Giving some relief to tax payers, Finance Minister Pranab Mukherjee on Friday proposed raising the income tax exemption limit for individuals to Rs 2 lakh per annum from Rs 1.80 lakh.
Unveiling the Budget proposals for 2012-13 in the Lok Sabha, he also increased the limit to Rs 10 lakh under the 20 per cent tax slab. The current limit is Rs 8 lakh.
"My proposals on direct taxes are estimated to result in a net revenue loss of Rs 4,500 crore for the year," Mukherjee said.
The Budget also exempt up to Rs 10,000 of interest income from tax.
Individual will have to pay 10 per cent tax on income between Rs 2 lakh and Rs 5 lakh; 20 per cent between Rs 5 lakh and Rs 10 lakh; and 30 per cent for above Rs 10 lakh.
Mukherjee said increasing the exemption limit is a move towards implementation of the Direct Taxes Code (DTC).
Income Tax Slabs
Up to 2 lakh rupees – NIL
Rs 2 - 5 lakh – 10%
Rs 5 -10 lakh – 20%
Above Rs 10 lakh – 30%
Budget 2012: FM offers tax sops for you
The Standing Committee of Parliament that has scrutinized the DTC Bill had suggested raising the tax exemption limit to Rs 3 lakh.
The exemption limit for the senior citizens between 60 and 80 years of age will be Rs 2.50 lakh; 10 per cent will be levied on income between Rs 2.5-5 lakh, 20 per cent between Rs 5-10 lakh and 30 per cent above Rs 10 lakh.
For very Senior Citizens (80 years and above), the income tax exemption limit will be Rs 5 lakh; 20 per cent will be levied on income between Rs 5-10 lakh and 30 per cent for above Rs 10 lakh.
Budget 2012: FM offers tax sops for you
On implementation of DTC, Mukherjee said, "We received the report of the Parliamentary Standing Committee on March 9, 2012. We will examine the report expeditiously and take steps for enactment of DTC at the earliest."
The DTC Bill seeks to replace the half-a-century-old Income Tax Act, 1961.
The savings bank account deductions, Mukherjee said, will help small tax payers.
"This would help a large number of small tax payers with salary income of up to Rs 5 lakh and interest from savings bank accounts up to Rs 10,000, as they would not be required to file income tax returns," Mukherjee said.
Homeowners of apartments can enjoy tax exemption of Rs 5,000 spent on maintenance.This exemption level has been increased from Rs 3,000 to Rs 5,000.
The Capital Gains Tax will not be applicable for people who use the amount generated from the sale of their houses as an equity investment in small and medium businesses.
Exemption permitted upto Rs 5,000 for expenses incurred on preventive health check up.
article