While there are no changes in income tax rates for individuals, Jaitley has increased exemption limit for health insurance premium, contribution to pension scheme and transport allowance
Finance Minister Arun Jaitley on Saturday kept the tax exemption limits for individual taxpayers unchanged. However, he asked the middle class to save more, by either contributing more to National Pension Scheme (NPS) or buying health insurance.
In his first full Budget, the Finance Minister increased the exemption limit for contribution to NPS to Rs1.50 lakh from Rs1 lakh. Health insurance premium exemption is also increased to Rs25,000 from Rs15,000. For senior citizens the health insurance limit would be Rs30,000. “Individual tax payer will benefit to the extent Rs4.44, lakh from the exemptions announced,” Jaitley said.
Here are Jaitley’s proposals for the middle class…
A. Increase in the limit of deduction in respect of health insurance premium to Rs25,000 from Rs15,000.
(1) For senior citizens the limit will stand increased to Rs30,000 from the existing Rs20,000.
(2) For very senior citizens of the age of 80 years or more, who are not covered by health insurance, deduction of Rs30,000 towards expenditure incurred on the treatment will allowed.
B. The deduction limit of Rs60,000 towards expenditure on account of specified diseases of serious nature is proposed to be enhanced to Rs80,000 in case of very senior citizens.
C. Additional deduction of Rs25,000 will be allowed for differently abled persons under Section 80DD and Section 80U of the Income-tax Act.
D. The limit on deduction on account of contribution to a Pension Fund and the New Pension Scheme is proposed to be increased to Rs1.5 lakh from Rs1 lakh.
E. To provide social safety net and the facility of pension to individuals and additional deduction of Rs50,000 is proposed to be provided for contribution to the New Pension Scheme under Section 80 CCD. This will enable India to become a pensioned society instead of a pensionless society.
F. Investments in Sukanya Samriddhi Scheme is already eligible for deduction under Section 80C. All payments to the beneficiaries including interest payment on deposit will also be fully exempt.
G. Transport allowance exemption is being increased to Rs1,600 per monthly from Rs800 per month.
H. For the benefit of senior citizens, service tax exemption will be provided on Varishta Bima Yojana.
Last year, Jaitley had increased the tax exemption limit to Rs2.5 lakh from Rs2 lakh, while raising the housing loan rebate to Rs2 lakh from Rs1.5 lakh for self-occupied property.