1. Increase Income Tax exemption limit. This is the important change in the budget for common man who has to pay income tax from their earnings. The Income Tax exemption limit increased to Rs. 200000 from the existing limit of Rs. 180000 for men and Rs. 190000 for women and the finance minister declares the gender equality by fixing the same income tax limit for both men and women.
2. Changes in Income Tax Rates. There is a change in income tax slab and income tax rates only for personal income tax, not for corporate tax. 10% Tax for income from 2 Lakh to 5 Lakh and 20% tax for income from 5 lakh to 10 Lakh and 20% tax for income more than Rs. 10 Lakh. In case of senior citizen and very senior citizen the basic exemption limit remains unchanged as 2.5 Lakh and 5 Lkah respectively. The existing rate is 10% from 180000 (190000 for women) to 500000 income and 20% for income between 500000 to 800000 and 30% for income more than 8 lakh.
3. DTC postponed. In the last budget (Budget 2011-12) finance minister declared that DTC (Direct Tax Code) would come to effect from the financial year 2012-13. But the implementation of DTC is postponed. We can confirm this as a positive one only when the DTC implemented. But the tax exemption for Equity related small savings (ELSS - mutual fund with 3 years lock in period) will continue till when DTC implemented and so we can consider it as a positive impact.
4. Income tax exemption for Saving Bank Interest. There is an exemption for the interest received from savings bank account up to Rs. 10000. So the employee who has an income less than Rs. 5 Lakh is not necessary to declare his interest to the employer for getting exemption from filing income tax return.
5. Health checkup cost excluded up to Rs. 5000. You can get exemption of Rs. 5000 under section 80D for health check up expense. This can pay by cash or cheque. But this is included in the Rs. 15000 exemption of medical insurance under section 80D.
6. 50% exemption for Rajiv Gandhi Equity Saving Scheme. The budget offers another income tax exemption up to Rs. 25000 for an investment up to Rs. 50000 (50% exemption) in the new Rajiv Gandhi Equity Saving Scheme. This may be like an ELSS with a lock in period of 3 years. But the exemption is restricted to the income tax payee whose income is less than Rs. 10 Lakh. The details are still expected. This may give an additional tax exemption for those who are eligible for the benefit.
7. The age of senior citizen is 60 for all income tax purpose. The existing age of senior citizen is 65 for income tax purpose except for income tax rates. But now the age of senior citizen is fixed as 60 years for all income tax purposes.
8. No advance tax for senior citizens. As per the budget proposal 2012-13 the senior citizen those who have completed the age of 60 in a particular financial year should not pay advance tax if the gross total income does not include income from business. This will give a relief to senior citizen.
All the above budget recommendations are positively and directly affect the common man. With these positive changes there is some relief to common man through this budget 2012-2013.
8 Positive income tax changes in the budget 2012-2013
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