Budget 2010 has brought smiles for individuals having taxable income of more than Rs. 3 lakhs and the tax saving could be as high as Rs. 57,680! Proposals affecting all individuals • The income slabs taxable at the rates of 20% and 30% have been proposed to be increased from the existing Rs. 3lakhs/ 5 lakhs levels to Rs. 5lakhs/ 8 lakhs respectively. Now an individual having taxable income of Rs. 5 lakhs would pay Rs. 20,600 less tax while this saving would be Rs. 51,500 for individuals having taxable income of Rs. 8 lakhs or more. However, no relief is proposed for lower income group individuals having taxable income Rs. 3 lacs or less as their tax situation continues to remain the same. Further, where the individuals having taxable income of Rs. 160,000 were expecting to get relief in terms of filing the tax returns, there is no good news for them as the threshold limit of minimum taxable income has been left unchanged. • You can now save more taxes if you invest more! An individual would now be able to claim an additional deduction of Rs. 20,000 by investing in long term infrastructure bonds to be notified by the Central Government. The tax saving would further increase depending on the income level and the applicable slab rates to such individual. Proposals affecting salaried employees • Salaried employees can expect to save time and efforts in filling their tax returns as a simplified two pager form "SARAL-II" will be made available from coming assessment year. It may be noted that even the existing tax return form "ITR 1" is also a two pager form (excluding the acknowledgement receipt) which is applicable to the individuals having income from salaries and interest. We hope the new income tax return form requires fewer details from salaried individuals than the existing form ITR 1. Proposals affecting Professionals and Self employed individuals • If you are a professional or self employed individual, you would not be required to get your accounts audited by a Chartered Accountant, if his / her gross receipts / turnover is not more than Rs. 10 lakhs or Rs. 40 lakhs, respectively. However, such individuals are required to get his / her accounts audited if the gross receipts exceed the above limits. The limits are now proposed to be increased to Rs.15 lakhs and Rs. 60 lakhs respectively. This change will now help such individuals to not only save on accountants' fee but also reduce the cost and time incurred for complying with the tax withholding requirements. • The threshold limits for carrying out tax withholding in respect of certain specified payments viz. rent, payment to contractors, professionals etc. is proposed to be increased by fifty percent against the existing limits. This will reduce the compliances in respect of payments of lower value by the professionals and self employed individuals who are subject to tax withholding compliances. • In case where such individual fails to deduct or after deduction, fails to deposit the withheld taxes within the relevant financial year, the same will be disallowed while computing his/her taxable income. It is now proposed to extend the time limit for the deposit of withheld taxes till the due date of filing the tax return for the relevant tax year. • If you do not deduct the taxes or fails to deposit the taxes withheld within the prescribed due date, you will now have to pay interest at a higher rate of 1.5 per cent per month as against the existing levy of 1 per cent per month. Further, it is proposed to increase the penalty for failure to get your books of account audited from the existing Rs. 1 lakh to Rs. 1.5 lakhs. Resident Senior Citizens/ Resident Women • There is no specific relief proposed by the Finance Minister. Senior citizens or working women will enjoy the same tax savings as are proposed for other individuals. To sum up, saving in taxes would help the individuals to fight with the inflationary pressures while the lower income group will continue to struggle in the clutches of hardship as his/her net disposable tax free income would remains the same after this budget proposal.
