Despite no obvious mention of income tax incentives for the common man, finance minister Arun Jaitley provided certain reliefs in this years budget that will allow the aam aadmi to save more.
1. How taxpayers can benefit
Jaitley proposed to increase the limit of deduction on account of health insurance premium from Rs.15,000 to Rs.25,000. For senior citizens this limit is to be increased from Rs.20,000 to Rs.30,000.
For senior citizens above the age of 80 years -- who are not eligible to avail health insurance -- deduction will be allowed for medical expenses up to Rs.30,000. The deduction limit of Rs 60,000 on expenditure on account of specified diseases -- like cancer -- will be enhanced to Rs.80,000 in the case of senior citizens.
The minister also proposed additional deduction of Rs 25,000 for differently-abled persons, increasing the limit from Rs.50,000 to Rs.75,000.
He also proposed to increase the limit of tax deduction from Rs.1 lakh to Rs.1.25 lakh in case of severe disability.
Investment in Sukanya Samriddhi Scheme will be eligible for deduction under section 80C of the income tax and any payment from the scheme shall not be liable to tax.
Limit on deduction on account of contribution to a pension fund and the new pension scheme is proposed to be increased from Rs.1 lakh to Rs.1.5 lakh. Additional deduction of Rs.50,000 will be allowed for contribution to the new pension scheme under section 80 CCD of Income Tax Act -- increasing the exemption from Rs.1 lakh to Rs.1.5 lakh.
Jaitley also doubled the transport allowance exemption to Rs.1,600 per month.
Deduction u/s 80C - Rs.150,000; Deduction u/s 80CCD - Rs.50,000; Deduction on account of interest on house property loan (Self-occupied property) - Rs.200,000; Deduction u/s 80D on health insurance premium - Rs.25,000; Exemption of transport allowance - Rs 19,200; Total - Rs.444,200
2. Universal security net
The finance minister has proposed to create an universal social security system for all.
A. Through its soon-to-be-launched Pradhan Mantri Suraksha Bima Yojana, it looks to provide an accidental cover of Rs 2 lakh for a premium of just Rs 12 per year.
B. The Centre has proposed to launch Atal Pension Yojana to provide a defined pension based upon the contribution and its period. The govt will contribute 50% of the contribution limited to Rs 1,000 per year, for 5 years, in the new accounts opened before December 31, 2015.
C. The finance minister announced Pradhan Mantri Jeevan Jyoti Bima Yojana that will cover both natural and accidental death risk of Rs 2 lakh at a premium of Rs 330 per year for everyone in the age group of 18-50.
D. Jaitley also proposed to use the unclaimed deposits of about Rs 3,000 cr in the PPF and around Rs 6,000 cr in the EPF for a senior citizen fund. The corpus will be used to subsidise the premiums of pensioners, BPL card-holders, small and marginal farmers etc.
3. It's all about gold
The finance minister has allowed for a gold monetization scheme where in gold deposits will be sought from charitable trusts, temples and other such institutions or individuals who have large holdings of physical gold. These will be lent to jewellers and other users of gold who can get access to the metal without having to buy more.
Secondly, the government will issue sovereign gold bonds as an alternative to purchasing physical gold. The bond will carry a fixed rate of interest, and also be redeemable in terms of the face value of the gold at the time of redemption by the holder of the bond.
Thirdly, the centre is also coming out with an Indian gold coin with the Ashoka Chakra embossed on its face to help recycle gold internally in India.
4. Service tax is now 14 percent which means everything you do has gotten costlier
Tobacco, cigarettes, paan masala, gutka etc. got more expensive with the excise on cigarettes raised to 15% and 25% for different categories. Even mineral water, aerated drinks, mobile handsets, tablet computers, alcohol will get expensive. Cars may get costlier.
On the bright side, shoes will get cheaper as excise duty on leather products, shoes, footwear etc. with retail price more than Rs. 1000 per pair has been reduced by 6%.
Also the in case you want to buy a swanky new LED or LCD TV, it's going to cost you less now.
But net-net: Even if Mumbai does offer you a an all-night party lifestyle, it is going to burn a huge hole in your pocket because everything from your food bill to alcohol bill will get more expensive.
5. There are new IIMs and IITs, which means all those MBA and engineering aspirants have something to cheer about
The FM has proposed a new IIT in Karnataka along with IIMs in Jammu and Kashmir and Andhra Pradesh.
Even the Indian School of Mines, Dhanbad will be converted into a full-fledged IIT, while AIIMS will be set up in Jammu and Kashmir, Punjab, Tamil Nadu, Himachal Pradesh, Bihar and Assam.
"In Kerala, the existing National Institute of Speech and Hearing will become a a university of Disability Studies and Rehabilitation," he said.
Jaitley also proposed three new National Institutes of Pharmaceutical Education and Research, one each in Maharashtra, Rajasthan and Chhattisgarh.
6. Higher education too got a boost
In order to enable poor and middle class students to pursue higher education of their choice without any constraints of funds, a fully IT based Student Financial Aid Authority is proposed to be set up during the year 2015-16. Jaitley has even hiked the amount allocated to higher education by 13 percent and earmarked Rs.26,855 crore for the same.
"To ensure that there is a senior secondary school within five km reach of each child, we need to upgrade over 80,000 secondary schools and add or upgrade 75,000 junior/middle to the senior secondary level," Jaitley said in his speech.
With a huge focus on skill developmen , the National Skills Mission was announced for youth below 25 years of age.
7. Tourism is set to get a huge boost
Not only did the tourism ministry get a 33 percent hike in budget allocation but Jaitley has also proposed to increase cover for Visa on Arrival (VoA) facility to 150 countries against 43. The government has already eased Indian tourism visa regime through the expansion of VoA enabled by Electronic Travel Authorisation (ETA) and extended this facility to tourists from countries like the US, Israel, Palestine and Japan to boost tourism sector.
Secondly, Jaitley also proposed to make World Heritage Sites more tourist friendly and the government will provide resources to start work for the following heritage sites -- Churches & Convents of Old Goa, Hampi in Karnataka, Kumbalgarh and other Hill Forts of Rajasthan, Rani ki Vav in Patan in Gujarat, Leh Palace in Ladakh in J&K, Varanasi Temple town in UP, Jalianwala bagh Amritsar in Punjab and Qutub Shahi Tombs Hyderabad in Telangana.
8. Tax free bonds for railways and infra
Jaitley has announced the introduction of tax-free infra bonds for railways and roads to mobilise funds for projects in the infrastructure development sector. For investors these are good long-term saving toosl as interest earned on these bonds is tax-free.
9. Rich will have to shell out more money as tax
The super rich taxpayers will have to shell out more tax as the budget has raised the surcharge payable by those reporting an income of more than Rs 1 crore a year. Someone earning Rs 10 lakh a month will have to pay an additional Rs 5,800 in tax every month.
Also, the budget has proposed to remove wealth tax.
10. Jaitley is keen to stamp out black money
Not only has PAN been made mandatory for all transactions above Rs 1 lakh but not declaring foreign assets can lead to rigorous imprisonment of up to 10 years and a penalty of 300 percent of the income sought to be concealed.
Even non-filing of tax return or submitting incorrect information in the tax return can lead to imprisonment of up to seven years. Also, amendments have been proposed in the Income Tax Act prohibiting acceptance or repayment of advance in cash of Rs 20,000 or more for any transaction in immovable property.
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Updated Date: Mar 02, 2015 07:50:21 IST