CMA Ramesh Krishnan

Union Budget – Direct tax proposals – an Individual Point of view

Introduction: Union budget-2014-15 presented by the Finance Minister today. New Government has presented this budget with facing several challenges like economic growth, GDP, Inflation and expectations from various sectors including individuals. This budget is not fulfilled everyone expectation, however it covered the steps which revive the economic growth in positive ways, this only has been told by the Finance minister that steps are only beginning of the journey towards a sustained growth of 7-8 % or above within 3-4 years along with macro-economic stabilization. In this article I would like to discuss about the direct tax proposals by the point of view of individual.

1. Increase of Basic exemption limit: Major expectation of increase in basic exemption limit has been given in the budget; the limit has been increased from Rs.2 lakhs to Rs. 2.50 lakhs for individuals except senior citizens and for senior citizens between 60 to 80 years has been increased from Rs. 2.50 lakhs to Rs. 3 lakhs. The revised income tax slabs are given below the table

Rates for Individuals below 60 years

Income slabs Income tax rate
Income up to Rs. 2.50 lakhs Nil
Rs. 2.50 to Rs. 5 lakhs 10%
Rs.5 Lakhs to Rs. 10 Lakhs 20%
Rs. 10 lakhs above 30%

 Rates for Individuals below 60 years below 80 Years

Income slabs Income tax rate
Income up to Rs. 3 lakhs Nil
Rs. 3 to Rs. 5 lakhs 10%
Rs.5 Lakhs to Rs. 10 Lakhs 20%
Rs. 10 lakhs above 30%

Rates for Individuals 80 years & above

Income slabs Income tax rate
Income up to Rs. 3 lakhs Nil
Rs. 3 to Rs. 5 lakhs Nil
Rs.5 Lakhs to Rs. 10 Lakhs 20%
Rs. 10 lakhs above 30%

 Surcharge of 10% on Income tax those taxable income exceeds Rs. 10 crore will apply.

Education cess will apply 3% on the Income tax & Surcharge will apply for all.

These changes in slab will give to individuals a minimum tax relief of Rs.5150

2. Increase in limit under section 80C: Very famous section among individuals is section 80C, the section gives rebate for various savings scheme till now Rs. 1 lakhs has been enhanced to Rs. 1.50 lakhs . This changes will give boost to habit of savings by the individuals and also give the minimum tax relief of Rs.5150

3. Increase in Public provident fund: Present investment cap of Rs. 1 Lakh under PPF scheme has been enhanced to Rs.1.50 lakhs which will help in the cap under section 80C. This change will attract & help to make savings under PPF by the individuals

4. Increase in housing interest deduction: One more major section which individuals claim is housing loan interest under section 24. Existing limit of Rs.1.50 lakhs for self occupied property interest deduction has been enhanced to Rs. 2 lakhs. This will give the marginal tax relief of Rs.5150 for those are claiming interest for self occupied property.

5. Increase tax rate on long term capital gain: Current tax rate on Long term capital gain has been increased from 10% to 20% on transfer of units of Mutual funds except equity oriented funds.

Conclusion: As an individual tax payer point of view, this budget given the minimum marginal relief of Rs. 5150 without any additional savings & Rs. 10,300 with an additional savings of Rs. 50000/-. Also made marginal satisfaction on those have saving more than Rs. 1 Lakh and unable to claim earlier years.

 ALSO READ
S.NO. INCOME TAX SLAB
INCOME TAX CALCULATORS
1. Income Tax Slabs for FY 2016-17 / AY 2017-18
2. Income Tax Slab for FY 2015-16 AY 2016-17
3. Income Tax Slab for FY 2014-15 AY 2015-16
4.
5.  Income tax Slab for FY 2012-13 / AY 2013-14 Income Tax Calculator FY 2012-13 / AY 2013-14
6. Income tax calculator for FY 2006-07 to FY 2016-17
7. Income Tax Slab Rates from AY 1992-93 to AY 2015-16

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0 responses to “Tax Proposals affecting Individual & Salaried AY 2015-16”

  1. S.B.Sharma says:

    Sir, I Have availed Housing loan in the fin. year 2010-11 of Rs.25 Lac. earlier rebate of intt. on hsg. loan was up to Rs.1.50 Lac. but on increasing in limit up to Rs.2.00 Lac for current year, may i eligible for increased limit upto 2 Lac. which my employer is not considering. is there any condition for old borrowers are entitle in old limit for current as well as up coming years.

    with regards

  2. Raj sekhar says:

    Sir,

    Now most of Life insurance companies launched new policies where the annual premium is more than 10% of Actual Sum Assured. Kindly confirm whether the maturity benefits in these policies are exempted under section 10 (10D). In these policies they are keeping a clause that “incase of death (Sum Assure on death is 10 times of the annual premium) they will pay higher of Sum Assured or 10 times of annual premium or 105% of premium paid. Death benefits are tax free. what about maturity benefit. How this clause affect the section 10(10D) benefit in these policies.
    regards
    raj

  3. Jaison Babu says:

    Hi Sir,

    Please comment why marginal tax is calculated separately as a one time payment. Instead can’t one time payments, for example, say bonus of Rs 50000 be added to my gross salary and then total tax liability be recalculated.

