Budget 2015-16 what main Changes that affect your Income Tax Benefits

What is the new changes in Central Budget 2015-16 and What will be the benefits of Salaried Persons for the Financial Year 2015-16
listed the major points of Budget 2015 and created a video
on this. Please have a look at below

Let
us discuss each point in detail.

1) No revision Tax Slabs and Sec.80C
limit

Finance minister has not touched the tax slabs and famous Sec.80C
limit. So the earlier FY 2014-15
(AY 2015-16) tax slabs will
continue. This is actually a big blow to salaried. They thought FM would revise
it to some extent. However, no such magic happened. 

2) Sec.80D Health Insurance Premium
limit raised

Earlier health insurance premium limit under Sec.80D was Rs.15,
000 for individual and HUF taxpayers. An individual can claim deduction towards
the health insurance premium paid to himself, spouse, dependent parents, or
dependent children of the assessee. In case of HUF, it is any member of a
family. 
Now this limit is raised to Rs.25, 000 per year for individual
and HUF. At the same time, for senior citizens, it is raised to Rs.30, 000
(from the earlier Rs.20, 000). So overall for your family you can save up to
Rs.55, 000 (On own family Rs.25, 000+Rs.30, 000 for senior citizen
parents). 
This budget gave some relief to senior citizens whose age is 80
yrs and above. Usually none of health insurance companies offers health
insurance to these citizens. Hence, any health expenditure up to Rs.30, 000 can
be claimed as deduction under Sec.80D. 
This upgrading of limit actually a big relief for all. Because
you notice the hospitalization cost these days. So buy a proper health
insurance, you must go for a higher sum assured. By increasing the premium
limit under Sec.80D, the Government actually pushes for health insurance to
all.

3) New Pension Scheme (NPS) limit
raised to Rs.1, 50,000

Earlier the limit under Sec.80CCD (1) was Rs.1, 00,000. This
Sec.80CCD deduction relates to your contribution to NPS (either an individual
or employee). Now this limit is raised to Rs.1, 50,000. 

4) Transport allowance limit raised

Earlier the monthly limit was Rs.800. Now it is doubled, i.e.
Rs.1, 600 per month. Therefore, if you receive a transport allowance in your salary,
then this is again a huge advantage for you. I feel this is a good move
considering the cost of managing vehicle.

5) Now TDS (Tax Deducted at Source)
on your RD (Recurring Deposits) too
– 

Even though interest earned from RDs is taxable, but as of now,
there was no TDS. Therefore, many people felt it easy to skip paying taxes on
this. However, in this budget Govt amended Sec.194A. So effective from 1st June
2015-TDS of 10% on all your RDs under Sec.194A. However, there will be no TDS
on RDs whose total interest is less than Rs.10, 000 in a year. This will
protect small investors. Anyhow, it is wrong to believe that NO TDS means NO
TAX. You still be liable for tax according to your individual tax slab on RDs.

6) Sukanya Samriddhi Account now with
huge tax benefits

Earlier, when the Sukany Samriddhi Account was launched, it was
ETE. Means whatever you invest in this scheme will be available for tax benefit
under Sec.80C. Interest earned was taxable (as is NSC) but maturity was said as
tax-free. However, in this budget FM declared that interest earned from this
scheme is full tax-free. Therefore, it is now treated as an EEE scheme (Exempt
while investing, interest earned is exempt and maturity exempt). 
If we consider the current trend then between Sukanya Samriddhi
Account Vs PPF, I feel Sukanya Samriddhi Account holds good except on liquidity
issue and some other minor features. 

7) Service Tax raised to 14% from an
earlier 12 %

Earlier the service tax was 12% (excluding cess) and now it is
raised to 14%. Along with that 2%, Swachh Bharat Cess also included. So
earlier, it is 12.36%. Now it is 14.5% of service tax (14% Service Tax+0.2%
Education Cess @ 2%+0.2% Swachh Bharat Cess @2%+0.1% Senior and Higher
Education Cess @ 1%).

8) Wealth Tax discontinued, but with
a surcharge of 2% if income is Rs.1 Cr or more

Earlier the wealth tax was collected to those individuals and
HUF if their Net Wealth exceeds Rs.30 lakh on the last date of the previous
year on certain assets. Now such tax was abolished. To compensate the loss, FM
introduced 2% surcharge on individual or HUF if their income is Rs.1 Cr or
more. This move actually brings in more income to Govt than wealth tax. 

9) 100% Tax Deduction under Sec.80G
if you donate to Swachh Bharat and Clean Ganga

Whatever you contribute to Swachh Bharat and Clean Ganga
schemes, the whole amount can be availed as deduction under Sec.80G. Let us contribute
to these noble causes.

10) PAN Card mandatory for all buy or
sell of above Rs.1 lakh

From now onward if you want to buy anything, which is more than
Rs.1 Lakh, then you have to quote your PAN number. This will bring the
transaction into legality and tax angel. Hence there is no escape from avoiding
tax or doing illegal transactions. Even FM also pointed that if someone tries
to split the amount to make sure that the payment will be within Rs.1 lakh then
too it will be tracked and penalize for such misdeed. From now onward, it is
prohibited of acceptance or payment of an advance of Rs 20,000 or more in cash
for purchase of immovable property.

11) Option to choose between EPF or
NPS

From now onward, you have the option to choose between EPF or
NPS. This gives some flexibility to employees to choose. However, this option
is only meant for certain employees whose income is limited (This limit is not
yet cleared as of now). Let us wait for more clarity on this.

12) Introduction of Tax Free Bonds

FM has proposed to introduce Tax Free Bonds. This will be good
for those who are looking for tax-free instruments and stable income.
FM announced that Rs.20,000 Cr worth of bonds will be issued to cater the
infra, railway, and road projects. The interest from these bonds will be
tax-free.

13) New Accidental Insurance which
cost you Rs.12 a year !!!

FM has proposed to introduce the new accidental insurance called
Pradhan Matri Suraksham Bima Yojana. Sum Insured under this scheme is Rs.2,
00,000 and yearly premium is just Rs.12 a year.

14) New Life Insurance of Rs.2,
00,000 for the yearly premium of Rs.300-

FM has proposed a new Life Insurance Pradhan Mantri Jeevan Jyoti
Bima Yojana. This will offer you Rs.2, 00,000 Sum Assured. This covers
accidental or natural death. The premium will be Rs.330 per year. Age group
eligible to buy this plan are between 18 Yrs to 50 Yrs of age.

15) Unclaimed EPF and PPF amount
usage

FM has proposed that unclaimed EPF and PPF amount, which is idle
with Govt, would be utilized for Senior Citizen Welfare Fund. This may to some
extent give some benefits to seniors. 

16) No Changes in Tax Rebate Rs.2000/- U/s 87A 

17) No Changes in Savings Bank Interest relief Rs.10,000/- U/s 80TTA

Leave a Reply

Your email address will not be published. Required fields are marked *