Personal taxation-Budget 2012-2-13

Increase in Basic exemption Limit:-

Basic exemption limit for individual taxpayers other than Senior citizen has been marginally raised from Rs.1,80,0000/- to Rs.2,00,000/- and Gender based discrimination between male and female has been done away with.

Change in Income slab:-

Presently Income slab between Rs.5,0,000/- to Rs.8,00,000/- is chargeable @20%, which has been proposed to change & increase up to Rs.10,00,000/-from Rs.8,00,000/- present, that is say, income slab between Rs.5,00,000/- to Rs.10,00,000/- would be chargeable @20%.

Effect of the above changes can be summarised as under

Income Slabs	Individual (Male & Female both)
	(A) Others	(B) Senior Citizen	(C) Very Senior Citizen
		Above 60 Years	Above 80 Years
Income Exempt up to->	200,000	250,000	500,000
From   -   To
200001  - 250000	10%	NIL	NIL
250001  - 500000	10%	10%	NIL
500001  - 1000000	20%	20%	20%
Above    1000000	30%	30%	30%

Individual Slab Rate	Current	Proposed	Maximum Savings
Nil	`180,000	`200,000	2,060
10%	`180,001 to `500,000	`200,001 to `500,000
20%	`500,001 to `800,000	`500,001 to `1,000,000	20,600
30%	> `800,000	> `1,000,000

No Need to pay Advance Tax by Senior Citizen:- it has been proposed that resident Senior Citizens(i.e person of age more than 60 years on any day in the previous year), shall not be liable to pay advance tax if he does not have any income chargeable under the head “Profits and gains of business or profession”, and he/she shall be allowed to discharge his tax liability (other than TDS) by payment of self assessment tax on or before filing his return of Income.

It would be effective from 1st April, 2012 (i.e. From the FY 2012 – 2013)

 Deduction in respect of interest on deposits in savings account:- A significant change that impacts all taxpayers is the exemption of Rs 10,000 for savings bank interest. Section 80TTA has been inserted to provide a deduction up to Rs.10,000/- to Individuals and HUFs in respect of Interest of deposits in a Savings Account with a Banking Company or Co-operative Society or Post Office but it does not include “time deposits” (i.e. FD/RD etc)

(w. e. f. Assessment Year 2013 – 2014)

Deduction of Rs. 5,000/- for expenditure on Preventive Health Check-up :–

Presently an individual get deduction of Rs.15000/-  (in case of senior citizen Rs.20000/-) for payment of medical insurance premium, condition that premium should be paid by any mode other than cash, it does not provide any cushion to diagnose & prevent the problem before it come, however now it has been taken care by the budget.

Section 80D has been proposed to change to also include any payment up to Rs. 5,000/- made by an individual on account of preventive health check-up of self, spouse, dependant children or parents(s) during the previous year but it keep in mind that this payment would eligible for deduction within the overall limits prescribed in the section (i.eRs.15000/- or Rs.20000 as case may be).

This payment of Rs. 5,000/- on Preventive Health Check-up can also be made in Cash.

This would be effective from F.Y.2012-13 (i.e. Assessment Year 2013 – 2014)

Decrease of qualifying Age the eligible as Senior Citizen to 60 years from 65 years:-

The Qualifying age of “Senior Citizen” was reduced from 65 years to 60 years by the Finance Act, 2011 (Last year). But there was some anomaly in the different sections wherein qualifying age to be senior citizen was mentioned as 65 years.  Now tThe Finance Bill, 2012 has similarly proposed to amend various other Sections of the Income Tax Act, 1961 in order to make the effective age of Senior Citizens uniform across all the provisions to reduce the age for availing of the benefits by a Senior Citizen in Sections 80D, 80DDB and 197A from 65 years to 60 years.

Cash Donations in excess of Rs. 10,000 not allowed if made in cash:– 

Section 80G regarding donation to specified institutions/organisations and Section 80 GGA regarding donation for scientific research/rural development have been proposed to be amended so as to specify that any payment exceeding Rs. 10,000/-shall only be allowed as a deduction if such sum is paid by any mode other than cash.

This would be effective from F.Y.2012-2013 (i.e.Assessment Year 2013 – 2014)

Change in eligibility conditions for payment of premium on Life Insurance Policies

Presently a deduction under section 80C for payment of premium for life insurance can be claimed condition that maximum 20% of sum assured would be eligible if premium amount exceed 20% of the sum assured,

Now the existing threshold of premium payable (i.e. 20% of the “Actual Capital Sum Assured”) has been reduced to 10% of “Actual Capital Sum Assured”.

This change will apply to insurance policies issued on or after 1st April, 2012
Extension of exemption from capital gains u/s 54B to HUF also:- Presently this exemption is available to individual only on account of capital gain on sale of agricultural land which is proposed to be extended to “HUF” as well.