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.
Author Bio
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
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
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
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
When new tax slabs will be in effect ?
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
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.
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
Could you please confirm the second chart heading? …
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.
Please let me know about relief of Rs.2000.00 u/s 87A. Is applicable in this year also or not.
above 80 years it is split into two upto 500000 but both the case it is shown as nil. hence it must be okey.
What about the marginal relief of Rs.2000 which was avilable in last year upto income of Rs. 5 Lacs. Pl. clarify the doubt
Nice for putting in simple language. Good…
Whats about 87A
WHAT ABOUT SEC 87A?
Sir , Pls. inform if Section 87 A ( Additional Rs. 2000 Tax rebate for Total income less than Rs. % Lakhs) is still applicable ?
What about the marginal relief of Rs.2000 which was avilable in last year upto income of Rs. 5 Lacs. Pl. clarify.
Pehle sab log thik tarah se pad lo. Up to 5 lakh exempt hi likha hua hai.
Third chart must be like this
6 to 10lakhs……
Sir,
The table prescribing tax rate above 80 yrs is mistaken.
Sir,
By mistake, you have shown senior citizen above 80 years tax slab wrongly. It has no tax upto 5 lakhs.
Regards,
–Bikash Bhaumik
your information for 60 to 80 years and above 80 years is identical
Kindly check your third chart of Rates for Individuals 80 years & above.
I think up to 5 Lacks no tax liability.
What about EPF ceiling and effective date
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.
Sir,
Kindly check the Slab you have mentioned for above 80. It needs to be corrected.
Waseem
Company Secretary