Finance Minister Arun Jaitley's maiden budget has succeeded in delivering the
Narendra Modi government’s promise of ushering in ‘achhe din’ — at least for the people belonging to the
middle class. The BJP government has raised the basic exemption limit for ordinary
taxpayers from Rs 2 lakh to Rs 2.5 lakh.
On the other hand, the limit for income on which senior citizens don't have to pay tax has been raised from Rs 2.5 lakh to Rs 3 lakh. No changes have been made in the Rs 5 lakh tax exemption for very senior citizens above 80.
The
Union Budget 2014 has also enhanced the annual deduction available under Section 80C from Rs 1 lakh to Rs 1.5 lakh. Taxpayers have been demanding this since a long time. The Rs 1 lakh limit was set nearly a decade ago. It quickly gets exhausted due to the multiplicity of investments included under Section 80C. Also, this is a provision that allows investors to reduce their tax liability.
The proposed changes can lead to big tax savings for middle-class taxpayers. Those earning more than Rs 10 lakh a year stand to save up to Rs 20,000 annually in tax.
Looking at the relief provided to the smallest taxpayers in the budget announced by
Arun Jaitley, the basic exemption limit has been raised by Rs 50,000. This will result in a tax saving of Rs 5,000. A Rs 50,000 increase in the investment limit under Section 80C will help save another Rs 15,000.
However, it is important to note that the potential tax savings have been reduced for those in the lower tax brackets.
(Image: Press Information Bureau)
