When an individual hears the annual Union Budget, the first question is: How will this affect me? Are there any changes in tax saving instruments or the tax slab?
Unlike last year's Budget, which saw a lot of changes on the income tax front, this year there are just two significant ones.
One-by-Six scheme
Any individual who satisfied any one of the following criteria (mentioned below) was expected to file a tax return:
This was implemented years ago, with the prime purpose of bringing a larger number of people into the tax net.
1. Owns a motor vehicle
2. Owner of immovable property of a specified area. To see what the specified area is in each city, take a look at the income tax web site.
3. Incurs expenditure for himself (or any other person) on travel abroad
4. Subscribes to a cell phone
5. Holds a credit card (not an add-on card)
6. Is a member of a club where the entrance fee charged is at least Rs 25,000
This came to be referred to as the One-by-Six scheme. If you fulfilled even one of the six, you were liable to file a return.
Apparently, the finance minister thinks that is defunct now and has suggested it be scrapped.
Section 80C
In last year's Budget, Section 80C was introduced and Section 88 was scrapped.
Investments in instruments falling under this section would be deducted from income, up to a limit of Rs 100,000.
These investments fall under Section 80C:
Apparently, banks were lobbying to get bank deposits included under Section 80C. If the finance minister had obliged them, then post office deposits too would have to be included under this section.
Hence, the finance minister has declared that fixed deposits in scheduled commercial banks would fall under Section 80C. This was only applicable, however, if they have a tenure of at least five years. This means it will not be valid for deposits of three or four years or for shorter tenures.
Certain expenses are also included under Section 80C:
There has been no addition to this list.
All these investments and expenses are directly reduced from your gross total income but, like we said earlier, they have a limit of Rs 100,000.
Barring these, the tax slabs and tax rates remain untouched.
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