Individual can now avail of tax rebates of over Rs60,000 (total increase in limit for health insurance and pension scheme contributions) in FY2015-16 as compared to FY2014-15. Additional avenues are made available through which individuals can save tax. Deduction limit for health insurance premiums raised by Rs10,000 to Rs25,000.
Contributions to insurance pension schemes were earlier limited to Rs1 lakh for tax rebates. Savers can now get a rebate for contributions up to Rs1.50 lakh. Individuals can contribute up to 10% of their salary to the National Pension System. There will be no overall limit. In addition to the salary contributions, individuals can invest an additional Rs50,000. Sukanya Samriddhi Account Scheme is now eligible for tax rebate under Section 80C.
Below are the highlights of how the budget will affect your personal finances.
Rs10,000 increase in the limit of deduction under section 80D relating to health insurance
-Limit of deduction of health insurance premium increased from Rs15,000 to Rs25,000, for senior citizens limit increased from Rs20,000 to Rs30,000.
-The aggregate deduction for health insurance premium and medical expenditure incurred in respect of parents would be limited to thirty thousand rupees
-Senior citizens above the age of 80 years, who are not covered by health insurance, to be allowed deduction of Rs30000 towards medical expenditures.
Rs50,000 increase in the limit of deduction under 80CCC relating to pension plans
For any annuity plan of LIC or any other insurer for receiving pension from a fund set up under a pension scheme, the deductions have been raised to Rs1.50 lakh from Rs1 lakh
Rs50,000 additional deduction under 80CCD relating to National Pension System
Contributions not exceeding 10% of salary to NPS will be eligible for tax deduction. The overall limit of Rs1 lakh has been omitted. Apart from the salary contributions, additional contribution of up to Rs50,000 will be eligible for deductions.
Tax benefits under section 80C for the girl child under the Sukanya Samriddhi Account Scheme
-The investments made in the Scheme will be eligible for deduction under section 80C of the Act.
-The interest accruing on deposits in such account will be exempt from income tax.
-The withdrawal from the said scheme in accordance with the rules of the said scheme will be exempt from tax
-Rate of interest 9.1% Per Annum
-Minimum Investment Rs1000/-and Maximum Rs1,50,000 in a financial year
-Account can be opened up to age of 10 years only from the date of birth
-Partial withdrawal, maximum up to 50% of balance after attaining age of 18 years. Account can be closed after completion of 21 years.
Increase in the limit of deduction under section 80DDB relating to treatment of chronic diseases
Deduction limit increased to Rs80,000 from Rs60,000 with respect to the medical treatment of certain chronic and protracted diseases such as Cancer, full blown AIDS etc., in case of senior citizen.
Increase in the limit of deduction under section 80DD and 80U for persons with disability and severe disability
Additional deduction of Rs25,000 allowed for medical treatment differently abled dependant.
Deduction on donations made
Donation made to National Fund for Control of Drug Abuse (NFCDA) to be eligible for 100% deduction u/s 80G of Income-tax Act. 100% deduction for contributions, other than by way of CSR contribution, to Swachh Bharat Kosh and Clean Ganga Fund.
Other Budget Provisions
Transport allowance exemption increased to Rs1,600 per month
Tax-free infrastructure bonds for the projects in the rail, road and irrigation sectors
Atal Pension Yojana to provide a defined pension, depending on the contribution and the period of contribution. Government to contribute 50% of the beneficiaries’ premium limited to Rs1,000 each year, for five years, in the new accounts opened before 31 December 2015.
Pradhan Mantri Jeevan Jyoti Bima Yojana to cover both natural and accidental death risk of Rs2 lakh at premium of Rs330 per year for the age group of 18-50.
Employees to opt for EPF or New Pension Scheme. For employee’s below a certain threshold of monthly income, contribution to EPF to be option, without affecting employees’ contribution.
Gold monetisation scheme to allow the depositors of gold to earn interest in their metal accounts and the jewellers to obtain loans in their metal account to be introduced.
Sovereign Gold Bond, as an alternative to purchasing metal gold scheme to be developed.
Service-tax plus education cesses increased from 12.36% to 14% to facilitate transition to GST.