New Delhi: Salaried class has got something to cheer with Finance Minister Arun Jaitley today raising tax exemption limit to Rs 2.5 lakh from Rs 2 lakh, providing a relief of Rs 5,000.
“I propose not to make any changes in the tax rate. However, with the view to provide relief to small and marginal and senior citizen, I propose to increase the personal income tax exemption limit by Rs 50,000 from Rs 2 lakh to Rs 2.50 lakh in case of all individual tax payer who are below the age of 60 years,” he said while presenting budget for 2014-15 in the Parliament.
The proposal, according to an estimate, is likely to benefit about 2 crore tax payers.
Similarly, he raised tax exemption limit from Rs 2.5 lakh to Rs 3 lakh in the case of senior citizens.
“I do not propose to make any change in the rate of surcharge for either for corporates or individual. The education cess for all tax payers shall continue at 3 per cent,” he said.
Thus, tax on income from Rs 2.5 lakh to Rs 5 lakh is retained at 10 per cent, up to Rs 10 lakh at 20 per cent and above 10 lakh at 30 per cent.
Noting that households are main contributors to savings, he said the investment limit under 80 C has been raised to Rs 1.5 lakh from the existing Rs 1 lakh to encourage savings.
Investment in Public Provident Fund up to Rs 1.5 lakh would now be exempt from tax. This was earlier pegged at Rs 1 lakh.
He also raised tax deduction limit on account of interest of housing loan in case of self occupied property to Rs 2 lakh from Rs 1.5 lakh.
Following is the table indicating the impact of changes in income tax provisions. Tax exemption limit has been raised to Rs 2.5 lakh from Rs 2 lakh.
1.(Individual Tax Payers)
INCOME TAX RATE IMPACT
Up to Rs 2,50,000 NILRs 5,000 (Savings)
Rs 2,50,001 to Rs 5,00,000 10 per cent Do
Rs 5,00,001 to Rs 10,00,000 20 per cent Do
Above Rs 10,00,000 30 per cent Do
2. (For Senior Citizens - above 60 years)
Up to Rs 3,00,000 NIL Rs 5,000 (Savings)
Rs 3,00,001 to Rs 5,00,000 10 per cent Do
Rs 5,00,001 to Rs 10,00,000 20 per cent Do
Above Rs 10,00,000 30 per cent Do
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