Taxation And New Budget

www.kgandhi.anindia.com New Budget AND TAX (2009 -2010) The finance Minister, in his budget speech, announced marginal tax benefits for individual tax payers. He increased the basic exemption limit for male taxpayers and female taxpayers by Rs 10,000 and that of senior citizens by Rs 15,000. There is no change in the Corporate Tax rates while there has been a modest hike in the exemption limit on personal Income Tax. The exemption limit for Senior Citizens has been increased from Rs. 2.25 lakh to Rs. 2.40 lakh. For Women tax payers the exemption limit has been increased by Rs.10,000 to from Rs.1.80 lakh to Rs. 1.90 lakh and from Rs. 1.50 lakh to Rs.1.60 lakh for all other categories of individual taxpayers. He abolished the surcharge of 10% on income over Rs 10 lakh.

The

new

tax

slabs

now

stand

as

follows;

Male taxpayers Income Level Upto 1,60,000 1,60,001 to 3,00,000 3,00,001 to 5,00,000 Above 5,00,000

Tax Rate Nil 10% 20% 30%

Female taxpayers Income Level Upto 1,90,000 1,90,001 to 3,00,000 3,00,001 to 5,00,000 Above 5,00,000

Tax Rate Nil 10% 20% 30%

Senior citizens Income Level

Tax Rate Upto 240000 Nil 240000 to 300000 10% 300001 to 500000 20% Above 500000 30% In addition to this, an education cess of 3% on the tax amount continues. But a 10% surcharge on income over Rs 10 lakh has been abolished.

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Saving from revised Tax rates With the help of below given Table you can understand, what will be your saving from the revision

For men and women Taxable income (Rs) 2,00,000 5,00,000 10,00,000 12,00,000 15,00,000 20,00,000 25,00,000 40,00,000

Tax - before budget Male Female 5150 2060 56650 53560 211150 208060 300245 296845 402215 398815 572165 568765 742115 738715 1251965 1248565

Tax -after budget Male Female 4120 1029 55620 52529 210120 207029 271919 268829 364619 361529 519119 516029 673619 670529 1137119 1134029

Difference Male Female 1030 1031 1030 1031 1030 1031 28326 28016 37596 37286 53046 52736 68496 68186 114846 114536

For senior citizens Taxable income (Rs)

Tax before budget

2,00,000 5,00,000 10,00,000 12,00,000 15,00,000 20,00,000 25,00,000 40,00,000 Below given are the changes on your personal taxation.

Tax after budget

Difference

Nil Nil Nil 49875 47379 2496 203424 201879 1545 291746 263679 28067 393716 356379 37337 563667 510879 52788 733617 665379 68238 1243467 1128879 114588 announced in Budget 2009 - 2010 that will have some impact

Marginal Increase in Tax Exemption: Personal income tax exemption limit raised for senior citizens by Rs 15,000 and for all others by Rs 10,000.

Higher Deduction under Section 80DD: Annual deduction relating to maintenance, including medical treatment, for a dependent with severe disability (more than 80%) has been raised to Rs 1 lakh from the current Rs 75,000.

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Expanded Scope of Section 80E: Annual deduction in respect of interest on loans taken for higher education purposes has been expanded from the current limited list of courses to cover all fields of studies, including vocational studies, pursued after completion of schooling.

Elimination of Surcharge: The 10% surcharge on taxes for those earning annual income above Rs 10 lakhs will no longer exist. This will lead to a tax saving for higher income earners

Abolishment of Fringe Benefit Tax (FBT): FBT on the value of fringe benefits provided by employers to employees has been abolished. Reimbursements will be taxed as perquisites at the marginal tax rate. This might increase the tax burden on employees.

Increase in Wealth Tax Exemption: The exemption limit for wealth tax has been increased from Rs 15 lakhs to Rs 30 lakhs.

Automation of Tax Filing Procedure: Reiteration of the re-engineering of the key business processes around the filing of direct taxes. Expect simplified tax filing in the near future, with the prospect of quicker refunds. Corporate Tax rates •

• • • •

Corporate Tax rates - No Changes in corporate Tax, it continues to stand at 30% plus surcharge of 10% of the corporate tax (for companies with profits above Rs 10 million) along with an education cess that amounts to 3% of corporate tax, totalling to 33.9%. Fringe Benefit Tax (FBT) - Fringe Benefit Tax is abolished Minimum Alternate Tax (MAT) - Increased to 15% of book profit Commodity transaction tax (CTT) – CTT is cancelled Goods and Services Tax (GST) – GST is to be implemented by April 2010, cumulative incidence of GST expected to be around 18%

For Further Details kindly Contect : Thanks and Regards, Kirang Gandhi Corporate Financial Planner www.kgandhi.anindia.com m-9271267305