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StaffCorner

10 Jul, 2014 01:32 PM

Budget 2014 : Some relief to Income Tax Payers

Budget 2014 : Some relief to Income Tax Payers
The Finance Minister Arun Jaitley announced a number of changes to the Income Tax Act. The Finance Minister has raised the exemption limit on income tax from Rs. 2 lakh to Rs. 2.5 lakh, a hike of Rs. 50,000. For senior citizens, the exemption has been raised to Rs. 3 lakh per annum.

This change will make a savings of around Rs. 5,000 for individuals in the 10 per cent tax bracket  to Rs. 15,000 for those in the 30 per cent tax bracket.

The hike in the exemption limit would provide much-needed relief to the salaried middle class, which has been reeling under the impact of high inflation.

The exemption limit on long-term financial savings, currently capped at Rs. 1 lakh, has also been hiked by Rs. 50,000. Savings instruments such as housing loan repayment (principal), five-year and above tenure fixed deposits, provident funds (PFs) and life insurance policy premiums are some investment vehicles that qualify for tax exemption under Section 80C of the Income Tax Act.

The Finance Minister has also hiked the tax-free cap on home loan interest from Rs. 1.5 to Rs. 2 lakh.

Together, the three announcements will lead to a combined savings of Rs. 15,000 to Rs. 45,000 for individual tax payers under the three categories.

The government will lose Rs. 22,000 crore on account of these changes in income tax. Income tax rates and slabs have not been changed though.

Some of Mr Jaitley's steps are aimed at increasing the savings rate, which has come down from over 38 per cent of GDP in 2008 to 30 per cent in 2012-13.



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