India’s middle class, approximately 300 million, always looks up expectantly whenever the finance minister delivers the annual Budget speech in the Parliament. The announcements made by FM Arun Jaitley today had much for them. It encouraged Indians to save up more for the future. The biggest beneficiaries of this Budget would be the country’s National Pension Scheme and health insurance players.
Here are the key announcements that can help you plan your finances better. Ensure that your savings are made in the most appropriate instruments:
- Increase in the limit of deduction in respect of health insurance premium from Rs 15,000 to Rs. 25,000. For senior citizens the limit will stand increased to 30,000 from the existing Rs 20,000.
- For very senior citizens above 80, who are not covered by health insurance, a deduction of Rs. 30,000 towards expenditure incurred on treatment will be allowed.
- The deduction limit of Rs 60,000 towards expenditure on account of specified diseases of serious nature is proposed to be enhanced to Rs 80,000 in case of very senior citizens under section 80DDB.
- Additional deduction of Rs 25,000 will be allowed for differently-abled persons under Section 80DD and Section 80U of the Income-Tax Act. The amount has increased from Rs 50,000 to Rs 75,000 now. Also proposed is an increase the limit of deduction from Rs 1 lakh to Rs 1.25 lakh in case of severe disability.
- The limit on deduction on account of contribution to a Pension Fund and the New Pension Scheme is proposed to be increased from Rs 1 lakh to Rs 1.5 lakh. So, you can now invest the entire amount of Rs 1.5 lakh in a pension fund and claim tax exemption.
- To provide a social safety net and the facility of pension to individuals, an additional deduction of Rs 50,000 is proposed to be provided for contribution to the New Pension Scheme under Section 80CCD. This is a new provision this year to ensure more Indians invest for their retirement. It is aimed at helping the country move from a pensionless to a pensioned society, as noted by the FM.
- Investments in the Sukanya Samriddhi Scheme is already eligible for deduction under Section 80C. All payments to the beneficiaries including interest payment on deposit will also be fully exempt.
- Transport allowance exemption is being increased from Rs 800 to Rs 1,600 per month.
- For the benefit of senior citizens, service tax exemption will be provided on Varishta Bima Yojana.
If one takes into account the tax concessions given to middle class tax payers in the 2014-15 Budget and the one announced today, an individual tax payer will get benefits of up to Rs 4,44,200.The Break-Up
· Deduction u/s 80C 1,50,000
· Deduction u/s 80CCD 50,000
· Deduction on account of interest
on house property loan
(Self occupied property) 2,00,000
· Deduction u/s 80D on health insurance premium 25,000
· Exemption of transport allowance 19,200
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