Thursday, 21 July 2011

Income Tax Rates & Changes for 2011-2012

There were certain changes made in the Income Tax Rule, when the financial bill, 2011 passed in the Parliament such as Age of Senior Citizen, Very Senior Citizen Category, enhancement of basic tax exemption etc. Here we wish to point out the important changes which are applicable to common people.

Enhancement of the Basic exemption limit to Rs.180000

For taxpayers other than senior citizens and women, the basic exemption limit was Rs. 160000. But now it has been enhanced to Rs. 190000. So the tax payer should not pay tax up to Rs.180000 of his taxable income. The tax rate is nil up to Rs. 180000 of taxable income. With this change the tax payer can save a tax amount of Rs. 2060 (Tax and Education Cess)

Enhancement of the Basic exemption limit to Rs.250000 for senior citizen

A senior citizen (60 years of age or more) should not pay tax for his or her taxable income up to Rs. 250000. Earlier it was Rs. 240000.  Senior citizen taxpayers also could save Rs. 1030 from the enhancement of basic exemption limit. Those who have completed 60 years of age within the financial year can avail the benefit of the basic exemption of senior citizen. Till last year (F.Y 2010-11, A.Y 2011-12) the qualifying age of senior citizen was 65 years. Now a person who have reached 60 years of age in any date within the financial year, he or she can avail this basic exemption limit of Rs. 250000 and the tax rate is nil up to Rs. 250000 of taxable income. Those who have completed the age of 60 and not reached 65 years could save a tax amount of Rs. 7210 (Tax of 250000-180000) and those who have already completed 65 years could save a tax amount of Rs. 1030 (Tax of 250000-240000). But in case of deductions as per section 80D, 80DDB, Form 15H the age of senior citizen is unchanged. It will remain as 65 years.

A new category of very senior citizen has been created

In this finance bill a new category of taxpayers has been created. Those who have reached 80 years of age will come under this very senior citizen category. The basic exemption of very senior citizen is Rs. 500000.  The income tax rate is nil for the first Rs. 500000 of taxable income of very senior citizen. They could save an additional tax amount of Rs. 25750 (Tax of 500000-250000)

There is no change in Income tax slab rates

The Income Tax Slab Rates will be same as earlier. 10% up to Rs. 5Lakh Taxable income, 20% for the next Rs. 3 Lakh and 30% for the remaining amount (Taxable income exceeds Rs. 8 Lakh) and 3% education cess for all the above slabs. No change in the basic exemption limit of Woman tax payers. The exemption limit of Rs. 190000 continues this year also. The Exemption under section 80CCF is still continuing the same amount of Rs. 20000 for the investment in infrastructure bond of specified companies. The exemption under section 80C also remain unchanged as Rs. 1 Lakh (120000 with 80CCF)

Related posts

Consequences of not filing ITR in time 

How to e-file Income Tax Return Yourself

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