Monday, 28 February 2011

Union Budget 2011 - raised income tax limit for general tax payers.

Today, 28th February, 2011 the Union Finance Minister Pranab Mukherjee presented the Budget for the financial year 2011-12. There are a few tax benefits proposed in the budget. The Budget 2011 highlights for tax benefits are as follows:-

Personal Income Tax Exemption limit rose to 180000.

The existing income tax exemption limit for general tax payers is Rs. 160000 and in the budget 2011 the limit is raised to Rs.180000 and the finance minister allowed a relief of Rs. 2000 in Tax (2060 including Education Cess). No doubt this is a relief for many. But the existing income tax exemption limit of woman tax payers is Rs. 190000 and the finance minister did not say anything about raising the exemption limit for woman tax payers.

Qualifying age of senior citizen reduced to 60

The Finance minister proposed the age of senior citizen as 60 for income tax purpose. Earlier the age was 65. Now almost all retired employees will get this benefit. The Income Tax Exemption limit for senior citizen also has been raised to Rs. 250000. At present it is Rs. 240000. So a senior citizen over the age of 65 will get a tax exemption limit of Rs. 10000 (Tax 1030) and the senior citizen those who have completed 60 years will get an additional exemption of Rs. 90000 (250000-160000) (Tax 9270) and they are considered the more benefit people in this budget 2011.

Very Senior Citizen – A new tax category over 80

Finance Minister Proposed a new category of tax payers in income tax is Very Senior Citizen those who have completed the age or 80. The Income tax exemption for very senior citizen will be Rs. 500000. At present they also should pay tax for the income over Rs. 240000. Now they get a benefit of Rs. 260000 and the Tax benefit is 26780 (Tax Rs. 26000 and Education Cess Rs. 780). The people in this new category will get the maximum income tax benefit from the budget 2011.

Other Income Tax Proposals

The other budget proposals related to Income Tax is a new Income Tax return form named ‘Sugam’ to be introduced for small tax payers to make the filing of income tax return more easily. Electronic filing of TDS returns stabilized. Surcharge of domestic companies reduced to 5 percent from 7.5 percent.

Even if there is no big relaxation in income tax, the income tax exemption limit and reduction in the age of senior citizens and the new very senior citizen category are good proposals for individual income tax. But due to the high inflation, the tax payers expected more benefits from the budget 2011. The woman tax payers do not get any benefit in this new budget. We can hope that in the budget discussion session they also will get some benefits.

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  1. [...] income tax return on or before 31st July, 2011. But this notification exempted them to file the Income tax return for the year under following [...]