In the hoary Indian tradition of respecting and providing for our elders, Budget 2011 has proposed the introduction of a special category of “very senior citizens”.

Those aged 80 years and more will fall in this category and will be eligible for a higher tax exemption limit of Rs 5,00,000 per annum.

So, if you are 80 years old and above, and your income does not exceed Rs 5,00,000 per annum, then you have to pay no tax.

To be sure, Finance Minister Pranab Mukherjee, in his Budget speech, made it a point to stress, tongue-in-cheek, that he is not a beneficiary of this special category (at least not yet). No worries, he sure has won himself a large fan following among the grand old men and women of India.

For the not-so-senior

Budget 2011 also gives senior citizens, who are not yet 80, something to smile about. The tax exemption limit for such citizens has been enhanced from Rs 2,40,000 to Rs 2,50,000. In terms of tax savings, this should translate into a modest sum of Rs 1,000 or thereabouts per annum. Come on, isn't something better than nothing? And after all, a rupee saved is a rupee earned.

What's more, now you become a senior citizen 5 years earlier. You heard right. The qualifying age of senior citizens has been reduced to 60 years from 65 years. Translation - higher tax exemption limit of Rs 2,50,000 kicks in five years earlier. Add to this the power of compounding. Ergo, some big savings.

Hey, for the young too!

For those among you yet to touch 60, despair not. Pranabda has enhanced your exemption limit from Rs 1,60,000 to Rs 1,80,000.

This means an additional Rs 2,000 in your pocket.

Although the exemption limit for women has not been enhanced this year, it still is a notch higher than their male counterparts at Rs 1,90,000.

Freedom from filing returns

Is salary your only source of your income? And does your employer deduct tax on the salary? Budget 2011 has some good news for you. It proposes to exempt such taxpayers from filing tax returns. The Form 16 issued to salaried employees will be treated as their income tax return.

Though the details of the scheme are being worked out and will be notified soon, it is expected that small salaried taxpayers with taxable income up to Rs 5 lakh will be covered under this scheme. Also, in case, the salary earner has other sources of income such as dividend and interest and does not want to file returns, he will have to disclose such income to his employer for tax deduction. Watch this space for updates.

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