Union Budget 2015: Tax implications
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Union Budget 2015: Tax implications

Last Updated: Tuesday, March 10, 2015, 18:16

Union Budget 2015: Tax implications

Zee Media Bureau/Ajeet Kumar

New Delhi: The hullabaloo about the much-awaited Union Budget 2015-16 is over! Though the FM tried to give relief to corporates in what his party described a ''growth-oriented budget'', he however stopped short of addressing the concerns of the tax payers, who were eagerly expecting some relief.

However, Finance Minister Arun Jaitley has proposed no changes in personal income-tax rates for 2015-16 but brought some relief for the middle class tax payers by increasing the limit of deduction on health insurance premium from Rs 15,000 to Rs 20,000, while presenting the Budget 2015-16.

For senior citizens, it will go up from Rs 20,000 to Rs 30,000 and for those above 80 years, not covered by health insurance, deduction of Rs 30,000 towards expenditure on medical treatment will be allowed.

Combining these incentives with others including an enhanced deduction of Rs 1.5 lakh on account of contribution to pension fund as against Rs 1 lakh now, the relief of tax deductions under various sections, including 80C and 80CCD, go up to Rs 4.42 lakh.

The individual taxpayers would get additional deductions of up to Rs 74,600 a year from their taxable income following new measures, in lieu of investments in pension and health insurance schemes, among others.

It is also proposed to provide a deduction of up to Rs 50,000 over and above the limit of Rs 1.50 lakh in respect of contributions made to NPS.

The deduction limit of Rs 60,000 towards expenditure on account of specified diseases of serious nature is proposed to be enhanced to Rs 80,000 in case of very senior citizens.

Additional deduction of Rs 25,000 will be allowed for differently-abled persons under Section 80DD and Section 80U of the Income-tax Act.

The transport allowance exemption has been doubled to Rs 1,600.

Investments in Sukanya Samriddhi Scheme is already eligible for deduction under Section 80C. All payments to the beneficiaries including interest payment on deposit will also be fully exempt.

For the benefit of senior citizens, service tax exemption will be provided on Varishta Bima Yojana.

In the first full-year Budget of the NDA government that shunned populism, he announced a 5 percent reduction in corporate tax over next four years, abolished wealth tax and replaced it with an additional 2 percent surcharge on super-rich individuals, while increasing service tax that will result in higher cost of variety of services.

With the levy of 2 percent additional surcharge, the total surcharge on 'super-rich' individuals with an income of over Rs 1 crore, becomes 12 percent as against 10 percent now. In the case of domestic companies having income between Rs 1 crore and Rs 10 crore, it will be 7 percent and 12 percent for firms with income above Rs 10 crore.

With the levy of 2 percent additional surcharge, the total surcharge on 'super-rich' individuals with an income of over Rs 1 crore, will become 12 percent, as opposed to 10 percent now. In the case of domestic companies having income between Rs 1 crore and Rs 10 crore, it will be 7 percent and 12 per cent for firms with income above Rs 10 crore.

Presenting the Budget in the Lok Sabha, Jaitley announced fresh measures to tackle black money, including a comprehensive legislation that will make concealment of income and assets abroad a punishment with rigorous imprisonment of 10 years.

In order to ensure social security and promote public health, the government has also proposed a slew of schemes like Pradhan Mantri Suraksha Bima Yojna, ATAL Pension Yojana and tax incentives for National Pension System.

The soon-to-be-launched Pradhan Mantri Suraksha Bima Yojna will cover accidental death risk of Rs 2 lakh for a premium of just Rs 12 per year, FM said.

In a bid to encourage foreign investors, Jaitley announced deferring of the implementation of controversial GAAR (General Anti-Avoidance Rules) by 2 years.

In his bid to move closer to the Goods and Services Tax (GST) regime, Jaitley raised service tax from 12.36 percent to 14 percent which will make smoking and consumption of other tobacco items, as also a whole lot of services including air travel, phone bills and eating out, more expensive.

The following is the list of most important tax related announcements made by the Finance Minister:

* No change in rate of personal tax

* Exemption to individuals tax payers to continue to facilitate savings

* Health Insurance Premium deduction hiked from Rs 15,000 to Rs 25,000; for senior citizens to Rs 30,000

* Deduction limit of Rs 60,000 with respect to specified decease of serious nature enhanced
to Rs 80,000 in case of senior citizen

* Additional deduction of Rs 25,000 allowed for differently-abled persons

* Transport allowance exemption hiked to Rs 1,600, from Rs 800 per month

* Limit on deduction on account of contribution to a pension fund and the new pension scheme increased from Rs 1 lakh to Rs 1.5 lakh

* Additional deduction of Rs 50,000 for contribution to the new pension scheme u/s 80CCD

* Tax payers to get income tax benefit of Rs 4.44 lakh

* Interest payment on Sukanya Smriti Plan exempted from tax

* Service-tax exemption on Varishtha Bima Yojana

* Girl child saving plan already eligible for tax deduction

* Additional 2 percent surcharge on people earning over Rs 1 crore

* To lower corporate Tax to 25 percent over next four years, starting from next financial year

* Wealth tax abolished

* Direct Taxes Code (DTC) dropped

* GAAR implementation deferred by 2 years to April 2017

* Service Tax rate hiked to 14 percent, from 12.36 percent

* Tax free bonds for roads, railways, irrigation projects

* To introduce 2 percent Swachh Bharat cess on Service Tax

* Negative List under service-tax is being slightly pruned to widen the tax base

* To include yoga in charitable purposes in income tax act

* 300% penalty on concealing income

* Black money holders to be imprisoned up to 10 years

First Published: Saturday, February 28, 2015, 13:09

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