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.
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