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Now, save up to Rs 50,000 in taxes
March 6
For senior citizens
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Tax liability (Rs) |
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Taxable income (Rs) |
2007-08 |
2008-09 (Projected) |
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2,00,000 |
1,030 |
0 |
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4,00,000 |
57,680 |
28,325 |
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6,00,000 |
1,19,480 |
79,825 |
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8,00,000 |
1,81,280 |
1,41,625 |
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10,00,000 |
2,43,080 |
2,03,425 |
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12,00,000 |
3,35,368 |
2,91,748 |
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14,00,000 |
4,03,348 |
3,59,728 |
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16,00,000 |
4,71,328 |
4,27,708 |
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18,00,000 |
5,39,308 |
4,95,688 |
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20,00,000 |
6,07,288 |
5,63,668 |
Tax liability includes surcharge and education cess
But in case the parent is over 65 years of age, the deduction allowed is Rs 20,000 taking the full deduction amount to Rs 35,000 for the person buying cover for himself and his parents, dependant or otherwise. If a senior citizen is buying cover for his parents, the total deduction allowed is Rs 40,000. The existing limit of Rs 15,000 remains unexhausted by most individuals. However, the additional deduction available on buying health plans for parents might induce individuals to get their parents medically insured. The incentive to pay for their parents exists now and, hence, the senior citizens get a helping hand form their children.
Another gift for senior citizens is that flows from the reverse mortgage product will not be taxed. Since the product is new in India, the tax status of this income flow was not clear. It is now clarified that such instalments received by senior citizens will not be taxed as income giving a big relief to the 600-plus people who have availed this product and the thousands more are likely to do so in the next few years.
Service Tax
Service tax is a key area for the government to tax since it is the fastest growing sector in Indian today. Four new services have been brought under the service tax net, bringing the total number of services to 104 now. The one area that will impact personal finance will be the inclusion of service in respect of asset management ser5vices provided under the unit-linked insurance plans (Ulips).
This will have a direct effect on lowering the returns of Ulips since the expense ratios will rise. It remains to be seen how the insurers absorb this cost.
Good times for tax payers: New rate of tax Click here...
Also read: All about the new tax scenario
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