The Union Budget was announced by Finance Minister Arun Jaitley today and like every year there is some good news and some bad. But the most important section for Income Tax paying Indian Citizens are to understand what changes in their salary structure. So does 2015 budget provide any relief, read on.
What makes it even more important for us to know the below is that fact that we love to save as much as possible. We do not even let go the opportunity to get a good flight ticket deal or save money on a movie tickets.
So here is how the new tax will impact your Direct and Indirect Taxes.
Direct Tax
- Wealth Tax to be abolished.
- To make up for loss due to removal of Wealth Tax. A special surcharge of 2 % on Super Rich is to be levied (Income above Rs. 1 crore).
- Assets to be specified in Wealth Tax Return, is now to be specified in Income Tax return.
- Corporate Tax to be reduced to 25% from earlier 30% over a period of four years starting from the next financial year. All the exemptions to be rationalized and removed in phase manner.
- Exemption on Transport Allowances for Salaried class to be increased from Rs. 800 to Rs. 1600.
- Deduction for health premium under section 80D to be increased from Rs. 15000 to Rs. 25000 and for senior citizen to Rs. 30000. For Super Senior Citizen the expenses upto Rs. 30000 will be allowed as deduction on medical expenses
- Income tax on Royalty and Technical Services reduced to 10%
- 100% deduction on contirbution to Swach Bharat Abhiyaan and Clean Ganga Mission
- Quoting of PAN number made necessary for purchase and sale above Rs. 1.00 lakhs
- Cash disallowance for purchase above Rs. 20000 of immovable property.
- No DTC as Income Tax Act, has been modified to include most of the provision of DTC
- GAAR will be deferred by 2 years.
- New Law on Black money to be introduced. To have prosecution and penalty provision for Tax evasion.
- The threshold limit for domestic transfer pricing increased from Rs. 5 crore to Rs. 20 crore.
- 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.
INDIRECT TAX
- Service Tax now increased to 14% instead of 12.36%
- Excise duty of 12.36 per cent including the cesses will be rounded off to 12.5 per cent
- GST to be applied next year.
- Service Tax exemption to Cold Storage for certain fruits.
- Excise duty will be reduced to 6% on leather shoes
- Excise registration will now be online and will be provided in 2days. Excise return and docs to be filled digitally.
- Enabling provision to levy Swachh Bharat Cess at the rate of 2 per cent or less on all or certain services if need arises
Divya Sethia, a C.A. further breaks the above down for us and highlights the most relevant sections:
- Individual tax payers (below 60 years), there is not much of a good news the budget has for you. There has been no revision in the tax rate or tax slabs. Income upto INR 2.50 lakhs continues to be tax free.
- Transport allowance which is tax exempt has been revised from INR 800/month to INR 1600/month resulting in additional income of INR 9,600 being tax free.
- Amount of Health insurance premium available for deductionn has been increased from INR 15,000 to INR 25,000.
And finally, one can contribute to national pension scheme and claim deduction upto INR 2lakh (under 80C and 80ccd) instead of current INR 1.5lakh. - Service tax rate has been increased to 14% from 12.36%, so be ready to shell out some extra bucks at restaurants/amusement parks/ concerts.
- One last thing, if you are the High net worth individual with income of INR 1crore and above, then you now pay a 2% extra surcharge on your income. The Wealth tax now stands abolished.
I hope you find this helpful, please share your thoughts in the comments below. In case you have questions, post in the comments and I will try to have them answered.
