New Delhi, Feb 28: Not changing the income tax rates or increasing the exemption limits for individuals, union Finance Minister Arun Jaitley Saturday proposed increasing the range of tax deductible investments/ spend.
Presenting the budget proposals for 2015-16 in the Lok Sabha, Jaitley said the government is proposing to rationalise various tax exemptions and incentives to reduce tax disputes and improve tax administration.
The proposals mentioned by the finance minister made clear the government's focus on enlarging the tax-exempt investments/spend.
Jaitley said the proposals would result in tax deductions to the tune of around Rs.440,000 crore.
Jaitley said in order to encourage savings and to promote health care among individual tax payers, it is proposed to increase the limit of deduction on account of health insurance premium from Rs.15,000 to Rs.25,000 -- for senior citizens this limit is to be increased from Rs.20,000 to Rs.30,000.
For senior citizens above the age of 80 years -- who are not eligible to avail of health insurance -- deduction will be allowed for medical expenses up to Rs.30,000.
The deduction limit of Rs.60,000 on expenditure on account of specified diseases -- like cancer -- will be enhanced to Rs.80,000 in the case of senior citizens.
The minister also proposed additional deduction of Rs.25,000 for differently-abled persons, increasing the limit from Rs.50,000 to Rs.75,000.
It is also proposed to increase the limit of tax deduction from Rs.1 lakh to Rs.1.25 lakh in case of severe disability.
According to Jaitley, investment in Sukanya Samriddhi Scheme will be eligible for deduction under section 80C of the income tax and any payment from the scheme shall not be liable to tax.
Limit on deduction on account of contribution to a pension fund and the new pension scheme is proposed to be increased from Rs.1 lakh to Rs.1.5 lakh. Additional deduction of Rs.50,000 will be allowed for contribution to the new pension scheme under section 80 CCD of Income Tax Act -- increasing the exemption from Rs.1 lakh to Rs.1.5 lakh.
Jaitley also doubled the transport allowance exemption to Rs.1,600 per month.
According to him, the details of tax deductions proposed are as follows:
Deduction u/s 80C - Rs.150,000; Deduction u/s 80CCD - Rs.50,000; Deduction on account of interest on house property loan (Self-occupied property) - Rs.200,000; Deduction u/s 80D on health insurance premium - Rs.25,000; Exemption of transport allowance - Rs 19,200; Total - Rs.444,200
Reacting to the budget proposals, Prashant Khatore, tax partner, Ernst and Young told IANS: "The finance minister is connecting various proposals to the Make In India programme. Though there is no change in personal income tax rates, the corporate tax rate has been proposed to be brought down to 25 percent over a four-year period."