Key changes to Personal Taxation from Budget 2015

The much awaited Budget 2015 has come and gone. Here are the key points:

What remains the same?

Base income-tax slabs/brackets and tax rates for the financial year 2015-16 on personal income remains unchanged. There was a huge expectation that tax slabs would be increased but no luck this time.  🙁

What has changed?

• Surcharge on Income Tax has been increased from 10% to 12% for income exceeding Rs.1 crore, thereby increasing the effective maximum rate of tax to 34.61% from 33.99%, an incremental impact of 0.62%.  🙁
• Wealth Tax has been abolished! The additional 2% surcharge is in lieu of the Wealth Tax which has been abolished. 🙂
• Transport allowance exemption is being increased from Rs.800 per month to Rs.1,600 per month. So your annual exempted Transport allowance would increase from Rs9,600 to Rs19,200.  I expect all employers to fine-tune their salary structure to enable higher deduction to employees. 🙂
• Health Insurance Premium:
• • • Limit of deduction of health insurance premium increased from Rs.15,000 to Rs.25,000, for senior citizens limit increased from Rs.20,000 to Rs.30,000. Don’t wait any further to cover your parents in an appropriate medical insurance plan 🙂
    • Senior citizens above the age of 80 years, who are not covered by health insurance, to be allowed deduction of Rs.30,000 towards medical expenditures. 🙂
• Limit on deduction on account of contribution to a pension fund and the new pension scheme increased from Rs.1 lakh to Rs.1.5 lakh.  Additional deduction of Rs.50,000 for contribution to the new pension scheme u/s 80CCD. The Government wants to make sure that you have sufficient money at your retirement:)
• Investment made towards the newly introduced Sukanya Samriddhi Scheme, relating to education of girl child shall be eligible for 100% deduction under Section 80C.  Also, the interest earned and withdrawal amounts are also tax free.  This is a deposit scheme similar to PPF but available for only girl child below the age of 10 years. 🙂
• People who hold foreign assets like 401K plans etc., needs to disclose it in their annual IT returns. Concealment or non-disclosure of foreign accounts/investments can lead to taxation at 300% of amount concealed