I-T exemption limit raised to Rs 1.8 lakh

01 Mar 2011 Evaluate

Income tax exemption limit for individuals has been raised from Rs 1.6 lakh to Rs 1.8 lakh, giving a relief of Rs 2,000 to every tax payer in the Budget for 2011-12 .

The Service Tax net will cover more services that will raise the cost of air travel, hotel accommodation and those who drink in AC restaurants. Basic food and fuel items will continue to be exempted while the new levy will not apply to precious metals and stones. Jewellery made of gold, silver and precious metals sold under brand name would be covered by the new levy.

Mr. Mukherjee’s income tax sops included reducing eligibility age of senior citizens from 65 to 60 and enhancing the exemption limit for them from Rs 2.40 lakh to Rs 2.50 lakh. He also created a new category of ‘Very Senior Citizens’ of 80 years and above who will be eligible for a higher exemption limit of Rs 5 lakh.

Spreading the Service Tax net further, the Finance Minister proposed to include hotel accommodation in excess of Rs 1,000 per day and service provided by AC restaurants serving liquor. Hotels with a declared tariff of Rs 1,000 per day will have to pay Service Tax with an abatement of 50 per cent, which will mean an effective burden of 5 per cent of the amount charged.AC restaurants with licence to serve liquor will now be paying Service Tax with an abatement of 70 per cent, which will mean effective burden of 3 per cent of the bill only.

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