Tuesday, May 24, 2011

the system of Income Tax in India and the revision in ceiling for the year 2011-12

India is a land of paradoxes.  If you watch Television news, the figures are mind boggling – lakhs of crores of rupees lost by the Nation and some individuals swindling such huge money.  How many of us would ever have handled say Rs.10,00,000/- [ten lakhs] of hard cash ?  There are also regular reports of individuals losing money and sleep after depositing in ‘blade Companies’ – the companies floated by some individuals which offer high unimaginable % of returns.  Yesterday there was a report that in a small village in TN, people had deposited Rs.5000/- under the promise that they would get lakhs every year – the Conmen collected lakhs and went hiding.  Those who got cheated [who volunteered themselves to be cheated] are now running to Police filing complaint and would spend rest of their lives ruing the worst decision that took. Is it greed, ignorance, or the system that allows such swindlers to run business ?

Meantime, the white collared gentleman feels that politicians, bureaucrats and everybody else is corrupt and he only remains honest.   True, he / she is subjected to tax deduction at source which most other earners in the Society like a business man, the trader, the shop owner,  contractor, a professional, a lawyer, a doctor are not.  The office goer often feels that every transaction of his is scrutinized and he only ends up paying the coffers of the Nation.  He too is culpable as some would evade the net by not paying tax on their other earnings – the rent received, interest received, money gotten from shares (does any one make money or most lose !)  Ideally, the Govt. wants you account every penny of your earning [not only the salary] but the income from the bank deposits [if at all you have saved something], from rent received [if at all you are able to own more than a house] from your shares [capital gains] and every other forms of money that you receive !

He too is culpable as some would evade the net by not paying tax on their other earnings – the rent received, interest received, money gotten from shares (does any one make money or most lose !)

Income Tax is the form of a Direct tax levied by the Government of India on taxable income of individuals, Hindu Undivided Families (HUFs), companies, firms, co-operative societies and trusts (identified as body of individuals and association of persons) and any other artificial person. Levy of tax is separate on each of the persons. The levy is governed by the Indian Income Tax Act, 1961. The Indian Income Tax Department is governed by the Central Board for Direct Taxes (CBDT) and is part of the Department of Revenue under the Ministry of Finance, Govt. of India.  There are millions of people inside and outside the tax net.  In fact, the Act speaks of some other heads of earning such as Income from horse races, from crosswords, winning bull races,  dividends, donations, gifts received et al.

Every year the common man would look to the Finance budget anxiously hearing every word of Finance Minister debating whether the FM would raise the IT limit or offer any other form of saving little realizing that these would cover a big space in next day’s paper – what is unwritten is something that would go unnoticed ‘say a reduction in CD or ED by a %’ would benefit a big Industrial house crores of rupees……

The annual ritual of Budget speech was over followed by the passing of Finance Bill relating to direct taxes which amends the Income tax.  Some of which would be of interest to us are :
 (i)  the basic exemption limit in the case of individual taxpayers stands increased ;
(ii) the qualifying age of senior citizens stands lowered  from 65 years to 60 years and also to increase the current exemption limit
(iii)  there is a new category providing a higher exemption limit limit to very senior citizens above the age of 80 years

There is the  existing provisions of section 80CCF of the Income-tax Act providing for deduction of  a sum of Rs. 20,000 (over and above the existing limit of Rs. 1 lakh available under section 80CCE for tax savings) in computing the total income of an individual.  This has been extended for the year 2011-12 (assessment year 2012-13) also.

Here are the revised slabs : -          Individuals and HUFs

  General Tax Payers
Income Level
Tax Rate
Up to Rs. 1,80,000
NIL
Rs. 1,80,001 to Rs. 5,00,000
10%
Rs. 5,00,001 to Rs. 8,00,000
20%
Rs. 8,00,001 and above
30%

  Education Cess: 3% of the Income-tax. 
  For Women
Income Level
Tax Rate
Up to Rs. 1,90,000
NIL
Rs. 1,90,001 to Rs. 5,00,000
10%
Rs. 5,00,001 to Rs. 8,00,000
20%
Rs. 8,00,001 and above
30%

  Education Cess: 3% of the Income-tax.

 For Senior Citizens of 60 years but less than 80 years
Income Level
Tax Rate
Up to Rs. 2,50,000
NIL
Rs. 2,50,001 to Rs. 5,00,000
10%
Rs. 5,00,001 to Rs. 8,00,000
20%
Rs. 8,00,001 and above
30%

   Education Cess: 3% of the Income-tax.

  Senior Citizens of 80 years and above
Income Level
Tax Rate
Up to Rs. 5,00,000
NIL
Rs. 5,00,001 to Rs. 8,00,000
20%
Rs. 8,00,001 and above
30%

   Education Cess: 3% of the Income-tax.

With Regards
S Sampathkumar

1 comment:

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