Dr. Sanjiv Agarwal

Budget 2014 (Finance Bill, 2014) has been enacted on 6th August, 2014 with the President of India giving his assent and the Act been gazetted. Most of the tax provisions (Income Tax) shall come into force from first day of April, 2014, i.e., for the current financial year 2014-15 which is the relevant year for the assessment year 2015-16 (when you file your returns next year).

Accordingly, for next assessment year, basic exemption limit has been raised from Rs. 2 lakh at present to Rs. 2.5 lakh for individuals, hindu undivided families etc. For senior citizens (>60 years), basic exemption limit will be Rs. 3 lakh (at present Rs. 2.50 lakh). There will be no surcharge in case of taxable income upto Rs. 1 crore. However, education cess will continue to be applicable at 3 percent of tax computed.

For shares held in company which are not listed on stock exchange, period for short term capital gain will be 36 months and not twelve months. For units of equity oriented funds, it will be twelve months only. Similarly, investments made by assessees in specified capital gain tax saving bonds arising from transfer of assets during the financial year in which such asset is transferred and in subsequent year should not exceed Rs. 50 lakh in aggregate. The assessees can not take advantage of two financial years now.

Concessional rate of tax of 10 percent on long term capital gain will also be allowed or listed securities / other than units) and zero coupon bonds from April 2014, i.e. Assessment Year 2015-16.

The limit of deduction for interest in respect of housing loan for self occupied house stands increased from Rs. 1.50 lakh to Rs. 2 lakh. This is also effective from April 1, 2014 and will apply to assessment year 2015-16.

Under the existing provisions of section 80C of the Act relating to tax saving investments, an individual or a Hindu undivided family, is allowed a deduction from income of an amount not exceeding one lakh rupees with respect to sums paid or deposited in the previous year, in certain specified instruments. The investments eligible for deduction, include life insurance premium, contributions to provident fund, schemes for deferred annuities etc. The assessee is free to invest in anyone or more of the eligible instruments within the overall ceiling of Rs. 1 lakh.

In view of amendment to section 80C now, the limit of the aggregate amount of deduction under sections 80C, 80CCC and 80CCD contained in section 80CCE has been enhanced to Rs. 1.5 lakh from the existing limit of Rs. 1 lakh. However, the limit for section 80CCC (Pension funds) of Rs. 1 lakh continues and similar limit of Rs. 1 lakh has been introduced in section 80CCD (Government notified pension scheme).

The aforesaid amendments will take effect from April 1, 2015 and will apply in relation to the assessment year 2015-16 and subsequent assessment years.

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