Saturday 28 February 2015

Union Budget 2015- Key Personal tax proposals


1.       Personal tax rates - The personal tax rates and income slabs remains the same as compared to financial year 2014-15.

 

2.       Abolishment of Wealth Tax - Considering the compliance burden on the tax payer and administrative burden on the Tax department, it is proposed to abolish the levy of Wealth tax with effect from tax year 2015-16. It is also proposed that information relating to assets which is currently required to be furnished in the wealth-tax return shall be captured by suitably modifying the income-tax return.

 

3.       Surcharge - The surcharge rate has been increased from 10% to 12% in the case of persons having a total income exceeding one crore rupees. The increase of 2% surcharge is in lieu of abolishment of Wealth tax.

 

4.       Sukanya Samriddhi account scheme - Contributions made under this scheme will be eligible for deduction under Section 80C. Interest on deposits and withdrawal from such scheme are exempt from tax. These amendments will take effect retrospectively from 01 April, 2015 and will accordingly, apply in relation to Assessment year 2015-16 and subsequent assessment years.

 

5.       Health Insurance/ Medical Insurance - For Individuals and HUF, contributions to health insurance have been increased from INR 15,000 to 25,000.  For senior citizens, the limit has been increased from 20,000 to 30,000. Therefore, the total deduction available u/s 80D has been increased to 55,000 from the earlier deduction available of INR 35,000.

 

6.       Medical expenditure for self and dependant (Section 80DDB) – In the case of resident individuals, the deduction for medical treatment with respect to certain diseases, has been increased from INR 60,000 to INR 80,000 in the case of very senior Citizens (80 years or more).  The Tax payer is also required to obtain a prescription from a specialist doctor in order to claim this deduction.

 

7.       Expenditure for the medical treatment u/s 80DD and 80 U - In the case of an individual or HUF who is resident in India, currently deduction for expenditure for medical treatment including nursing is available upto INR 50,000 if the person is suffering from disability and INR 100,000 in the case of severe disability.

 

However, as per the proposed budget, this limit has been increased from INR 50,000 to INR 75,000 for the person with disability and from INR 100,000 to 125,000 in the case of severe disability.

 

8.       Contribution to Pension Scheme u/S 80CCC - A deduction upto INR 100,000 was available from the total income of an individual who was contributing to the pension scheme.  The said limit has been increased to INR 150,000 in the proposed budget.  However, the overall limit U/S 80 CCE is unchanged i.e INR 150,000.

 

9.       Contribution to National Pension Scheme (NPS) u/s 80CCD – An additional deduction is proposed for contributions to New Pension Scheme upto an amount of INR 50,000.

 

10.    GAAR provisions – GAAR provisions were to come into effect from April 01, 2016.  However, it is proposed that implementation of GAAR be deferred by two years and GAAR provisions to be made applicable to income of the FY 2017-18.

 

11.    It is proposed that donations made by any donor to the Swachh Bharat Kosh and donations made by domestic donors to Clean Ganga Fund will be eligible for a deduction of 100% from the total income under section 80G.  Also, the income of Swachh Bharat Kosh and Clean Ganga Funds are exempt from tax.

 

12.    To ensure accurate disclosure in respect of remittance to non-resident for non-furnishing or incorrect information a specific penalty of one lakh shall be levied, which was not prescribed earlier. This will be relevant for salary cross charge payments.

 

13.    It is proposed that in the case of an Individual, being a citizen of India and a member of the crew of a foreign bound ship leaving India, the period or periods of stay in India shall, in respect of such voyage, be determined in the manner and subject to such conditions as may be prescribed.

 

14.    It is proposed that concealment of income and assets and evasion of tax in relation to foreign assets will be prosecutable with punishment of rigorous imprisonment upto 10 years.  Also, non-filing of return or filing of return with inadequate disclosure of foreign assets will be liable for prosecution with punishment of rigorous imprisonment up to 7 years.

 

15.    Also, it is proposed that Income in relation to any undisclosed foreign asset or undisclosed income from any foreign asset will be taxable at the maximum marginal rate. Exemptions or deductions which may otherwise be applicable in such cases shall not be allowed.

 

16.    Exemption for Transportation allowance has been increased from INR 800 per month to INR 1,600 per month.

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