Taxexcel: New Tax Section in F.Y.2015-16

Sunday 21 June 2015

To start with, let the explain what exactly has changed in terms of taxation from the year (i.e.AY 2016-17) As per Budget 2015:

Tax slabs have not changed
investment limit under sec. 80C also same as previous FY 2013-14 up to Rs. 1,50,000

All changes this budget have been beneficial for the tax payer. If you are already aware of all the provision for saving income tax, you can skip the remaining part and go directly to the income taxcalculator for FY 2015-16 to compute your income tax liability (or TDS) basis your salary or business income. Others, do read on to know all the different tactics you can use to save on income tax.

Income Tax Slabs

Income tax slabs have been changed this year. Standard deduction limit has been raised to Rs. 2,50,000 for both Male and Female assesses.

1) In Case of General Assesses (Both Male & Female):

Income Bracket	Rate
0 to Rs. 2,50,000	0 %
Rs. 2,50,001 to Rs. 5,00,000	10 %
Rs. 5,00,001 to Rs. 10,00,000	20 %
Above Rs. 10,00,000	30 %

2) In Case of Senior Citizens (Age above 60 years but below 80 years):

Income Bracket	Rate
0 to Rs. 3,00,000	0 %
Rs. 3,00,001 to Rs. 5,00,000	10 %
Rs. 5,00,001 to Rs. 10,00,000	20 %
Above Rs. 10,00,000	30 %

3) In Case of Very Senior Citizens (Age 80 years and above):

Income Bracket	Rate
0 to Rs. 5,00,000	0 %
Rs. 5,00,001 to Rs. 10,00,000	20 %
Above Rs. 10,00,000	30 %

* On final tax amount, a surcharge of 3 %
**No surcharge above 10 lacs.

Income Tax Exemptions:

1) Section 80 C Limit – Unchanged this year (to Rs. 1,50,000)

Deduction on premium paid for a life insurance policy, taken after 1 April 2012, will be allowed only if yearly premium is less than 10% of sum assured. If its more than 10% then it will be not eligible for deduction u/sec. 80C
ELSS (Mutual Fund)
PPF (upto Rs. 1,50,000)
EPF
FD for 5 years
Pension Plans
NSC
Sukanya Samriddhi Account ( Minor Girl Child Scheme) Max Rs. 1.5 Lakh
Post Office SB
Infrastructure Bonds
Expenditure on Children Education (For upto 2 children only for full time education)
Tuition fees Maximum allowed is Rs. 1,50,000
Housing loan principal
Deferred Annuity
Approved Super Annotation Fund
80CC Raised Up to Rs. 1,50,000 [ Pension Fund ]

2) Section 80CCD - Unchanged this year

Deduction under this section can be claimed only if the contribution to your NPS account is made by your employer and the deduction is limited to a maximum of 10% of your basic salary. Returns on NPS are tax free, but withdrawal is still taxable. The deduction under sec 80CCD is over and above the deduction available under sec 80C.

3) Section 80 D –Changed this year

Deduction under section 80D

Deduction of Rs. 25000/- is allowed if the same is paid as premium for Medical Insurance taken for self / dependents or towards preventive health check-up (max Rs. 5000). In case any of self / dependents is a senior citizen, the deduction allowed is Rs. 30000/-

4) Section 80DD – Unchanged this year

Deduction under section 80DD

Exemption given for expenditure made for a disabled dependant towards Medical Treatment/Training/Rehabilitation. It also includes the LIC/Insurance premium paid towards maintenance of such dependant.
Maximum deduction allowed is Rs. 50,000/- in case of normal disability and Rs. 1 Lakh in case of severe disability.

5) Section 80DDB - Unchanged this year

Deduction under section 80DDB

Exemption given for expenditure incurred on specified disease or ailments such as cancer/aids.
Maximum deduction allowed is Rs. 40,000/-. In case of Senior Citizens, maximum deduction allowed is Rs. 60,000/-

List of ailments covered:
(i) Neurological Diseases where the disability level has been certified to be of 40% and above,

Dementia ;
Dystonia Musculorum Deformans ;
Motor Neuron Disease ;
Ataxia ;
Chorea ;
Hemiballismus ;
Aphasia ;
Parkinsons Disease ;

(ii) Malignant Cancers ;

(iii) Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;

(iv) Chronic Renal failure ;

(v) Hematological disorders :

Hemophilia ;
Thalassaemia.

6) Section 80E - Unchanged this year

Deduction under section 80E
Deduction is allowed for repayment of interest component of Higher Education loan. All education after Class 12 is allowed, either vocational or Fulltime. But should be from a school/institute/university recognized by the government.

7) Section 80G - Unchanged this year

Contribution to exempt charities – 25/50/75/100% depending on the charity and as per approval
100% exemption on donation to political parties

8) Section 80U - Changed this year

Deduction upto Rs. 75,000/- is allowed in case of Permanent Disability.
In case of Permanent Disability exceeding 80%, maximum deduction allowed is Rs. 1,25,000/-.

