Prepare at a time Tax Compute Sheet +Arrears Relief +Form 10E+HRA Calculation+Form 16 Part A&B and Part B with Budget FY 2014-15 – Tax on Salary

As you are aware, the
Union Budget for FY 2014-15 was tabled in the Parliament by the Finance
Minister of India
on 10-Jul-2014. There are some changes to the computation of tax on salary
which payroll managers need to consider for FY 2014-15
.

1. Changes in tax rates

The
revised tax rates for salaried employees (aged 60 years and below) for FY
2014-15 are as follows
.
Total Income for the Year in Rs.
Tax Rate in %
Up to
2,50,000
Nil
2,50,001
to 5,00,000
10
5,00,001
to 10,00,000
20
Above
10,00,000
30
The
revised tax rates for salaried employees (aged above 60 years but below 80
years) for FY 2014-15 are as follows
.
Total Income for the Year in Rs.
Tax Rate in %
Up to
3,00,000
Nil
3,00,001
to 5,00,000
10
5,00,001
to 10,00,000
20
Above
10,00,000
30

2. Increase in deduction under Section 80C [Click to view total list of U/s 80C]

The
deduction under 80C (Life insurance premium, PPF, investment in National
Savings Certificate, interest from notified bank deposits, principal repayment
on housing loan, etc.) was restricted to Rs.1 lakh in 2013-14. The same has
been increased to Rs. 1.5 lakh for 2014-15.

Consequent
to the change in section 80C, section 80CCE has been amended so as to raise the limit of aggregate deduction under sections 80C, 80CCC and 80CCD from Rs. 1
lakh to Rs.1.5 lakh.

3. Increase in deduction under Section 24 – Interest on
housing loan[View Section 24B what says as tax Rules)

The
tax deduction on housing loan interest payment (for a self occupied property)
was restricted to Rs. 1.5 lakh per annum in FY 2013-14. For the year 2014-15,
the limit has been increased to Rs. 2 lakh.

There
is no reference to Section 80EE in the Finance Bill for FY 2014-15. Hence, the
carry forward of unutilized tax deduction for first time owners of residential
property, if applicable, is available for FY 2014-15.

Note:
1. The Education Cess stays at 3%.
2. In case the total taxable income goes beyond Rs. 1 crore in the year, a
surcharge of 10% (subject to marginal relief) is to be deducted – as it was in
FY 2013-14.

What about the tax credit of up to Rs. 2,000?[View Section 87A]

We
have received queries from payroll managers regarding the availability of Rs.
2,000 tax credit in FY 2014-15. The Financial Bill tabled in the Parliament
does not provide for the removal of tax credit under Section 87A. Hence, the
tax credit of Rs. 2,000 is available for FY 2014-15 as long as the total income
does not exceed Rs. 5 lakh for the year.

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