Individuals and the Budget: No major tax reliefs, no major pain

There was little to cheer for the individual tax payer in the 2009-10 Union Budget. The view perhaps is that the burden on him has been lowered substantially in the past few years. Hence, there is no reason to do a lot this year.

Individual income tax
It was tokenism at its best. The Finance Minister increased the lowest tax slab by Rs 10,000 for all tax payers and by Rs 15,000 for senior citizens. That’s an annual saving of Rs 1,000 and Rs 1,500 respectively. Those with an income of over Rs 10 lakh, will rejoice as the 10% surcharge has been removed. Thus, if they were assessed to income tax of Rs 1 lakh, a surcharge of 10% or Rs 10,000 was being levied. They will save this amount from the current year, onwards.

Education Loans – Sec 80 E
Earlier, the interest payable on education loans was allowed as a deduction only for loans taken for a graduate or post-graduate course in medicine, management and engineering. Or, it is applicable for a post-graduate course in applied sciences including maths and statistics. Now, this deduction is allowed for any course, undertaken after Std. X, including vocational courses. This is a welcome relief, as it takes into consideration the rising cost of education for all courses and encourages students to take up any course of their choice.

Medical treatment deduction – Sec 80DD
This was availed of by individuals who have dependents suffering from a disability. The Act allows the expenditure to be deducted from income. The limit under severe disability has been hiked from Rs 75,000 to Rs 100,000.

Advance Tax
Advance Tax becomes payable if a person’s advance tax liability exceeds Rs 5,000. This limit has now been hiked to Rs 10,000 sparing smaller tax payers from the pain of calculating and depositing advance tax.

Wealth Tax – limit triggering tax doubled to Rs 30 lakh
Tax payers with a net wealth exceeding Rs 30 lakh will now have to pay the wealth tax of 1% against the earlier limit of Rs 15 lakh.

Voluntary retirement
Employees taking a VRS can claim an exemption of an amount of up to Rs 5 lakh, to ensure that tax does not take their present value of future earnings away in one shot. At the same time, under Sec 89, arrears of salary entitle taxpayers to some concessions. Some people, however, have taken advantage of both sections. The Finance Bill proposes to plug this loophole.

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