How the Budget hits the salaried class

The Finance Minister has been made his proposals for various sectors. The Union Budget 2011-12 has proposed some tax relief for individuals, but there are quite a few things that still are a bit confusing.

So what exactly has the finance minister done?

And how do his tax proposals affect you? Do you gain anything?

Or will you lose this time?

In an hour-long chat on Monday, Mahesh Padmanabhan from RelaxwithTax replied to many such questions.

Mahesh Padmanabhan is Principal Advisor, Direct Taxes group, RelaxwithTax Consultants Pvt Ltd, a Mumbai based personal taxation and finance solutions provider.

Here is the transcript:

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Mahesh Padmanabhan says, Good Afternoon, welcome to an interactive chat session on the impact, Budget 2011 has on you - Team RelaxwithTax

Ankit asked, What is the New Tax limit? And How much we can save under 80C
Mahesh Padmanabhan answers,  at 2011-02-28 14:12:16The new zero tax slab for Resident Male is Rs. 1.8 lakhs and the deduction limit under section 80C is still the same i.e. Rs. 1 Lakh plus Rs. 20000 on account of investment in infrastructure bonds

xyz asked, is there any change in upper slabs???
Mahesh Padmanabhan answers, Upper slabs remain the same i.e between Rs. 5 Lakh & 8 Lakhs it is 20% & greater than Rs. 8 Lakhs is 30%

qwerty asked, What is tax exemption on housing loan(principal & Interest)?
Mahesh Padmanabhan answers, There is no change in the housing loan principal & interest payment deduction. Principal component is still eligible u/s 80C - Rs. 1 lakh limit and interest at Rs. 1.5 Lakh for self occupied property

Neeraj asked, How do you rate the overall budget?
Mahesh Padmanabhan answers, Not great specially for individuals

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kumar asked, Sir, Any change in voloutry retirment tax limit.
Mahesh Padmanabhan answers, If you meant the age criteria for being senior citizen, yes it has been brought down to 60 years from the earlier 65 years

Sanjib asked, Women tax slab rate
Mahesh Padmanabhan answers, There has been no change in the women tax slab. It still remains as in the previous year i.e. upto Rs. 1.9 lakhs of income zero tax and the next slabs remain the same as mentioned in the earlier answer

Jags asked, FM should have increased tax limit to 2 lakh and thought to catch business people who cheat govn with paying very less tax
Mahesh Padmanabhan answers, Thats right we were expecting Rs. 2 Lakh zero tax slab it is indeed unfortunate for this not happening

amitksaxena asked, Did infra bond tax exemption is increased from 20000?
Mahesh Padmanabhan answers, This deduction is carried forward from the earlier year. This deduction is considered under section 80CCF which is over and above the Rs. 1 Lakh limit of section 80C

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Karthik asked, Is there any change in the tax exemption for mediclaim policy?
Mahesh Padmanabhan answers, No change

wren asked, what is the new tax slab rate and how beneficial is it for the salaried class????
Mahesh Padmanabhan answers, Not much only that for resident male this would bring an additional relief of Rs. 2060 in terms of reduction of tax

JATINM asked, Why FM not changed the TAX Slab....
Mahesh Padmanabhan answers, The tax slabs have been changed as follows: Resident Male & Non residents - Upto Rs. 1.8 lakhs - Zero tax Resident Women - No Change Resident Sr. Citizen - Upto Rs. 2.5 Lakhs - Zero Tax Next slabs remain the same ie. between 5 - 8 lakhs - 20% & greater than 8 lakhs - 30%

Abhijeet asked, I had car loan???any rebate on the same for salaried class???
Mahesh Padmanabhan answers, No deduction for car loan

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chandra asked, Is it true that Salaried taxpayers spared filing returns in new budget. Pls. explain
Mahesh Padmanabhan answers, Salaried class would not be required to file tax returns provided certain conditions are met such as no other income & no multiple employers etc. This is yet to be notified through official gazette

zxc asked, what will be impact of new tax exemption limit from 1.60 to 1.80
Mahesh Padmanabhan answers, Tax will go down by Rs. 2060

rege asked, any change in 80cc??
Mahesh Padmanabhan answers, No change

chandra asked, Is it true that salaried taxpayers spared filing returns in new budget Pls. explain.
Mahesh Padmanabhan answers, Yes salaried individuals without any other income such as interest, capital gains, home loan etc would not required to file tax return. This is yet to be officially notified