    My employer calculates separately marginal tax at the tax slab rate i fall under, which is 10%. This makes my total tax liability increase enormously.

    Please advice

    Regards,
    jaison

  4. Laxmikant Dharmadhikari says:

    Our One Employees Total Salary 600000/-

    Saving 80D-Rs.15000/- Interest of loan higher education Rs 92386, LIC Premium Rs.21140/-,Housing Loan re-payments Rs.56279/- and Interest on Housing Loan Rs.125581/-

    Pl. confirmm taxable income and TDS on income

  5. Saurabh singh says:

    When new tax slabs will be in effect ?

  6. Davinder Sehgal says:

    Source : Hindustan (Hindi) News Paper, Page 19, Column 2, Dated 20/07/2014.

    News says if u take joint housing loan then both are entitle to get tax relief of 4 Lacs ( 2 + 2 Lacs each) & similarly on principle repayment both will get tax relief upto 3 lacs (1.3 + 1.5 lacs each) Pl. confirm & give details.

    Thanks

  7. som says:

    Position of section 87A is not known. There is no mention in budget speech on relief under this section. Let us see the amendments made after the bill is passed.

  8. Vishvendra Singh says:

    For Senior Citizen Above 80 Years, Exempted taxable income is Rs. 500000 There After 20% up to 10 Lacs & 30% Above 10 Lacs. Please correct – See more at: https://taxguru.in/income-tax/budget-2014-tax-proposals-affecting-individual-salaried.html#sthash.IamZuz8F.dpuf

  9. gajanan says:

    Could you please confirm the second chart heading? …

  10. Krishnamohan says:

    Sir,
    Kindly confirm any changes on the following:
    – Limits of Premium Paid on Health Insurance (Mediclaim Policy) current 15K)
    – Limits of Traveling allowance (current 800/- PM)
    – Limits of Children Edn Allowance (current -200/- PM/Per Child-Max 2)
    – Limits of Children Hostel Expenses(Current-600/- PM/Per Child-Max-2)
    – Limits of Gift Article to employees (current Rs. 5000/- Max)
    – House Rent allowance tax-ability
    Also request to inform any other deduction for salaried class.

  11. Mohd Aijaz says:

    Please let me know about relief of Rs.2000.00 u/s 87A. Is applicable in this year also or not.

  12. murthy says:

    above 80 years it is split into two upto 500000 but both the case it is shown as nil. hence it must be okey.

  13. kumar says:

    What about the marginal relief of Rs.2000 which was avilable in last year upto income of Rs. 5 Lacs. Pl. clarify the doubt

  14. SUNIL HUKKERI says:

    Nice for putting in simple language. Good…

  15. What is about 87A-Narendra Bhansali says:

    Whats about 87A

  16. MANOJ says:

    WHAT ABOUT SEC 87A?

  17. Kharpate says:

    Sir , Pls. inform if Section 87 A ( Additional Rs. 2000 Tax rebate for Total income less than Rs. % Lakhs) is still applicable ?

  18. Atul says:

    What about the marginal relief of Rs.2000 which was avilable in last year upto income of Rs. 5 Lacs. Pl. clarify.

  19. Narinder says:

    Pehle sab log thik tarah se pad lo. Up to 5 lakh exempt hi likha hua hai.

  20. Aruna says:

    Third chart must be like this
    6 to 10lakhs……

  21. Rohini says:

    Sir,
    The table prescribing tax rate above 80 yrs is mistaken.

  22. Bikash Bhaumik says:

    Sir,

    By mistake, you have shown senior citizen above 80 years tax slab wrongly. It has no tax upto 5 lakhs.

    Regards,

    –Bikash Bhaumik

  23. kumar advani says:

    your information for 60 to 80 years and above 80 years is identical

  24. Antony says:

    Kindly check your third chart of Rates for Individuals 80 years & above.

    I think up to 5 Lacks no tax liability.

  25. Sudeep Nevatia says:

    What about EPF ceiling and effective date

  26. Anshul Bafna says:

    For Senior Citizen Above 80 Years, Exempted taxable income is Rs. 500000
    There After 20% up to 10 Lacs & 30% Above 10 Lacs.
    Please correct.

  27. Waseem says:

    Sir,
    Kindly check the Slab you have mentioned for above 80. It needs to be corrected.
    Waseem
    Company Secretary

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