CA Sumit Jain and CA Yash Dabriwal
The Government has projected the Union Budget 2015 as step towards attaining the ultimate goal of accomplishing Achche Din for common man of India. The expectation from the Government was to reduce the tax burden for overall middle class, however there was no alteration in the income tax slabs, only some additional deductions are been introduced in the budget. The Finance Minister has said that individuals can now increase its non-taxable income close to Rs 450,000 a year if they plan well.
Set out below are the key takeaways for the common man from the Union Budget 2015:
1. Receipt under Sukanaya Samriddhi Scheme to be tax free
Sukanya Samriddhi Scheme was introduced in January by the Hon’ble Prime Minister in his endeavor towards Beti Bachao Beti Padhao. The scheme was aimed at encouraging savings for a girl child’s education and marriage. At present, investment under Sukanya Samriddhi Scheme is already eligible for deduction under Section 80C.
It is now proposed that all payments to be made to recipients, including interest payments and withdrawals from the account under the scheme, would be fully exempt. This amendment is proposed to be effective retrospectively from 1 April 2015.
2. Increased threshold for deduction in respect of health insurance premium
The continuously rising cost of medical expenditure has now caught the eye of the Government, as it doled out an increased tax benefit under section 80D. The limit for deduction in respect of health insurance premium payments has now been revised to Rs. 25,000 from erstwhile Rs. 15,000. The limit in respect of senior citizens also stands revised at Rs. 30,000, as compared to Rs. 20,00o earlier.
Furthermore, a fresh deduction has been proposed in respect of very senior citizens (aged 80 years or more) to the extent of any payment made on account of medical expenditure, but restricted to Rs. 30,000.
The aggregate deduction available to any individual in respect of health insurance premium and the medical expenditure incurred would, however, be limited to Rs. 30,000.
3. Easing the norms for claiming deduction on treatment of specified diseases
It is proposed to remove the requirement of obtaining a certificate from a Government doctor and now allows the deduction to the taxpayer on the basis of prescription, from a specialist doctor under section 80DDB.
The corresponding limit has also been increased to Rs. 80,000 for very senior citizens, while the overall ceiling for others categories remains unchanged.
4. Increase in limits for deduction for disable persons
In view of the rising cost of medical care and special needs of a disabled person, it is proposed to amend section 80DD and section 80U so as to raise the limit of deduction in respect of a person with a disability from Rs. 50,000 to Rs. 75,000.
It is also proposed to raise the limit of deduction in respect of a person with severe disability from Rs. 1 lakh to Rs. 1.25 lakhs.
5. Higher threshold for deduction towards contribution to pension funds
With an agenda to promote social security measures and to bring the existing provision in line with the recently increased overall limit of Rs. 150,000, the deduction for contribution to certain pension funds under section 80CCC has been increased to Rs. 150,000 from present Rs. 100,000.
Also, an additional deduction under section 80CCD to the extent of Rs. 50,000 has been introduced for contributions under the National Pension Scheme.
6. Relaxed TAN requirements
The burdensome requirement of obtaining/quoting a TAN by an individual (not liable to audit under section 44AB) in respect of his one-time transactions has been proposed to be discontinued in respect of notified deductors or collectors.
This shall reduce procedural requirements on part of an individual and ease his burden. Similar provisions already exist under section 194-IA in respect of transactions for purchases of immovable property from an Indian resident.
7. Wealth tax abolished and increase in surcharge on the super-rich
The waning law on taxation of wealth has been proposed to be abolished. The Finance Minister has mentioned that the collection of wealth tax is more costly affair than collecting it. The details furnished under the Return of Wealth still seems useful and so the Government has proposed to include the disclosure of details of assets as part of the Income Tax Return.
The revenue loss on the abolition of the Wealth Tax Act has been proposed to be compensated with an increased surcharge on the super-rich taxpayer (i.e. a taxpayer having a total income in excess of Rs. 1 crore). Super-rich taxpayers shall be liable to an increased surcharge of 12% in the event that their total income exceeds Rs. 1 crore, which shall be subject to the marginal relief available.
8. Increase in travel allowance
The long due increment in the monthly travel allowance has now finally materialized. In order to commensurate with the increased costs of transportation, it is now proposed to be double the original transport allowance and it shall stand at Rs. 1,600 per month.
(The authors are associated with one of the leading tax consultancy firms and the views expressed in the Article are their personal views)