"In this world nothing can be said to be certain, except death and taxes," said Benjamin Franklin in the late 1700s and this remains an axiom even today, of course with an add-on that death certainly doesn't get worse every year!
Whether it was to reverse this truism or to give more to the ordinary tax "assessee" (no pun intended!), the goodies in the direct tax proposals in the Finance Bill, 2010 received an emphatic welcome from the individual tax payers.
The proposed amendments of modifying the income slabs for levying personal income tax brought some joy and glee to the individuals. With the slab rates broadened substantially and increase in tax saving investment limits, the Finance Minister has increased the disposable income of the taxpayers. For example, a male individual below sixty-five years having a taxable income of Rs 800,000 will see a reduction of at least Rs 50,000 in taxes.
A snapshot of the personal tax slabs prior to the Finance Bill and the proposed slabs from 1 April 2010, which you have already known.
This widening of the tax slabs is in line with the proposed Direct Tax Code, which is expected to replace the present Income-tax Act, 1961, from 1 April 2011.
The other good news is the introduction of a new tax saving avenue for investments of up to Rs 20,000 in notified long-term infrastructure bonds. This is in addition to the existing deduction limit of Rs 100,000 for prescribed investments / expenses. Further, contributions to the Central Government Health Scheme shall also be eligible as a deduction within the current limits for health insurance payments.
To give a much needed impetus for investments in the New Pension Scheme, the government will contribute Rs 1,000 per year for 3 years to each NPS account opened in the financial year 2010-11 for persons contributing a minimum of Rs 1,000 and a maximum of Rs 12,000 annually.
The Budget has also provided some relief to taxpayers including individuals whose taxes are deducted at source by raising the threshold limits for applicability of tax deduction for prescribed receipts including rental and contractual income. This will give some respite to the ordinary tax payers who otherwise would wait for refunds even though their total income is below the basic taxable limit. Also, an anomaly in the provisions, with respect to the transfer of immovable property at inadequate consideration, which earlier resulted in double taxation, has been corrected.
As a step towards reducing administrative inconvenience in filing income tax returns, salaried individuals can look forward to a reincarnation of the Saral form in its new avatar i.e. "Saral II" which we presume, like its namesake would be "Saral" too! Also, to facilitate quicker processing of tax returns, two new Centralised Processing Centres would be added during the financial year 2010-11.
Amidst the above welcome changes, the Finance Minister has proposed to bring the gifts of bullion (including gold/silver bars) within the tax net under the head of "income from other sources".
To sum up, the Budget has brought more cheers than fears on a personal tax front. The Finance Minister deserves a pat on the back for presenting such a buoyant and a growth-oriented Budget. Putting more money in the individual taxpayers wallet will lead to enhanced spending and investment and this in turn will propel Indias growth story, amongst challenging global circumstances, to new highs. Way to go Finance Minister - do continue the "cheers" for the Budgets to come!