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1. The increase of Rs. 10,000/= in the I-T exemption limit saves you Rs. 1,000/= of tax; for senior citizens , saving works out to Rs. 2,000/=.

2. But the benefit from higher exemption is offset by the 1% hike in education cess. The break-even point is Rs. 5.10 Lakh. If your income is less than that, you will save tax overall. If its more, the cess will start to bite and net, you will pay more tax than earlier . at Rs. 2 Lakh per annum, you pay Rs. 1,470/=

3. Because of the higher cess , the highest effective I-T rate goes up from 33.66% to 33.99% (on a basic rate of 30%).Your take home pay will therefore take a slight hit.

4. In addition , the cess extends to indirect taxes like service tax , customs and excise. In effect, you end up paying more not just on what you earn , but also on what you spend.

5. The one group of people who have gained very clearly are senior citizens. Apart from the Rs. 2,000/= saving on I-T ,they will soon get a ‘reverse mortgage’ scheme from the National Housing Bank, which means that instead of having to pay EMI on a loan obtained against a mortgage, they get a regular monthly income, besides owning and occupying the house as long as they live.

6. Property rented out for commercial use will come under the service tax net. Self-employed people working out from home often show it as space rented from other family members which they write-off as business expense. They will now have to decide whether the deduction from I-T is worth the extra service tax bill.

7. Individual fund managers, designers and content providers from telecom and advertising will have to pay service tax.

8. Two Lakh small service providers to benefit from doubling of tax exemption limit.

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