to phase out the surcharge on various direct taxes by eliminating the surcharge of 10 per cent on personal income tax."

The minister also indicated introduction of SARAL - II forms in near future, to replace the current ITR forms system, which require an individual to select one of the any four ITR forms as per the income source for filing of income tax returns.

The budget has extended to include fields of vocational studies for tax deduction under section 80E of the Income-tax Act provided on educations loans.

For individuals with income above Rs.10 lakh per annum, budget brings dual benefits of higher exemption level and a wavier of 10 percent income tax surcharge. In terms of numbers, this implies tax incidence on the highest slab has reduced from 33.99 percent to 30.09 percent.

The Government has however, scrapped off fringe benefit tax (FBT) on employee perks, shifting the burden of benefits drawn on the employees. In this case, employees have to bear the tax for superannuation fund contributions, which are received only on the retirement.

The employee stock options are also taxable, starting from date of vestment. Tax experts have suggested that tax-payment should be done only when the stock is sold, as the case was before P Chidambaram introduced FBT.

Commenting on the same, Vikas Vasal, executive director, tax, KPMG., said, "Ideally, the tax should become payable when the stock is sold,"