Older,it gets merrier

For individuals aged 80 years or more,The basic exemption limit has been set at Rs 5 lakh which would result in tax savings of Rs 26,780 a year.

If youre a senior citizen,you can save more tax. If youre a very senior citizen,you can save even more. The Finance Minister enhanced the tax exemption limit by Rs 20,000 to Rs 1.80 lakh,gave additional benefits to senior citizens but excluded women below 60 from additional sops. While proposing to raise the limit to Rs 2.5 lakh for senior citizens,the Budget has lowered the age for senior citizens to 60 from 65.
A new category of very senior citizens of 80 years and above has been introduced with no tax on their income up to Rs five lakh.

Increase in threshold exemption limits of income
The Finance Minister has proposed to increase the basic exemption limit for the individuals from Rs 1.6 lakh to Rs 1.8 lakh,thereby giving them a tax saving of Rs 2,060 per annum.

For senior citizen as well,the exemption limit has been raised from Rs 2.4 lakh to Rs 2.5 lakh,giving a saving of Rs 1,030 p.a.

The age for individuals to qualify as senior citizen is proposed to be reduced from 65 years to 60 years. This would result in savings of up to Rs 6,180 p.a. for female taxpayers and Rs 9,270 p.a. for male taxpayers between the age group of 60 to 65 years.

A new category tax payers,very senior citizens is proposed to be introduced for individuals aged 80 years or more. The basic exemption limit for such individuals has been set at Rs 5 lakh which would result in tax savings of Rs 26,780 p.a.

Deduction on investment in Long term infrastructure bonds to continue
An additional deduction of up to Rs 20,000 over and above the deduction of Rs 1 lakh was introduced under section 80CCF of the Income Tax Act Act in Budget 2010 for individuals making investment in specified long term infrastructure bonds. The said deduction has been retained for the tax year 2011-12 as well.

Exemption from furnishing Return of income
Budget has empowered the Central Government to exempt certain class of persons from furnishing the return of income subject to fulfillment of the specified conditions to be notified. Salaried employees for whom entire tax liability is discharged by the employer through deduction of tax at source and who have no other sources of income,may benefit from these provisions.

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What Hurts Individuals?
For women tax payers below 60 ,there is no relief in the taxes.
Currently,employers contribution to the pension scheme is first added to the income of the individual and then deduction is allowed under section 80CCD2 within the overall limit of Rs 1 lakh. Budget 2011 has proposed to withdraw the deduction for employers contribution under section 80CCD2. Those using employers contribution to pension scheme to utilise the exemption of Rs 1 lakh under 80CCE would now need to save more to that extent to save taxes.
The relief by enhancing the basic exemption limits may not be enough to provide relief from inflation.

Courtesy: Kuldip Kumar,Chander Talreja,Vikas Kumar,Ruchika Khaneja,PWC-India

What the budget means for you
GOVERNMENT EMPLOYEES
At present specified perquisites of the CEC and the Judges of the Supreme Court are exempt from tax. Such benefits are proposed to be extended to the serving as well as retired Chairman and members of the UPSC.

YOUNG PROFESSIONALS
No specific exemption to young professionals except saving of Rs 2,060 resulting from the increase of basic exemption limit from Rs 1.6 lakh to Rs 1.8 lakh.

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FEMALE ASSESSEEs
No relief for resident female taxpayers if they are below 60 years of age. However,they may benefit if they are 60 years or more to the extent of Rs 6,180 and Rs 26,780 where they are aged 80 years or more.

SENIOR CITIZENS
Senior citizens,below 80 years of age,will now save Rs 1,030 as minimum exemption limit has been raised from Rs 2.4 lakh to Rs 2.5 lakh. Benefit would rise to Rs 26,780,if these individuals are of 80 years or more under new category of Very Senior Citizens.