9) Section 24B & Section 80EE - Unchanged this year

Housing loan interest. Maximum allowed limit raised to – Rs. 2,00,000 (for loans taken after 1 April 1999. For loans before that Maximum Investment Limit was 30,000).
Additional deduction of Rs. 1 lac will be applicable to persons taking first home loan of up to Rs. 25 lacs for property worth upto Rs. 40 lac. For such persons, the total deduction will be Rs. 2.5 lacs (Rs. 1.5 lac available under section 24(1)(vi) and Rs. 1 lac available under this new section 80EE).
10) Superannuation - Unchanged this year

Any contribution made by a company to superannuation fund upto Rs. 1,00,000 tax free in the hands of the employee.

11) Conveyance/Transport Allowance - Changed this year

Any Conveyance / Transport Allowance given to an employee is tax free upto Rs. 1600 /- P.M.

12) Medical Allowance - Unchanged this year

Any Medical Allowance given to an employee is tax free upto Rs. 15,000 /- (Supporting Bills required).

13) HRA - Unchanged this year

Any House Rent Allowance given to an employee is tax free upto the minimum value of the following conditions (subject to – when an employee can produce rent paid receipts from landlord for the period and if the employee has not availed of tax exemptions for home loan interest / principal repayment):

50% of Annual Basic (40% of Annual Basic in case of non-metros)
Actual HRA received
Rent Paid – (10% of Annual Basic)
Calculate HRA Exemption U/s 10(13A) with Excel utility

14) Professional Tax - Unchanged this year

Any Professional Tax deducted from an employee’s salary can be reduced from the annual salary income to arrive at taxable salary.

15) Provident Fund - Unchanged this year

Provident Fund contributions (under section 80 C and subject to an overall investment limit of Rs. 1,50,000 ) deducted from an employee’s salary are tax exempt.

16)80CCG – Direct Equity Investment - Unchanged this year

Under ‘Rajiv Gandhi Equity Savings Scheme‘ – a new equity investor will be able to claim 50% of his investment in direct equity as deduction subject to maximum investment of Rs. 50,000 and provided his taxable income is below Rs. 10 lacs. The investment will be subject to 3 years lock-in.
Government has notified this scheme (RGESS). Mutual funds and ETFs that invest in BSE100 or CNX 100 stocks or PSUs which are Navratna, Maharatna and Miniratna will qualify under this scheme. These investments can be traded over stock exchange after 1 year of investment. New equity investor has been defined as someone who has opened a Demat account but has not bought any securities till date of notification of this scheme (22 Sep 2012).

17) Section 80TTA – Savings Bank Interest - Unchanged this year

No tax will be charged on interest earned on balance in savings bank account subject to a maximum of Rs. 10,000 per year.

18) Section 87 A [Tax Rebate Rs.2,000/- - Unchanged this year

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Thursday 5 March 2015

What is the new changes in Central Budget 2015-16 and What will be the benefits of Salaried Persons for the Financial Year 2015-16

listed the major points of Budget 2015 and created a video on this. Please have a look at below

Let us discuss each point in detail.

1) No revision Tax Slabs and Sec.80C limit-

Finance minister has not touched the tax slabs and famous Sec.80C limit. So the earlier FY 2014-15 (AY 2015-16) tax slabs will continue. This is actually a big blow to salaried. They thought FM would revise it to some extent. However, no such magic happened.

2) Sec.80D Health Insurance Premium limit raised-

Earlier health insurance premium limit under Sec.80D was Rs.15, 000 for individual and HUF taxpayers. An individual can claim deduction towards the health insurance premium paid to himself, spouse, dependent parents, or dependent children of the assessee. In case of HUF, it is any member of a family.

Now this limit is raised to Rs.25, 000 per year for individual and HUF. At the same time, for senior citizens, it is raised to Rs.30, 000 (from the earlier Rs.20, 000). So overall for your family you can save up to Rs.55, 000 (On own family Rs.25, 000+Rs.30, 000 for senior citizen parents).

This budget gave some relief to senior citizens whose age is 80 yrs and above. Usually none of health insurance companies offers health insurance to these citizens. Hence, any health expenditure up to Rs.30, 000 can be claimed as deduction under Sec.80D.

This upgrading of limit actually a big relief for all. Because you notice the hospitalization cost these days. So buy a proper health insurance, you must go for a higher sum assured. By increasing the premium limit under Sec.80D, the Government actually pushes for health insurance to all.

3) New Pension Scheme (NPS) limit raised to Rs.1, 50,000-

Earlier the limit under Sec.80CCD (1) was Rs.1, 00,000. This Sec.80CCD deduction relates to your contribution to NPS (either an individual or employee). Now this limit is raised to Rs.1, 50,000.

