Budget 2012-13

The current budget made tax payers flow mixed responses. Even though the ultimate goal of this budget is to attain balanced and progressive, the rise in service tax from current 10 to 12 per cent offset the gain & eat into whatever savings taxpayers make.The overview of some proposals are as follows.

• Change in tax slabs: This budget witnessed change in tax slabs once again that is in line with the DTC proposal. The table below gives clear picture of the same for the individual aged below 60.

           Taxable income                   Tax Rate(%)
        
           2-5 lakh                                10
           5-10lakh                               20
           Above 10 lakh                      30                          
 Upto Rs 2.5 lakh is exempt from tax for those above 60 years of age and those who are 80 are exempt till Rs 5 lakh.

• No tax benefit for infrastructure bonds: Tax benefits on infrastructure bonds for upto Rs 20000 u/s 80CCF will not be available deapite companies being allowed to issue 60000 crore worth of bonds.
• Life insurance polices : This budget focussed on protection.The polices issued on or after april 1, 2012 will be eligable for tax exemption u/s 80C  and 10(10D) only if the yearly premium in all the years is below 10 per cent of the sum assured.The lock-in period also likely to go up from current 5 to years. Premiums of life & helath insurance will go go up because of service tax on it. There is service tax of 3 per cent on first year premium and 1.5 per cent on the subsequent year's premium.
• TDS on Real estate sale above 50 lakh : The real estate sale  above 50 lakh attracts TDS of 1% which is mandatory. Property registration will not be permitted without proof of deduction & payment of this TDS.
• Reduction is STT: Security transaction tax is reduced to 0.1 per cent from existing 0.125 per cent.
• DTC postpaned : The direct tax code will not be implemented in 2012-13.The finance minister has not commited any particular date but assured that the same will be adopted at the earlist.
• Savings bank interest upto 10000 tax exempt : Apart from banks this benefit is extended to the interst of post office savings account as well as co-operative bank accounts.How ever this exemption is not applicable to interest earned in fixed deposits.

The rise in service tax from current 10 to 12 per cent, rising inflation resulted in offseting the gainand eat into whatever savings taxpayers make. Further, the increase in excise duty to 12 per cent rseults prices of goods will certainly go up.