In the Budget proposals for the year 2010-11 presented by Finance Minister Mr.Pranab Mukarjee, Income tax rates for individuals have been modified to a greater extent. Yet in the background of inflation and implementation of sixth pay commission report the salaried class feels that measure is half-done. This is because though the widening of the slab for 10% Income tax is a welcome move, the exemption limit of Rs.1.6 lakhs, Rs.1.9 lakhs and Rs.2.4 lakh for men, women and seniors respectively were not raised. Salaried Class in the lower income bracket therefore cannot take their salary home free of taxes.
CGHS Contribution to be eligible for deduction under Section 80D:
The proposal to make CGHS contribution as one eligible deduction under Section 80 D at par with premium paid towards health insurance schemes is another welcome move as far as central government employees are concerned. In this connection, the income tax proposals for the assessment year 2011-12 says:
“The Central Government Health Scheme (CGHS) is a medical facility available to serving and retired Government servants. This facility is similar to the facilities available through health insurance policies. It is, therefore, proposed to also allow deduction in respect of any contribution made to CGHS by including such contribution under the provisions of section 80D. The deduction will be limited to the current aggregate as mentioned in the section”
Benefit provided to Senior Citizens paying Health Insurance premium:
The finance minister has also made a change in the quantum of eligibility of premium paid towards Health Insurance Scheme under Section 80 D of Income Tax Act. Under the existing provisions of section 80D, deduction in respect of premium paid towards a health insurance policy up to a maximum of Rs. 15,000 is available for self, spouse and dependent children. A further deduction of Rs. 15,000 is also allowed for buying an insurance policy in respect of dependent parents. The deduction is enhanced to Rs. 20,000 in both cases if the person insured is of age of 65 years or above. This amendment is proposed to take effect from 1st April, 2011 and will accordingly, apply in relation to the assessment year 2011-12 and subsequent years.
Marginal Increase in deduction eligibility limit when invested in long term infrastructure bonds:
The much expected enhancement of deduction eligibility limit of Rs. 1 lakh under Section 80C, 80CCC, 80CCD etc., were not taken care of in this budget. However, in tune with the policy thrust of promoting investment in the infrastructure sector, it is proposed to insert a new section 80CCF in the Income-tax Act to provide that subscription during the financial year 2010-11 made to long-term infrastructure bonds (as may be notified by the Central Government), to the extent of Rs. 20,000, shall be allowed as deduction in computing the income of an individual or a Hindu undivided family. This deduction will be over and above the existing overall limit of tax deduction on savings of up to Rs.1 lakh under section 80C, 80CCC and 80CCD of the Act. Again, this amendment will in relation to the assessment year 2011-12.
If Readers could find any other specific benefits out of this budget to salaried class, they can share their views in the form of comments to this article.