A lot was expected from the Budget 2009-10 and clearly there were many disappointed observers after the Budget Speech was done.
But as far as personal taxation goes, there were positive changes overall, even if the magnitude might not have been as high as expected.
Here are 7 changes that you will be affected by:
1. Elimination of Surcharge: The 10 per cent surcharge on taxes for those earning annual income above Rs 10 lakh (Rs 1 million) will no longer exist. This will help those in the higher income bracket.
2. Marginal increase in tax exemption: Personal income tax exemption limit raised for senior citizens by Rs 15,000 and for all others by Rs 10,000. This will help those in the lower income bracket, especially those just starting out their careers.
3. Abolishment of Fringe Benefit Tax: FBT on the value of fringe benefits provided by employers to employees has been abolished. Reimbursements will be taxed as perquisites at the marginal tax rate. This will likely hurt employees.
4. Higher deduction under Section 80DD: Annual deduction in respect of maintenance, including medical treatment, for a dependent with severe disability (more than 80%) has been raised to Rs 1 lakh from the current Rs 75,000.
5. Expanded scope of Section 80E: Annual deduction in respect of interest on loans taken for higher education purposes has been expanded from the current limited list of courses to cover all fields of studies, including vocational studies, pursued after completion of schooling. This should provide a fillip to all those who want to study courses for which previously the tax treatment on education loans was not favourable
6. Increase in Wealth Tax exemption: The exemption limit for wealth tax has been increased from Rs 15 lakh (Rs 1.5 million) to Rs 30 lakh (Rs 3 million).
7. Automation of tax filing procedure: Reiteration of the re-engineering of the key business processes around the filing of direct taxes. Expect simplified tax filing in the near future, with the prospect of quicker refunds.
iTrust Financial Advisors offers expert services in financial planning, income tax returns, home loans and mutual fund investment.
