Individuals, especially the salaried class, have a lot to cheer about this year's budget. The finance minister has definitely put some money into their pockets. All things considered, individuals will pay lesser taxes this year.
Rewarding the salaried class for demonstrating better tax compliance, the finance minister has raised the standard deduction limits. For individuals with an annual income of up to Rs 5 lakh, the standard deduction has been raised to 40 per cent of salary, or Rs 30,000, whichever is lower.
Earlier, individuals with an annual salary of up to Rs 1.50 lakh could claim a deduction of Rs 30,000. Individuals whose annual salary was between Rs 1.50 lakh and Rs 3 lakh were entitled to a standard deduction of Rs 25,000 and those with an annual income between Rs 3,00,000 and Rs 5,00,000 could claim up to Rs 20,000.
For individuals with an annual income of above Rs 5 lakh, a standard deduction of Rs 20,000 has now been allowed. Earlier, they could not claim any standard deduction. Being a writer could turn out to be remunerative career.
Royalty income up to Rs 3 lakh a year, received by authors of literary, artistic and scientific books shall henceforth be fully exempt; as will be royalty received by individuals from exploitation of patents. Also, opting for an early retirement may be an good idea now.
For employees opting for the voluntary retirement scheme, payments up to Rs 5 lakh, even when taken in instalments are fully exempt from tax.
While there is no change in the income-tax rates, the 5 per cent surcharge levied last year in connection with the security of India, has been removed entirely except in the case of those earning an income above Rs 8.5 lakh.
A 10 per cent surcharge on the tax will be levied on individuals earning above Rs 8.5 lakh.
There's more reason to cheer. Income from dividends, interest enjoy a deduction of Rs.9,000 under Section 80L of the I-TAct. This has now been increased to Rs 12,000. An additional deduction of Rs.3,000 is allowable against interest from g-secs.
Thus, the total deduction available under Section 80L will be Rs 15,000. Though dividend will not be taxable in the hands of the recipient from next year, the finance minister has proposed to retain this deduction at Rs 15,000 for the next year also.
Not only will your tax outgo be lesser, the whole process of filing your tax returns will now become a lot simpler. The government is working on the introduction of a one-page only return form for individual tax payers, having income from salary, house property and interest etc. from April 1 onwards.
You will also get your tax refunds a lot faster this year. All tax refunds will now directly credited to the bank account of the taxpayer, through electronic clearance system.
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