Budget 2012: Impact of taxes on YOUR income

The Finance Minister Pranab Mukerjee presented the Budget 2012-13 and has given a marginal benefit on the much awaited income tax slabs for common people.

The biggest beneficiaries would be people having income between 800,001 to 999,999 per annum. They move from the 30 per cent slab to the 20 per cent slab.

The basic slab for income tax has been proposed to be raised to Rs 2 lakhs from the current Rs 1.8 lakhs. This leads to a savings of Rs 2,000 for all taxpayers earning between 180,001 to 199,999.

The finance Minister has not mentioned the tax slabs for women and senior citizens in his Budget Speech so far but it is awaited.

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In addition, the Finance Minister has created new tax slabs. If your income is between Rs 200,001 to Rs 500,000, your tax rate will be 10 per cent.

For people earning Rs 500,001 to Rs 100,0000 the tax rate will be 20 per cent and for people whose income is Rs 1,000,001 and above the tax rate is 30 per cent.

The Finance Minister has also said that taxation of unexplained money, credits, investments, expenditures etc, will be at the highest rate of 30 per cent, here the slab of income will not be considered.

The FM has proposed to give a deduction of Rs 5,000 for expenses incurred on preventive health check-up. Now you can go fearlessly to that neighbourhood hospital and get the Executive Master Health Check up done and get a tax benefit too.

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A new equity scheme called Rajiv Gandhi Equity Saving Scheme is being introduced to promote Equity investments.

The Rajiv Gandhi Equity Saving Scheme will get income tax deduction, which will be purely applicable to the New Retail Investors who will invest directly into equity up to Rs 50,000, with a lock in period of three years.

The investor's annual income should not exceed Rs 1,000,000.

In order to ensure more number of participation from small towns in Initial Public Offers, the FM has announced that changes have been made in the IPO guidelines. The exact guidelines have not been mentioned yet.

However, this will help the capital markets in the long-run and even your neighbour share broker who can now look at rural India in a big way.

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The Finance Minister has proposed to allow selected government undertakings to issue tax-free bonds of Rs 60,000 crore, which is double the amount assigned in the previous year.

The FM has proposed to give a tax deduction of up to Rs 10,000 on interest earned from savings bank accounts. This means you can keep up to 2.5 lakhs continuously in your savings bank, get interest (currently four per cent in most banks) and not worry about the interest getting taxed.

The Finance Minister has said that Credit Guarantee Fund is to be set up which is likely to reduce the risk of banks. For that reason, the banks might reduce the rate of interest on educational loans.

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The finance Minister has announced 12 per cent excise duty on branded retail garments but it has been proposed that multi-branded shops are to be supported and the country can expect more number of malls and supermalls in the future.

The price of luxury cars are expected to go up which will disappoint people who were wishing for the prices to fall post budget. The customs duties on the silver and gold prices have gone up to four per cent from two per cent.

This will make both gold and silver costlier than what they are today. However, the branded silver jewellery is fully exempted from excise duty.

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The custom duty of LCD and LED panels has been exempted. In addition, the mobile phone parts are exempted from basic customs duty, which is expected to bring down the price of mobile phones.

The interest subvention of one per cent has been extended for one more year on housing loans up to Rs 15 lakhs. The Finance Minister has also announced that a Credit Guarantee Trust Fund is to be set up to ensure better flow of Institutional Credit for Housing Loans.