Male taxpayers and senior citizens have reason to cheer as finance minister Pranab Mukherjee raised the threshold limit for individual male taxpayers and senior citizens. This has been raised by `20,000 to `1,80,000 for male taxpayers, while for senior citizens it has been raised by `10,000 to `2,50,000. Also, the qualifying age for senior citizen status has been reduced by five years — from 65 to 60.
Mr Mukherjee has also introduced a new category of “very senior citizen” — those aged 80 and above — for whom the exemption limit has been raised to `5 lakhs.
There is, however, no change in tax slabs of women taxpayers. They will continue to be exempt from income-tax till `1,90,000. Individual taxpayers will save `2,000. The tax rates remain unchanged.
Income between `1,80,000 and `5,00,000 will be taxed at 10 per cent. Income between `5,00,000 and `8,00,000 will be taxed at 20 per cent. All income above `8,00,000 would be taxed at 30 per cent.
“Individuals in the 60-65 age group are the maximum gainers — they will now enjoy the exemption limit for senior citizens,” said direct tax expert Subhash Lakhotia. “It is a big disappointment for women taxpayers as they do not get anything out of this Budget.
In a high-inflation economy, there were expectations of tax incentives on investments.”
To attract long-term savings in the infrastructure sector, the finance minister extended the `20,000 investment limit in infrastructure bonds by one more year. This is over and above the `1 lakh rebate available under Section 80C of the Income-Tax Act. Investment in infrastructure bonds will help individuals save income tax up to `6,150. The actual tax rebate will depend on the slab an individual falls under.
Jayesh Sanghvi, partner, direct tax, Ernst & Young, said: “The FM has maintained the status quo on tax rates. The focus was more on growth and policy decisions than on individual tax rates.”