The taxpayers were expecting “achhe din” from the maiden budget of the Narendra Modi government, especially because of the rise in inflation. It was expected that finance minister Arun Jaitley will deliver relief on personal taxation.
But the taxpayers were left with the feeling that despite the relief on the tax payable, the government could have offered a bit more.
The personal income tax exemption limit set by Jaitley for salaried individuals is Rs 2.50 lakh. The exemption hike comes after no change in the previous year.
A parliamentary panel, headed by Yashwant Sinha, had recommended that the ceiling be raised to Rs 3 lakh last year and the common man was looking at similar relief.
The exemption limit on senior citizens (60 years to below 80 years), is being raised from Rs 2.5 lakh to Rs 3 lakh. However, for very senior citizens, the limit of Rs 5 lakh continues.
The education cess will continue at 3 per cent. A 10 per cent surcharge will also remain in place on individuals earning more than Rs 1 crore a year.
The exemption relief was further increased under the popular section 80C of the Income Tax Act from Rs 1 lakh to Rs 1.5 lakh on investments made in life insurance, provident fund and small scale saving schemes like National Savings Certificate and Senior Citizens Savings Scheme.
The taxpayers had expected the limit to go up to Rs 2 lakh.
The other significant change allows savers to deposit up to Rs 1.5 lakh in the PPF (public provident fund) account and get the Section 80C benefit as well as tax-free interest.
The benefit of tax rebate of Rs 2,000 under section 87A of the act has not been withdrawn. It is still available to individuals whose total income does not exceed Rs 5 lakh a year.
On housing loan on self-occupied property, an individual can claim Rs 2 lakh, up from the earlier Rs 1.5 lakh.