Crucial benefits from the Budget that missed the eye

While the Union Budget for 2012-13 may not have given you big tax sops, there are procedural advantages that will help many

The rise in basic exemption limit for personal income tax and higher duties (service, excise and customs) on goods and services are the most spoken highlights of the Union Budget 2012-13. But there are some small provisions, which have slipped the eye of many.

Age rationalisation for senior citizens: This is, perhaps, the most important. In the last Budget, the finance ministry had lowered the age of senior citizens to 60 years for the purpose of income tax computation (as against 65 years). In spite of that, senior citizens were allowed deductions for premium payment towards health insurance (Section 80D) only if they were 65 years old or more.

"It is proposed to reduce the age for availing of the benefits by a senior citizen under sections 80D, 80DDB from 65 years to 60 years from April 1, 2013," says the Budget.

A higher age for senior citizen benefits was a sore point for individuals paying premiums for their parents or those paying for themselves, as they could not avail a higher deduction of Rs 20,000.

Section 80DDB provides for deduction up to Rs 40,000 for medical treatment of a dependant. This also has been enhanced to Rs 60,000, if paid for a senior citizen (60 years).

Proceeds from sale of property: Starting next financial year, you will have another avenue to park gains from sale of property to save capital gains tax on it. You can now invest the long-term capital gains in a small or medium manufacturing enterprise. Till now, you could either buy another property or invest in capital gains investment bonds of the National Highways Authority of India.

Some like Viswanathan K, executive director at RSM Astute Consulting Group, feel there should be some cap on who can invest in this option. As the small and medium enterprises space is not known to every individual, this may not be availed of by many. However, the relief would be available in case of any transfer of residential property made on or before March 31, 2017.

Anuj Puri, chairman & country head, Jones Lang LaSalle India, feels though it's a welcome move for property sellers, this could also result in lower sales volumes in the secondary market.

Audit of accounts: If you earn by offering professional services, you will now require to get your accounts audited only if you earn Rs 25 lakh or more as against Rs 15 lakh now. A similar amendment has been made for small businessmen, who will have to get their accounts audited if total sales, turnover or gross receipts in the previous year exceed Rs 1 crore, as opposed to Rs 60 lakh currently. These amendments will take effect from April 1, 2013.

Alternate Minimum Tax (AMT): Now, a person (other than a company) will need to pay AMT if his/her adjusted total income exceeds Rs 20 lakh. This move will help those who run sole proprietorship firms in tax-free zones (like Sikkim, Jammu & Kashmir) or enjoy a tax holiday. AMT is an extension of MAT for those who claim profit-linked deductions under Chapter VIA (including Sections 80C, 80CCC, 80CCD). Here, sole proprietorships and partnership firms will have to pay minimum tax of 18.5 per cent, irrespective of the tax deductions they claim. Fortunately, the income cap will make sure most individuals stay out of it.