What Budget 2012 Means for You | theprimagecorp.com

By SHEFALI ANAND

Individuals got some income tax breaks in the federal budget on Friday, but its net benefit could be muted because Finance Minister Pranab Mukherjee also raised indirect taxes and took a step to make gold costlier.

Here?s a look at key announcements in the budget which affect individuals:

Income Tax: Mr. Mukherjee gave individuals higher exemption levels from income tax and raised existing tax slabs.

At present, individuals don?t have to pay taxes on annual income of up to 180,000 rupees ($3,600.) Mr. Mukherjee raised this limit to 200,000 rupees ($4,000.)

He also revised the tax slabs thus:

Individuals with an income between 200,000 rupees and 500,000 rupees: 10% tax rate

500,000 rupees to 1 million rupees: 20%

Income of more than 1 million rupees: 30%

Other direct tax breaks: Mr. Mukherjee proposed that interest of up to 10,000 rupees ($200) earned on savings bank accounts would be exempt from income tax.

Also, as much as 5,000 rupees ($100) spent on preventative health check-ups would be exempt from income tax.

Tax-free bonds: Expect a slew of tax-free bonds to come to market. Mr. Mukherjee allowed some infrastructure companies to issue as much as $12 billion-worth of such bonds in the year starting April 1 ? double their allowance for the year gone by. They will be issued by entities like the Housing and Urban Development Corp. Ltd. and National Housing Bank. Such bonds issued earlier this year received a good response from wealthy individuals.

Indirect Hit: On the flip side, get ready to pay more indirect taxes and more on services than ever before.

At the moment, 69 categories of services are subject to service tax, but Mr. Mukherjee on Friday expanded this net. He introduced a ?negative list? of 17 categories of services which would not be subject to service tax. Social services, such as hospital and education services, public transport, home rentals, and entertainment services will be exempt from service tax.

Everything else ? from the services of a lawyer to that of your barber ? will be now become taxable.

The tax rate will be higher too, up from 10% to 12%.

These will go into effect from June 1.

Gold: There was another hit for gold lovers, as Mr. Mukherjee doubled the import duty on standard gold (of 99.5% purity) bars and coins to 4%.

?Write to Ms. Anand at shefali.anand@wsj.com, follow Ms. Anand @shefalianand.

joy division dodd frank norco rand paul detained nbc news asexual jim carrey