IT sops in budget; air travel, health check-up to be costlier

A play-safe Budget today raised the threshold income tax exemption limit from Rs 1.60 lakh to Rs 1.80 lakh that will leave at least Rs 2000 more in the hands of tax payers across the board and made changes in the service tax that will make air travel, hotel accommodation and drinking in AC restaurants costlier.

Presenting the budget for 2011-12 that will result in a net revenue loss of Rs 200 crore, Finance Minister Pranab Mukherjee imposed an excise duty of one per cent on 130 specified items which will, however, exempt food and fuel.

He also gave some relief to corporates by reducing the current income tax surcharge of 7.5 per cent on domestic companies to five per cent but raised the Minimum Alternate Tax (MAT) from 18 to 18.5 per cent including developers of Special Economic Zones (SEZs) in it.

While leaving the rest of exemption slabs, surcharge and cess on income tax untouched, he reduced the qualifying age of senior citizens from 65 to 60 years, raised their exemption limit from Rs 2.40 lakh to Rs 2.50 lakh. No special benefit was announced for women whose basic exemption limit remains at Rs 1.90 lakh.

Mukherjee 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.

The budget sought to widen the ambit of the service tax net by which hotel accommodation above Rs 1,000 a day and AC restaurants that serve liquor will be included.

The scope of life insurance service is being widened to cover all services provided to any person by an insurer and legal services provided by business entity to individuals and individuals to entities but not individuals to individuals.