Everyone has his own expectations from Union Budget 2013. While it’s a yearly exercise, it makes sense to analyse the proposals of Union Budget 2012 and how they have impacted us.
Increase in tax slabs
In 2012, the finance minister increased the tax slabs for both men and women to R2 lakh, from the previous limit of R1.8 lakh for men and R1.9 lakh for women. This has resulted in tax savings of R2,060 for men and R1,030 for women. After many years, women had to forego the differential tax benefit, which was not very well accepted. However, the small tax benefit for all taxpayers was a welcome change.
Interest from savings bank account
Section 80TTA was introduced in the Income Tax Act, 1961, which provided a deduction of R10,000 while computing income of an individual or an HUF. This provision has made many people happy as, previously, interest on savings bank account was taxable. It has also stimulated individuals to save more and earn tax-free interest up to R10,000.
Relief from advance tax payment for senior citizens
Another good move in Budget 2012 was relief to senior citizens from advance tax payment. As a general rule, taxpayers (including senior citizens) are required to pay advance tax during the year, failing which interest has to be paid. Pursuant to this relief, senior citizens who don’t have business income are now required to pay tax only at the time of filing their tax returns.
Tax benefits for preventive health check-ups
A proposal was introduced to give individuals a deduction of R5,000 from their taxable income to cover the costs incurred for preventive health check-ups for self, spouse, children and parents. This benefit was provided within the overall limits specified under Section 80D of the IT Act. Many people have availed this tax benefit for the expenditure, which they were anyway incurring earlier.
Rajiv Gandhi Equity Savings Scheme
The Rajiv Gandhi Equity Savings Scheme (RGESS) was proposed to be introduced during the year.
According to the scheme, it would give first-time investors a maximum tax benefit of R5,000 on a maximum investment of R50,000. This scheme has only recently been given more clarity and it is likely that people will invest money in February and March and avail tax benefit for the current year.
The last year’s Budget saw a mixed bag of tax benefits being rolled out for individuals. A lot is expected from the FM in the forthcoming Budget. Of course, he has to do a fine balancing act as he will have to manage the fiscal deficit also.
The author is a director with KPMG. The views expressed are personal