Reasons to cheer
Asian Age, The Deccan Chronicle
Tax partner, EY
The most direct way by which the Union Budget affects the common man is through changes in tax rates — both direct and indirect. While income tax is a direct tax on your income, indirect taxes only hit you at the time of incurring an expense, for example a service tax on your telephone, restaurant bill etc.
The direct changes proposed in the Budget are:
- The income tax threshold has been raised to Rs. 2.5 lakh from the existing Rs.2 lakh. This will definitely bring more money in your hands. The benefit here is limited to Rs. 5,000 for every taxpayer.
- For senior citizens, the i
- The threshold for investment in Public Provident Fund (PPF), which provides for a good opportunity to increase your savings while earning tax-free income, has been enhanced by Rs. 50,000. Earlier the maximum limit of contribution was Rs. 1 lakh per annum which has now been raised to Rs. 1.5 lakh.
- The finance minister has also proposed to increase the limit of 80C deductions from Rs. 1 lakh to Rs. 1.5 lakh. This will help you increase your savings and also reduce your tax burden.
- Another proposal that was high on expectation was a tax deduction on housing loans. This was eagerly expected by the builder community, financial institutions, as well as people owning/ planning to purchase a residential property. The deduction limit on account of interest on loan for self -occupied house property has been raised from Rs. 1.5 lakh to Rs. 2 lakh. This will definitely have a positive impact on your financial plan.
In addition to the above, there are other ways in which the budget impacts you. A hike in duty (customs, excise or service tax levy) of consumer goods can affect the budget planning of every household.