Income tax 2012-13

The tax exemption limit for individuals has been hiked to Rs.2 lakh from the current Rs.1.8 lakh, while the tax slabs have been re-jigged to provide relief to tax payers.

Presenting the union budget for 2012-13 in the Lok Sabha, Finance Minister Pranab Mukherjee said the upper limit for the 20 percent tax slab would be increased to Rs.10 lakh.

“I propose to enhance the exemption limit for individual from Rs.1.80 lakh to Rs.2 lakh. I also propose to raise the upper limit of the 20 percent tax slab from Rs.8 lakh to Rs.10 lakh,” Mukherjee said.

“This measure will provide a tax relief of Rs.2,000 to every taxpayer of this category,” Mukherjee said.

The new tax slab for the coming fiscal will be 10 percent tax for income above Rs.2 lakh and up to Rs.5 lakh, 20 percent for above Rs.5 lakh and up to Rs.10 lakh, and 30 percent for income above Rs.10 lakh.

NEW DELHI: Disappointing a large section of income tax payers in the country, finance minister Pranab Mukherjee made a small raise in the exemption limit in his Budget speech.

Pranab Mukherjee raised the exemption limit for income tax by just Rs 20,000 from Rs 1,80000 to Rs 2 lakh.

The new tax slabs are as follows:

Up to Rs 2 lakh: No tax

From Rs 2 lakh to 5 lakh: 10%

From Rs 5 lakh to 10 lakh: 20%

Above Rs 10 lakh: 30%

Promise to curb black money, major push on infrastructure, capital market reforms and huge subsidy cut were among the other proposals listed by Pranab Mukherjee in the Union Budget for 2012-13.

The revision in tax slabs will give some direct tax relief to individuals, even as eating out, buying luxury cars, air travel, availing some professional services and investing in gold jewellery will become costlier.

Presenting his 7th budget in the Lok Sabha on Friday, the finance minister said the exemption limit for personal income tax was being enhanced from Rs 1,80,000 to Rs 2,00,000, even as the limit for peak rate was being raised to Rs 10,00,000 from Rs 8,00,000.

“This will provide tax relief of Rs 2,000 to every tax payer,” the finance minister said, adding: “My proposal on direct taxes will result in a revenue loss of Rs 4,500 crore.”

He also announced new tax slabs under which income up to Rs 2,00,000 would be totally exempt, levy 10 percent for Rs 2,00,000 to Rs 5,00,000, then 20 percent for Rs 5,00,000 to Rs 10,00,000 and 30 percent for income above Rs 10,00,000.

For the corporate sector, he said, while the tax rates were remaining unchanged, he assured cheaper access to funds for expansion, even as he tinkered with the excise rates and customs duties for specific items.

He proposed to raise the service tax rate to 12 percent from the present 10 percent.

In the speech, which started at 11 am and lasted 110 minutes, Mukherjee listed a slew of proposals that ranged from social welfare schemes and incentivising industry to fiscal consolidation and sector-specific reforms.

Assuring further liberalisation of capital markets, he announced a new equity savings scheme to extend income tax deduction of 50 percent to those who invest up to Rs 50,000 in equities and whose annual income is less than Rs 10 lakh.

The finance minister started his speech with the cascading effect of the global slowdown on India, but yet assuring people that there were clear signs of a recovery which should see the country grow at 7.6 percent in 2012-12, against 6.9 percent this fiscal.

“The global crisis has affected us. India’s gross domestic product (GDP) is expected to grow at 6.9 percent in 2011-12, after having grown at 8.4 percent in each of the two preceding years,” the finance minister said.

“Though we have been able to limit the adverse impact of the slowdown in our economy, this year’s performance has been disappointing. But it is also a fact that in any cross-country comparison, India still remains among the front-runners in economic growth.”

At the same time, Mukherjee also said the Indian economy was at the cusp of a revival, as agriculture and services have continued to grow at a decent pace. It was industrial performance that was acting as a drag.

“While we do not have the aggregate figures for the last quarter of 2011-12, numerous indicators pertaining to this period suggest that the economy is now turning around. There are signs of recovery in coal, fertiliser, cement and electricity sectors.”