Lets get down to the details, shall we?
Changes in Individual Income Tax Rules:
The following are the main changes to the individual income tax rules as per the Budget 2012:
1. Minimum/Basic Exemption hiked to Rs. 2 lakhs.
2. Highest Tax slab (30%) is applicable if your income is greater than 10 lakhs
3. No discrimination between Male & Female Tax Payers. The Tax Slabs & Taxation Rates will remain the same for all regular citizens irrespective of Gender
4. Interest of upto Rs. 10,000/- earned by Individuals from their Bank Accounts is exempt from Income Tax
5. Up to Rs. 5000/- can be claimed as tax exemption for health checkup. This expense is part of the Rs. 15,000/- limit under Sec 80D (Medical Insurance Premium).
6. A new deduction of 50000 Rs also proposed for investment in equities through the Rajiv Gandhi Retail Equity scheme for individuals whose income is up to 10 Lakhs.
Points to Note Here:
1. Details reg. this new Rajiv Gandhi Retail Equity Scheme are still unclear. Who can invest, how the scheme will work etc is not yet known clearly. As and when clarity emerges on this scheme, we will cover it
2. The exemption of Rs. 5000/- for health checkup is part of the Rs. 15,000/- limit for Medical Insurance Premium. So, lets say you pay a premium of Rs. 12,000/- for medical insurance for your family, you can get a health checkup done for you and your spouse and claim up to Rs. 3000/- as part of Sec 80D.
3. There is not much clarity on Sec 80CCF "Infrastructure Bonds". The finance minister did not talk about this topic and explicitly mention that the tax benefits under this section will continue for this year as well. (This is important because, last year the finance minister said that this sec 80ccf will be applicable only for one year). However, he said that the government plans to raise around Rs. 60,000 crores through issue of tax free infrastructure bonds. So, I am assuming that sec80ccf will continue this year as well. Lets hope for the best.
Changes in Income Tax Rules for Businessmen holding Small & Medium Sized Businesses:
The following are the main changes to the income tax rules for individuals who own small to medium sized businesses as per the Budget 2012.
1. The Threshold annual turnover limit for businesses required to mandatorily maintain books of accounts and have an audit done has been raised from Rs. 60 lakhs to 1 crore
2. Businesses with a turnover of less than Rs. 1 crore can file their tax returns using the ITR-4 or ITR-4S (Also called the Sugam Form) instead of paying thousands of rupees to full time accountants & auditors
Points to Note Here:
1. Small and medium sized businesses were forced to hire a full time auditor/accountant to maintain their book of records as well as taxes due to the requirements laid down by the IT Department
2. Now that, this is relaxed a bit, small businesses can save around 20,000 to 25,000/- or even more on their fee towards these individuals.
Revised Tax Slabs – After the Budget 2012:
The following are the Revised Tax slabs effective for the financial beginning April 2012.
For Regular Citizens (Men & Women below 60 years Age)
| Income Range (In Rs.) | Tax % |
|---|---|
| Up To Rs. 2,00,000/- | NIL (0%) |
| Rs. 2,00,001/- to Rs. 5,00,000/- | 10% (Of the Amount that exceeds Rs. 2 lakhs) |
| Rs. 5,00,001/- to Rs. 10,00,000/- | Rs. 30,000/- + 20% (Of the Amount that exceeds Rs. 5 lakhs) |
| Above Rs. 10,00,001/- | Rs. 1,30,000/- + 30% (Of the Amount that exceeds Rs. 10 lakhs) |
For Senior Citizens (Men & Women aged between 60 to 80 years)
| Income Range (In Rs.) | Tax % |
|---|---|
| Up To Rs. 2,50,000/- | NIL (0%) |
| Rs. 2,50,001/- to Rs. 5,00,000/- | 10% (Of the Amount that exceeds Rs. 2.5 lakhs) |
| Rs. 5,00,001/- to Rs. 10,00,000/- | Rs. 25,000/- + 20% (Of the Amount that exceeds Rs. 5 lakhs) |
| Above Rs. 10,00,001/- | Rs. 1,25,000/- + 30% (Of the Amount that exceeds Rs. 10 lakhs) |
For Very Senior Citizens (Men & Women aged above 80 years)
| Income Range (In Rs.) | Tax % |
|---|---|
| Up To Rs. 5,00,000/- | NIL (0%) |
| Rs. 5,00,001/- to Rs. 10,00,000/- | 20% (Of the Amount that exceeds Rs. 5 lakhs) |
| Above Rs. 10,00,001/- | Rs. 1,00,000/- + 30% (Of the Amount that exceeds Rs. 10 lakhs) |
Note: A Cess of 3% will be added to the Tax amount payable by the assesse.
We will take a detailed look at how the revised tax slabs affect various individuals of the Tax Payer community in India in our next post.
Anand,
ReplyDeleteThis Interest income of Rs. 10,000/- is this applicable only on interest earned on our bank savings account or is it on FD's as well?
Mohammed
@ Mohammed
ReplyDeleteThe saving is only on Interest earned on your Savings account. Not on FD's or any other deposits.
I believe I am right. Anand, can you confirm?
Swetha
CAN I FILL INCOME TAX RETURN NOW FOR THE ASSESSMENT YEAR 2012-13?
ReplyDeleteNo. The financial year 2012-13 has just begun on April 1st 2012. So, practically you cannot file tax returns for an assessment year that is yet to complete
DeleteYou will get your form 16 after March 31st 2013 and then you can file your returns.
Anand
Hello,
ReplyDeleteThis is really interesting take on the concept. Income tax is taxed paid on individual earnings from salaries and investments. It services of tax spanner and keeps up with the changing times to best utilize your financial resources. Thanks a lot....
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