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bnp asked, What do u think is the rationale behind keeping PPF contribution to 70k under 80C?
Mahesh Padmanabhan answers, 70 K limit is not prescribed by section 80C but is the rule prescribed under the PPF rule

samir asked, Is ELSS are Taxable Now?
Mahesh Padmanabhan answers, Elss is taxable if it sold within a period of 3 years of acquisition. there is no change in this provision

sunil asked, Dear Mr Mahesh,how this budget will hit common man below his belt ?
Mahesh Padmanabhan answers, Anyways sunil as common men, we are always hit below the belt. We do not need a budget to do that. Anyways on a more serious note, service tax coverage on airconditioned hotels, hospital etc is going to impact in addition to the inflationary conditions that the budget provisions may spawn

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Prerak asked, Sir, what is the limit for salaried employee
Mahesh Padmanabhan answers, Prerak, i have answered this. kindly check the chat transcript for the answer

Saju asked, Hi How is tax calculated for a salaried employee? Can can we calculate the TAX for the current year
Mahesh Padmanabhan answers, You could log on to relaxwithtax.com and check how the budget impacts your tax calculation using the calculator available online

balaji asked, Namaste, I heard there is no tax audit for the business turnover upto Rs. 60 lacs. Is that right
Mahesh Padmanabhan answers, This was a last year provision and there has been no change in this provision

Akhil asked, Hello Mahesh, WHY GOI put one house policy which will fulfill dream Roti, Kapada aur Makan of every countrymen? Nowadays house/home is used as investment avenue.
Mahesh Padmanabhan answers, You are right & that is the reason why small housing sector i.e. cost below Rs. 25 lakh has been identified as priority sector loan

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chakraborty asked, in mentioned in internet that women slab are unchanged and its as per previous year... but previous year it was 190000 for women..but in web site its mentioned 240000.. so please advise.. which is correct...
Mahesh Padmanabhan answers, There is no change in tax slabs for women and it is Rs. 1.9 lakhs of zero tax slab

chai asked, Hi, is 80C limit is increased to 1.5L?
Mahesh Padmanabhan answers, No it has not been increased to Rs. 1.5 lakhs

sudhir asked, why FM is not increasing the tax net?
Mahesh Padmanabhan answers, There is a linked cost of managing increased assessees but that does not mean that the coverage is not increased. Indirect tax brings in more people under the tax net indirectly

mahendralb asked, Sir, We have 3 slabs now?
Mahesh Padmanabhan answers, Yes but in case of senior citizen another slab of zero tax has been introduced i.e. for those above 80Years. For them it is Rs. 5 Lakhs of zero tax

 . . .

vantipalli asked, Has FM announced any measures for arresting the corruption in India.
Mahesh Padmanabhan answers, Another commision has been setup. I cannot comment of the eficacy of this mechanism

mahendralb asked, What are the good news for Salaried people?
Mahesh Padmanabhan answers, The detailed analysis on impact on salaried individual would be put up by day end on relaxwithtax.com

muzaffar asked, Why do you say its not a good budget for Individuals. What could the FM had done better for them?
Mahesh Padmanabhan answers, Considerations that need to be given is to bring in good governance (i.e. clean), expanding the tax base, reduction of overall rates of tax (india is a large country) etc. With these aspects, we do not need very high rates of tax to manage the economy

mridul asked, Mahesh..With the kind of medical expenses going up...dont you think there should have been any effect on that area?
Mahesh Padmanabhan answers, Medical cost may go further north as the service tax has been extended to even smaller hospitals. It is unfortunate that basic parameters that are relevant for the citizenry is neglected

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rajrrr asked, i think infrastructre bond investement got raised to rs 30000 is it true
Mahesh Padmanabhan answers, Thats not true it still remains at Rs. 20000

wonder asked, exemption from filing returns..doesn't that cut your market???
Mahesh Padmanabhan answers, Filing tax returns is more of a historical activity. Tax compliance is much more than filing tax returns. My opinion is that this provision would contribute more confusion than would ease the entire process. There are inherent conditions that need to be met for non filing of tax returns else the individual might be hit with a penalty of Rs. 5000

Mahesh Padmanabhan says, Thank you friends, it was indeed enjoyable interacting with you. But we would need to sign off now and hope to see you soon. Regards Mahesh-Team RelaxwithTax