Key highlights of Indian Budget - Direct Tax proposals
This article will provide the reader with the key highlights of the recently presented budget. The key highlights provided are only from a direct tax perspective and only that are applicable to individuals. Thus, only personal income tax that are most important are highlighted in this article.
- Indian Budget
- Raising the exemption limit
- Internal changes in slabs
- Deduction of interest income
- Deduction for preventive health check
- Donation in cash not allowed
Recently, the Union Budget 2012 was introduced in the Indian Parliament.
The Union Budget seeks to make certain ammendment in the Indian tax laws. The key highlights of the budget proposals from a direct tax perspective are discussed in this article.
This article will provide insights of important budget proposals from an income tax perspective that more relevant to individuals. Corporate taxation is not discussed in this article.
Raising the exemption limit
Exemption limit refers to the basic income upto which income of an individual is not taxable under the Indian tax laws.
Exemption limit for individuals has been increased from ₹ 180,000 to ₹ 200,000. More over, now there is no difference between a men and women in terms of tax rates. Even for Women, the exemption limit is same as men ie ₹ 200,000 (increased from ₹190,000). There is no change in basic exemption limit of Senior Citizens and Very Senior Citizens.
Internal changes in slabs
Under Indian Income tax laws, different range of income are taxable at different rates. There has been an internal change in slab. Earlier income in excess of ₹ 800,000 was taxable at a tax rate of 30%. However, post budget, now income in excess of
₹ 10,00,000. Thus, there would be considerable savings in taxes.
Deduction of interest income
Interest income earned from savings bank account would be now exempt from tax up to an amount of ₹ 10,000. Thus, again individuals would benefit from this budget proposal, as there would be considerable tax savings.
Deduction for preventive health check
Now, deduction would be allowed for preventive health checkup of individual or his parents upto a limit of ₹ 5,000. Deduction would be allowed even if payment is made in cash.
Donation in cash not allowed
Earlier, deduction of donation paid even in cash was allowed in the tax return. However, the budget proposes to allow tax deduction of donation exceeding ₹ 10,000 only if it is paid by any of modes (other than cash).