Get Ready to Plan your Financial Year Ahead of Time




Budget, which was introduced a couple of days back, highlighted a string of changes that tax payers need to familiarize themselves with. With certain sections having mellowed down a bit, there are other areas, which have seen an unappreciated hike in the tax rates. Out of the many amendments worth remembering, let us have a look at subjects that are likely to have a greater impact on our financial bearing.
·         Respite for senior citizens:
A considerably beneficial financial arrangement has been unveiled for senior citizens. Until the last financial year, taxes were waived on interest income earned by senior citizens from banks, co-operative societies and post office up to a bracket of INR 10000. However, with a view to relax this provision, a further waiver of INR 40000 has been offered leading to the current tax waiver margin standing at INR 50000.

A similar kind of advantage is also advanced with regards to the insurance sector. Any senior citizen, who decides to buy a new insurance or upgrade the existing one, will enjoy a deduction limit of INR 50000, which is Rs 20000 more than the previous slab. This deduction limit holds true with respect to both medical expenditure as well as health insurance premiums.

·         What’s with the NPS offerings?
NPS, which essentially refers to the National Pension Scheme, is the latest on the block. Individual employees, who hold a NPS account, were granted a tax liberty up to 40% of the funds that they draw on either closure or opting out of this pension format.  However, non employee subscribers were kept aloof from this benefit. This is not the reality anymore with the current Budget having extended the same tax waiver facility to every person, who has a NPS account in his name.

·         Standard Deduction makes a comeback
As per the previous Budget, exemption was granted on both transport allowance as well as reimbursement of medical expenses. During this time, the concept of Standard Deduction was nowhere to be seen. However, with the new Budget going live the roles are now reversed. Standard Deduction will now be allowed up to INR 40000. On the other hand, exemption on transport allowance and medical reimbursement will be done away with.

·         Health & Education Cess sees a Hike
Even though some of the tax areas have been relaxed, there are others, which are likely to burden tax payers to a certain extent. In the last financial year, Education, Secondary and Higher Education Cess was held at 3%. However, with the advent of the Budget this financial year, Education and Health cess has been hiked to 4%. Increase of 1% in the cess is likely to make tax payers shell out a little extra amount towards taxes than what they had been paying so far.


·         Expenses incurred on Specified Diseases Waiver Rise
Specified Diseases, which essentially consist of AIDS, Cancer or something on similar lines require individuals to spend considerably towards the medical treatment. As per the previous Budget, exemption to an extent of INR 60000 and INR 80000 was offered on the expenses incurred towards treating these specified diseases for senior and very senior citizens respectively. However, the current Budget has gone a mile extra in offering further relief, which is now declared to stand at INR 100000 for everyone in common.

·         Tax Liability on long term capital gains made out of equity shares
A tax liability of 10% has been introduced in case of long term capital gains arising out of equity oriented mutual funds as well as shares. This holds true in each and every case wherein capital gains cross the threshold of INR 100000. No separate benefit will be allowed in respect of indexation. 

·         Relaxation in Corporate Taxes
One introduction in the current budget, which has been particularly welcomed, is with regards to relaxation in the corporate taxes.  Any business organization, which has a turnover up to Rs 250 Crore, will enjoy 25% reduction in corporate taxes.

If you haven’t yet well acquainted yourself with the many provisions that complete the current budget, it is quite obvious that you will not know about the areas that have been amended, to positively suit the needs of tax payers on one hand and about areas that have gone overboard in further burdening the many tax payers out there on the other.

If that has been the case, just one glance through this write up and visit www.findvise.com to solve all your queries and questions will be answered instantly.

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