BUDGET 2012- Exempt income
Receipt under life insurance policies
Now, such exemption would be available for life insurance policies issue donor after 1 April 2012 provided that the premium or other payment does not exceed 10%.
For this purpose a definition of “actual capital sum assured” has been inserted.
Definition of “actual capital sum assured”
A definition of “actual capital sum assured” will be inserted to mean the minimum amount assured under the policy on happening of the insured event at any time during the policy term.
Such amount will not include:
• the value of any premium agreed to be returned
• any benefit by way of bonus or otherwise in excess of the sum actually assured which may be receivable under the policy.
Presently, receipt under insurance policies is exempt from tax if the premium does not exceed 20% of the actual capital sum assured. This exemption will continue for policies issued before 1 April 2012.
Exemption of income earned by SEBI registered Venture Capital Fund (VCF) or Venture Capital Company(VCC)
This exemption has been extended to the VCF/VCC, without any sector restrictions.
Currently, any income of a SEBI registered VCF/VCC from investments in VCU, engaged in specified sectors, is exempt from tax.
Denial of tax exemption to charitable organization in certain cases
At present charitable organization carrying an activity of trade commerce or business of general public utility is not regarded as charitable purpose if the gross receipts from such activities exceed Rs.25 Lakhs in that financial year. It is now clarified that such a charitable organization will not been titled to a tax exemption in such financial year even if the approval granted to the charitable organization is not withdrawn.
This amendment will be effective retrospectively from 1 April 2009.
Exemption in respect of income received by a foreign company on sale of crude oil to any person in India
It is provided that any income received by a foreign company in Indian currency on account of sale of crude oil to any person in India would not be included in its total income subject to fulfillment of certain specified conditions.
This amendment will be effective retrospectively from 1 April 2012.
Other deductions under Chapter VIA
(A.) Deduction in respect of interest on deposits in savings account
A deduction of up to Rs.10,000 will be available to individuals or HUF in respect of interest on deposits (not being time deposits which are repayable on expiry of fixed periods) in a savings account with a banking company, specified co-operative society or post office.
In case of deposits held by or on behalf of a firm, AOP or BOI, no deduction will be available in the hands of the partner of the firm or any member or individual of the AOP or BOI.
(B.) Deduction in respect of donations made
Presently, donations made to specified institutions/associations are allowed as deduction under section80G and section 80GGA, irrespective of the mode of payment of such donation.
Now, donations exceeding Rs. 10,000 paid in cash will not be allowed as deduction under these sections.
(C.) Deduction for expenditure on preventive health check up included under section 80D
Presently, a deduction of Rs.15, 000 is available to an individual for payments towards health insurance policy or contribution to Central Government Health Scheme, for self, spouse and dependent children. In case of parents, additional Rs. 15,000 is available for amounts paid towards health insurance.
Now, payment made by any mode (including cash) for preventive health check upto Rs. 5,000 will also be eligible for deduction within the limit mentioned above.
The age limit to qualify as senior citizen has been reduced rom 65 years to 60years under section 80D.
(D.) Deduction in respect of amount paid for medical treatment of a specified disease or ailment under section 80DDB
Presently, the age limit to qualify as a senior citizen is 65 years or more.
Now, the age limit has been reduced from 65 years to 60 years.
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