Tax exemption limit raised to Rs 1.8 lakh

Senior citizens will get tax exemption for income up to Rs 2.5 lakh,higher from Rs 2.4 lakh now.

As per the announcement,the increase in the income tax exemption limit for general tax payers (excluding women and senior citizens) to Rs 1.8 lakh per annum would translate into a benefit of Rs 2,000 for all tax payers.

At present,the general tax payers earning more than Rs 1.6 lakhs per annum are required to pay income tax.

Introducing a new tax slab for very senior citizens (80 years and above),Mukherjee said,they will not have to pay any tax for annual income up to Rs 5 lakh.

The general tax payers will have to pay 10 per cent tax on income between Rs 1.8 lakh and Rs 5 lakh; 20 per cent between Rs 5 lakh and Rs 8 lakh; and 30 per cent on income above Rs 8 lakh.

The exemption limit for women tax payers will be Rs 1.9 lakh. They will have to pay 10 per cent tax on income between Rs 1.9 lakh and Rs 5 lakh; 20 per cent between Rs 5 lakh and Rs 8 lakh; and 30 per cent for income above Rs 8 lakh.

In case of senior citizens (between 60 and 80 years),the exemption limit has been raised to Rs 2.5 lakhs from Rs 2.4 lakhs. They will have to pay 10 per cent on income between Rs 2.5 lakh and Rs 5 lakh; 20 per cent between Rs 5 lakh and Rs 8 lakh; and 30 per cent on income above Rs 8 lakh.

For very senior citizens (80 years and above),there will be no tax on income up to Rs 5 lakh. They will have to pay 20 per cent on income between Rs 5 lakh and Rs 8 lakh and 30 per cent above Rs 8 lakh.

Common man reacts to hike in tax exemption

In his budget for the coming financial year,Finance Minister Pranab Mukherjee on Monday announced raising the personal income tax exemption limit from 160,000 rupees to 180,000 rupees in FY2012.

This measure will provide a uniform tax relief of 2,000 rupees to every taxpayer of this category, Mukherjee said in his speech.

Mukherjee said he has limited his proposals to initiatives that require urgent attention,as the government’s policy on direct taxes has been outlined in the DTC,which is before parliament.

We were expecting around two lakh that is what the market speculation was,just raised about 20,000 which is hardly anything, said Mohit Oberoi,a businessman.

The finance minister also extended 20,000 rupees exemption for investment in infra debt funds for another year.

Qualifying age for senior citizens will be reduced to 60 years from 65 years while the exemption limit will be increased from 2,40,000 rupees to 2,50,000 rupees,Mukherjee said.

The finance minister also proposed the creation of a new category of very senior citizens aged above 80 years,who will be eligible for a higher exemption limit of 5,00,000 rupees.

Following is the table of new income tax slabs proposed by Finance Minister Pranab Mukherjee in Budget 2011-12.

INCOME: TAX RATE

Above Rs 8,00,000: 30 per cent

BUD-HIGHLIGHTS-TAX

Higher tax exemption limit for individuals,significant benefits for senior citizens,retention of service tax at 10 per cent and withdrawal of some duty exemptions were some of the major tax-related highlights of the Budget 2011-12 presented by Finance Minister Pranab Mukherjee today.

Here are some major announcements:

*Tax exemption limit raised to Rs 1.8 lakh,from Rs 1.60 lakh for individual tax papers.

*For senior citizens,the qualifying age reduced to 60 years and exemption limit raised to Rs 2.50 lakh.

*Citizens over 80 years to have exemption limit of Rs 5 lakh.

*Surcharge for companies cut to 5 per cent,from 7.5 per cent.

* A new revised income tax return form ‘Sugam’ to be introduced for small tax papers.

*Service tax retained at 10 per cent; duty exemptions to be withdrawn on various items.

*Net loss from direct tax proposals estimated at Rs 11,500 crore for the year.

*Excise and customs duty proposals to result in the net gain of Rs 7,300 crore.

*Standard rate of central exercise duty maintained at 10 per cent; No change in CENVAT rates.

*Nominal one per cent central excise duty on 130 items entering the tax net. Basic food and fuel and precious stones,gold and silver jewellery will be exempted.

*Peak rate of customs duty maintained at 10 per cent in view of the global economic situation.

*Basic customs duty on agricultural machinery reduced to 4.5 per cent from 5 per cent.

*Service tax widened to cover hotel accommodation above Rs 1,000 per day,A/C restaurants serving liquor,some category of hospitals,diagnostic tests.

*Service tax on air travel increased by Rs 50 for domestic travel and Rs 250 for international travel in economy class. On higher classes,it will be ten per cent flat.