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Charge to Income-tax
Everyone exceeds the maximum amount which is not chargeable to the income tax is an assessee, and shall be chargeable to the income tax at the rate or rates prescribed under the finance act for the relevant assessment year, shall be determined on basis of his residential status. Income tax is a tax payable, at the rate enacted by the Union Budget (Finance Act) for every Assessment Year, on the Total Income earned in the Previous Year by every Person.

Tax Rates
In India, Individual income tax is a progressive tax with three slabs. About 10 per cent of the population meets the minimum threshold of taxable income From April 1, 2011 new tax slabs apply, which are as follows:

Income tax slabs (in Rs) 2011-2012


General 0 to 1,80,000 Women 0 to 1,90,000 Senior Citizen 0 to 2,50,000 Very Senior Tax Citizen Applicable 0 to 5,00,000 No Tax

1,80,001 to 1,90,001 to 2,50,001 to 5,00,000 5,00,000 5,00,000 5,00,001 to 5,00,001 to 8,00,000 8,00,000 Above Above 8,00,000 8,00,000 5,00,001 to 8,00,000 Above 8,00,000

10%

5,00,001 to 8,00,000 20% Above 8,00,000 30%

Heads of Income

The total income of a person is divided into five heads, viz., taxable Income from Salary Income from House property Income from Business or Profession Income from Capital Gains Income from Other Sources

Exemptions:
1) 80 C Limit Unchanged (Rs. 1,00,000)(refer to our earlier blog for all options under section 80 C 2) 80 CCF Additional Rs. 20,000 on investments towards approved Infrastructure bonds 3) 80CCD: Contribution to NPS and returns on NPS tax free, but withdrawal still taxable

4) 80 D Mediclaim Premium on the Health of a) Self Spouse and Children Rs. 15,000 b) Parent/Parents Rs. 15,000 c) If Parent/ Parents Senior citizen Rs. 20,000

5) Section 80DD Deduction under section 80DD Exemption given for Expenditure made for a disabled dependant towards Medical Treatment/Training/Rehabilitation. It also includes the LIC/Insurance premium paid towards maintenance of such dependant. Maximum deduction allowed is Rs. 50,000/- in case of normal disability and Rs. 1 Lakh in case of severe disability.

6) 80DDB Deduction under section 80DDB Exemption given for expenditure incurred on specified disease or ailments such as cancer/aids. Maximum deduction allowed is Rs. 40,000/-. In case of Senior Citizens, maximum deduction allowed is Rs. 60,000/-

7) Section 80E Deduction under section 80E Deduction is allowed for repayment of interest component of Higher Education loan. All education after Class 12 is allowed, either vocational or Fulltime. But should be from a school/institute/university recognized by the government. 8 ) Section 80G Contribution to exempt charities 25/50/75/100% depending on the charity and as per approval 100% exemption on donation to political parties

9) 80U Deduction under section 80U Deduction upto Rs. 50,000/- is allowed in case of Permanent Disability. In case of Permanent Disability exceeding 80%, maximum deduction allowed is Rs. 75,000/-. 10) Section 24(1)(vi) Housing loan interest.Maximum Investment Limit Rs. 1,50,000 (for loans taken after 1 April 1999, for loans before that Maximum Investment Limit 30,000).

11) Superannuation Any contribution made by a company to superannuation fund upto Rs. 1,00,000 tax free in the hands of the employee 12) Conveyance/Transport Allowance Any Conveyance / Transport Allowance given to an employee is tax free upto Rs. 9,600 /- (No Supporting Bills required) 13) Medical Allowance Any Medical Allowance given to an employee is tax free upto Rs. 15,000 /- (Supporting Bills required)

Punjab Chief Minister Parkash Singh Badal sought income tax exemption for industry, corporate houses, NGO's and media investing in the road safety programmes approved by the government in the forthcoming Union budget for 2012-13 financial year.

Income Tax exemption limit for individuals has been raised from Rs 1.6 lakh to Rs 1.8 lakh, giving a relief of Rs 2000 to every tax payer, in the Budget for 2011-12 which widened the Service Tax net to cover more services that will raise the cost of air travel, hotel accommodation and those who drink in AC restaurants.

Income tax benefits for projects

Five year tax holiday for:


Power projects
Firms engaged in exports New industries in notified states and for new industrial units established, in electronic hardware/software parks. Export oriented units and units in Free Trade Zones. As of 1994-95 budget firms engaged in providing infrastructure facilities, can also avail of this benefit.

Tax deductions of 100% of export profits

Deduction of 30% of net income for 10 years for new industrial undertakings.
Deduction of 50% on foreign exchange earnings by construction companies, hotels and on royalty, commission, etc. Deduction in respect of certain inter-corporate dividends to the extent of dividend declared. Deduction of an additional amount of Rs.20000 allowed, over and above the existing limit of Rs. 1lakh on tax savings, for investment in long term infrastructure bonds as notified by the central government.

Besides contribution to health insurance schemes which is currently allowed as a deduction under the Income Tax Act, contributions to the central government health scheme also allowed as a deduction under the same provision.

Current surcharge of 10 percent on domestic companies reduced to 7.5%


Rate of minimum alternate tax(MAT) increased from the current rate of 15% to 18% of book profits. To further encourage R & D across all sectors of economy, weighted deduction on expenditure incurred on in-house R&D enhanced from 150% to 200%.

Weighted deduction on payments made to national laboratories, research associations, colleges, universities and other institutions, for scientific research enhanced from 125% to 175%. Payment made to an approved association engaged in research in social sciences or statistical research to be allowed as a weighted deduction of 125 %. The income such approved research shall be exempt from tax. Benefit of investment linked deduction under the Act extended to new hotels of 2 star category and above anywhere in India to boost investment in the tourism sector.

Limits for turnover which accounts need to be audited enhanced to Rs.60 lakhs for businesses and to Rs.15 lakhs for professions. Limit of turnover for the purpose of presumptive taxation of small businesses enhanced to Rs.60 lakhs. If tax has been deducted on payment by way of any expense and is paid before the due date of filing the return, such expenditure to be allowed for deduction. Interest charged on tax deducted but not deposited by the specified date to be increased from 12% to 18% p.a. To facilitate the conversion of small companies into limited liability partnerships, transfer of assets as a result of such conversion not to be subject to capital gains tax

The advancement of any other object of general public utility to be considered as charitable purpose even if it involves carrying on of any activity in the nature of trade, commerce or business provided that the receipts from such activities do not exceed Rs.10 lakhs in the year. Proposals on direct taxes estimated to result in a revenue loss of Rs.26000 crores for the year.

Allow pending projects to be completed within a period of five years instead of 4 years for claiming a deduction of their profits, as a one time interim relief to the housing and real estate sector. Norms for built-up areas of shops and other commercial establishments in housing projects to be relaxed to enable basic facilities for their residents.

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