Finance Minister Arun Jaitley did not really bring in acche din for the salaried class as the income tax slabs remain unchanged but it did offer some respite by doubling monthly transport allowance ( which is tax free) to Rs 1600 as well as offering deductions under section 80 (D).
Firstly, Medical reimbursement/Mediclaim deductions under section 80D have been raised from Rs 15,000 to Rs 25,000; and Rs 30,000 for senior citizens.
Secondly, Disabled and very senior citizens will get higher deductions.
“For senior citizen above the age of 80 years, not eligible to take health insurance, deduction is allowed for Rs 30,000 toward medical expenditure. Deduction limit of Rs 60,000 on expenditure on account of specified diseases is enhanced to Rs 80,000 in the case of senior citizens,” the government release said.
Additional deduction of Rs 25,000 is allowed for differently-abled persons, increasing the limit from Rs 50,000 to Rs 75,000. It is also proposed to increase the limit of deduction from Rs 1 lakh to Rs 1.25 lakh in case of severe disability.
Thirdly, Additional deductions of Rs 50,000 per annum will be available for contributions to pension schemes.
Fourthly, Tax-free travel allowances raised from Rs 800 pm to Rs 1,600.
What this means is that individual taxpayers can effectively have a tax-free income of Rs 4,44,200 if they use all deduction options.
See the break-up below:
Jaitley also proposed to provide that 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.
However, there have been no changes in the personal income tax exemption limit. Last year Jaitley had raised the personal Income Tax exemption limit by Rs 50,000 to Rs 2.50 lakh and also raised by same amount the exemption from payment of Income Tax on savings to Rs 1.50 lakh. Jaitley had also raised the tax exemption limit on repayment of housing loans to Rs 2 lakh from Rs 1.5 lakh but hut apart from deductions no other sops for the salaried class have been offered.
Here’s the bad news for the super rich though: Wealth tax has been replaced with an additional 2 percent surcharge on the super rich.
“Jaitley proposed to levy a surcharge at the rate of 12% on individuals, HUFs, AOPs, BOIs, artificial juridical persons, firms, cooperative societies and local authorities having income exceeding Rs 1 crore. Surcharge in the case of domestic companies having income exceeding Rs 1 crore and upto Rs 10 crore is proposed to be levied @ 7% and surcharge @ 12% is proposed to be levied on domestic companies having income exceeding Rs 10 crore,” said a government released.