4) Transport allowance limit raised-

Earlier the monthly limit was Rs.800. Now it is doubled, i.e. Rs.1, 600 per month. Therefore, if you receive a transport allowance in your salary, then this is again a huge advantage for you. I feel this is a good move considering the cost of managing vehicle.

5) Now TDS (Tax Deducted at Source) on your RD (Recurring Deposits) too-

Even though interest earned from RDs is taxable, but as of now, there was no TDS. Therefore, many people felt it easy to skip paying taxes on this. However, in this budget Govt amended Sec.194A. So effective from 1st June 2015-TDS of 10% on all your RDs under Sec.194A. However, there will be no TDS on RDs whose total interest is less than Rs.10, 000 in a year. This will protect small investors. Anyhow, it is wrong to believe that NO TDS means NO TAX. You still be liable for tax according to your individual tax slab on RDs.

6) Sukanya Samriddhi Account now with huge tax benefits-

Earlier, when the Sukany Samriddhi Account was launched, it was ETE. Means whatever you invest in this scheme will be available for tax benefit under Sec.80C. Interest earned was taxable (as is NSC) but maturity was said as tax-free. However, in this budget FM declared that interest earned from this scheme is full tax-free. Therefore, it is now treated as an EEE scheme (Exempt while investing, interest earned is exempt and maturity exempt).

If we consider the current trend then between Sukanya Samriddhi Account Vs PPF, I feel Sukanya Samriddhi Account holds good except on liquidity issue and some other minor features.

7) Service Tax raised to 14% from an earlier 12 %-

Earlier the service tax was 12% (excluding cess) and now it is raised to 14%. Along with that 2%, Swachh Bharat Cess also included. So earlier, it is 12.36%. Now it is 14.5% of service tax (14% Service Tax+0.2% Education Cess @ 2%+0.2% Swachh Bharat Cess @2%+0.1% Senior and Higher Education Cess @ 1%).

8) Wealth Tax discontinued, but with a surcharge of 2% if income is Rs.1 Cr or more-

Earlier the wealth tax was collected to those individuals and HUF if their Net Wealth exceeds Rs.30 lakh on the last date of the previous year on certain assets. Now such tax was abolished. To compensate the loss, FM introduced 2% surcharge on individual or HUF if their income is Rs.1 Cr or more. This move actually brings in more income to Govt than wealth tax.

9) 100% Tax Deduction under Sec.80G if you donate to Swachh Bharat and Clean Ganga-

Whatever you contribute to Swachh Bharat and Clean Ganga schemes, the whole amount can be availed as deduction under Sec.80G. Let us contribute to these noble causes.

10) PAN Card mandatory for all buy or sell of above Rs.1 lakh-

From now onward if you want to buy anything, which is more than Rs.1 Lakh, then you have to quote your PAN number. This will bring the transaction into legality and tax angel. Hence there is no escape from avoiding tax or doing illegal transactions. Even FM also pointed that if someone tries to split the amount to make sure that the payment will be within Rs.1 lakh then too it will be tracked and penalize for such misdeed. From now onward, it is prohibited of acceptance or payment of an advance of Rs 20,000 or more in cash for purchase of immovable property.

11) Option to choose between EPF or NPS-

From now onward, you have the option to choose between EPF or NPS. This gives some flexibility to employees to choose. However, this option is only meant for certain employees whose income is limited (This limit is not yet cleared as of now). Let us wait for more clarity on this.

12) Introduction of Tax Free Bonds-

FM has proposed to introduce Tax Free Bonds. This will be good for those who are looking for tax-free instruments and stable income. FM announced that Rs.20,000 Cr worth of bonds will be issued to cater the infra, railway, and road projects. The interest from these bonds will be tax-free.

13) New Accidental Insurance which cost you Rs.12 a year !!!

FM has proposed to introduce the new accidental insurance called Pradhan Matri Suraksham Bima Yojana. Sum Insured under this scheme is Rs.2, 00,000 and yearly premium is just Rs.12 a year.

14) New Life Insurance of Rs.2, 00,000 for the yearly premium of Rs.300-

FM has proposed a new Life Insurance Pradhan Mantri Jeevan Jyoti Bima Yojana. This will offer you Rs.2, 00,000 Sum Assured. This covers accidental or natural death. The premium will be Rs.330 per year. Age group eligible to buy this plan are between 18 Yrs to 50 Yrs of age.

15) Unclaimed EPF and PPF amount usage-

FM has proposed that unclaimed EPF and PPF amount, which is idle with Govt, would be utilized for Senior Citizen Welfare Fund. This may to some extent give some benefits to seniors.

16) No Changes in Tax Rebate Rs.2000/- U/s 87A

17) No Changes in Savings Bank Interest relief Rs.10,000/- U/s 80TTA