Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
An additional tax savings of Rs. 2,000 for you!! - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Feb 28, 2011

    An additional tax savings of Rs. 2,000 for you!!

    The Honorable Finance Minister Mr. Pranab Mukherjee continued his taxpayer friendly approach to lay in the foundation to launch the Direct Taxes Code from April 1, 2012. Last year, he provided relief to individual taxpayers by broadening the tax slabs. But this year, taking into account the fact that we are a year away from the date of implementation of the DTC, he didn't tweak much on the direct tax front, but indeed made an attempt to move closer to it.

    He displayed the Government's populist emotions and instilled confidence in the common man by raising the exemption limit for individuals (in the general category) from Rs. 160,000 to Rs. 180,000. Thus now individuals (in the general category) would enjoy a uniform tax relief of Rs. 2,000.

    Income-tax rates in Budget 2011
    Taxable Income Tax Rate
    Upto Rs 180,000 Nil
    Rs 180,001 to Rs 500,000 10%
    Rs 500,001 to Rs 800,000 20%
    Rs 800,001 & above 30%

    So, say if you are a male individual having a net taxable income of Rs. 10,00,000; and with the base exemption limit increased to Rs. 1.80 lakh, your income tax liability will be Rs. 1,56,560 - a tax saving of Rs. 2,060 (please refer table below).

    Taxable Income   10,00,000
    Upto Rs.160,000 Nil -
    Rs.160,001 to Rs.500,000 10% 34,000
    Rs.500,001 to Rs.800,000 20% 60,000
    Rs.800,001 & above 30% 60,000
    Tax payable   154,000
    Education Cess 3% 4,620
    Total Tax (Rs.)   158,620
    Taxable Income   10,00,000
    Upto Rs.180,000 Nil -
    Rs.160,001 to Rs.500,000 10% 32,000
    Rs.500,001 to Rs.800,000 20% 60,000
    Rs.800,001 & above 30% 60,000
    Tax payable nbsp; 152,000
    Education Cess 3% 4,560
    Total Tax (Rs.)   156,560

    In our opinion this measure would help in smooth transition to the DTC wherein the basic exemption limit has been proposed to Rs. 200,000 (In the DTC there are no categories like general or women).

    A special attention has been paid to the senior citizens this time, as the base exemption limit for them has been raised to Rs. 250,000 (from Rs. 240,000 earlier), thus being in line as the one proposed in DTC. Also, the most debatable issue (pending for a long time) of the qualifying age for a senior citizen under the Income Tax Act, 1961 has been addressed to in this year's budget. The FM has reduced the qualifying age for a senior citizen to 60 years from 65 years earlier.

    Walking an extra mile for the senior citizens, the FM has introduced another category - "Very Senior Citizen" (age 80 years and above), and has set the base exemption limit of Rs. 500,000.

    Overall the Budget 2011-12 spelt out by the Finance Minister reflected populist sentiments of the Government and moved a step closer to DTC, at least with respect to the base exemption limit. However, the expectations on the increase in section 80C (of the Income Tax Act, 1961) limit was completely turned a deaf ear, as it remains unchanged at Rs. 100,000. But we think that given the political clout under which the UPA Government was caught, and the limited scope available on the direct taxes front (due to the roll out of the DTC next fiscal) the FM has brought a smile (if not a broad one!) on the common man's face.

    This article has been sourced from PersonalFN has been providing independent research since 1999 on mutual funds, insurance, fixed income instruments and gold. It also provides research based advice on investments and financial planning to individual clients. To know about our financial planning services, simply write to info@personalfn.com.


    The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.



    Equitymaster requests your view! Post a comment on "An additional tax savings of Rs. 2,000 for you!!". Click here!


    More Views on News

    Insider Leaks Equitymaster Stock Picks (The 5 Minute Wrapup)

    Jul 25, 2017

    Equitymaster HQ has been infiltrated. Valuable stock ideas have been leaked. Who's responsible?

    Raymond and Other 'For Profit' Companies Who Don't Care about Shareholder Returns (The 5 Minute Wrapup)

    May 27, 2017

    What happens when minority shareholders are short-changed in the normal course of business?

    Why Commission Driven Model In Mutual Funds Should Be Eliminated... (Outside View)

    Feb 15, 2017

    PersonalFN believes SEBI has taken a step back-apparently in the admission of it going overboard with the regulations.

    This Book Changed How I Looked at the World of Man and Money (Vivek Kaul's Diary)

    Aug 24, 2016

    And here's your chance to claim a free copy of this book...

    The Developed World is Dying because of Demographics, Debt, and Deflation (Vivek Kaul's Diary)

    Aug 12, 2016

    And Why India's demographic dividend could turn out to be a doubtful debt...

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Profitable Investment in the History of the World(Vivek Kaul's Diary)

    Aug 8, 2017

    'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms