For individual taxpayers now there are many steps for lower burden are announced by Finance Minister Arun Jaitley. These include raising the basic exemption limit, increasing Section 80C benefits and additional deduction on interest paid on home loans. These help people in the 30% tax slab save up to Rs 36,050 a year. The benefit will be up to Rs 25,750 for those in the 20% tax slab and Rs 15,450 for those in the 10% tax slab.
The budget proposes to raise the exemption limit by Rs 50,000 to Rs 2.5 lakh for all individual tax payers below 60 years of age and Rs3 lakh for those who are above 60 but below 80. The exemption limit remain unchanged at Rs 5lakh for people above 80 years. The 3% education cess has also not been changed. The individual whose annual income is above 1 crore also not get any relief; the 10% surcharge levied in the last year’s budget will continue. Individual with more than 1 crore annual income pay 33% tax.
Section 80C Deductions Get Bigger
Under Section 80C of the Income Tax Act the cap on investments has been raised from Rs 1 lakh to Rs 1.5 lakh. Under Section 80C, contributions to Employee Provident Fund (EPF), Senior Citizen Saving Schemes (SCSS), Public Provident Fund, Tax Saving bank fixed deposits, Home Loan principals and Tax saving mutual funds are ligible for deduction while calculating the taxable income.
Allocate Money Wisely
You will have to allocate more money for tax-saving investments according to the increase in the Section 80C limit. The investments should be made taking into account the overall portfolio and not just for the sake of saving tax. One should consider aspects such as potential returns, taxability at redemption and lock-in while choosing the investment. EPF, PPF and tax saving mutual funds are the better tax-saving instruments under section 80C. Gains from these three are not taxable at redemption.
Boost For home Loan Borrowers
Home loan borrowers also get relief from this budget. It has raised the deduction limit for home loan interest payment for self-occupied properties from Rs 1.5 lakh to Rs 2 lakh. This not only help the home borrowers save more money but also gives a boost to the real estate sector, which is in the last couple of year have seen a slump in demand.