New Delhi: The salaried class, which constitutes a major chunk of middle-income group in the country, has a lot to cheer, as finance minister Arun Jaitley on Thursday raised personal income-tax (I-T) exemption limit to Rs 2.5 lakh and also hiked investment limit for tax savings by Rs 50,000.
The move would enable individual tax-payers to save up to Rs 40,000.
In his maiden Budget for 2014-15, the finance minister raised personal income-tax limit from Rs 2 lakh to Rs 2.5 lakh for tax payers up to 60 years of age and from Rs 2.5 lakh to Rs 3 lakh for persons above 60 years.
In addition to these, Mr Jaitley also raised the limit of small investments that are exempt from income-tax, from existing Rs 1 lakh to Rs 1.5 lakh. This relief is provided for investment made in instruments listed under 80C of the Income-Tax Act, like Public Provident Fund, life insurance, fixed deposits (for five years and above) and Provident Fund.
For home loan borrowers, the finance minister raised the tax benefit on interest payment of housing loans from current Rs 1.5 lakh to Rs 2 lakh on self occupied properties. The hike in exemption limit and increase in saving ceiling will lead a maximum tax saving of Rs 39,655 where surcharge is applicable.
For people, with net annual income of Rs 3 lakh, the relief provided in the Budget will result in saving of Rs 5,150 in taxes. For individual with Rs Rs 5 lakh net income, the tax benefit will come to Rs 10,300 after considering tax deduction under 80C. For persons with income of Rs 10 lakh, the savings in taxes would Rs 15,450, according to calculations made by a leading consultancy firm KPMG.
According to a rough estimate the finance minister’s proposals is likely to benefit about two crore tax payers.
Meanwhile, the finance minister has also raised tax exemption limit from Rs 2.5 lakh to Rs 3 lakh in the case of senior citizens above 60 years but lower than 80 years.
