Budget 2012, new income tax slabs and more: A ready reckoner

Sat Mar 17, 2012 1:58pm IST

Finance Minister Pranab Mukherjee (2nd L) poses as he leaves his office to present the 2012/13 budget in New Delhi March 16, 2012. REUTERS/Vijay Mathur

Finance Minister Pranab Mukherjee (2nd L) poses as he leaves his office to present the 2012/13 budget in New Delhi March 16, 2012.

Credit: Reuters/Vijay Mathur

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REUTERS - Finance Minister Pranab Mukherjee played it safe in unveiling the budget on Friday, pledging reforms but setting only modest targets for trimming a ballooning fiscal deficit, disappointing investors.

Here are some of the important announcements that affect individuals.

BENEFITS TO INDIVIDUAL TAX PAYER

The personal tax slabs have been aligned towards the rates proposed in the Direct Tax Code (DTC). The minimum threshold of income not chargeable to tax has been marginally increased to Rs. 2 lakhs. Maximum rate of tax to set in at Rs. 10 lakhs .

Currently, interest received on savings in bank are fully taxable. The budget proposes that interest from a savings account in a bank or post office will be exempt up to Rs. 10,000.

A deduction of up to Rs. 5,000 has been proposed for preventive health check up for self, spouse, dependents. This deduction would be within the overall limit currently existing for medi-claim insurance premiums and would include cash payments.

Securities Transaction Tax (STT) has been reduced on delivery based transactions to 0.1%.

(Also read: New income tax slabs, other benefits for individuals, click <here>)

SPECIFIC BENEFITS TO SENIOR CITIZENS

The age for senior citizens has been brought down from 65 years to 60 years for claiming deduction of medi-claim insurance premium and medical treatment expense.

Resident senior citizens not having any profits from business/profession would be exempt from payment of advance tax.

COMPLIANCE REQUIREMENTS

Currently, an individual is required to file an Income-tax return only if his income exceeds the maximum amount not chargeable to tax. It is now proposed to make it mandatory for every resident having an asset including a bank account located outside India to file a tax return in India.

Remuneration (other than salary) paid to directors will be subject to tax deduction at source (TDS) at the rate of 10%.

Every transfer of immovable property (other than an agricultural land), will be subject to TDS at the rate of 1% from the sale consideration.

(Also read, Highlights: 2012/13 Budget presented to parliament, click <here>)

INCREASE IN TAX BURDEN

There will be no tax benefit with respect to new insurance policies issued on or after April 1, 2012 , where the premium exceeds 10% of the actual capital sum assured.

Cash donation in excess of Rs. 10,000 will not be eligible for deduction under section 80G.

(The views expressed in this column are the author's own and do not represent those of Reuters)

(Shuddhasattwa Ghosh is an Associate Director in PwC. He has close to 15 years of experience in structuring international secondments and advising on related tax and regulatory compliances both from the individual as well as the corporate perspectives)

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