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Sunday, March 1, 2015

Budjet 2015 Top highlights and Tax Bebefit


How Can you Save Rs 4.44 Lakh in Taxes Per Year

How Can You Save Rs 4.44 Lakh in Taxes Per Year

           Finance Minister Arun Jaitley on Saturday said an individual tax payer will get tax benefit of Rs 4,44,200 after taking into account the tax concession given to middle class tax payers in the last Budget and this Budget.


Here is the mathematics behind Mr Jaitley's statement:
  • 1. Rs 2.50 lakh is the income that is exempt from taxes
  • 2. Rs 1.50 lakh is the exemption provided to tax saving instruments under Section 80CCD of the Income Tax Act.
  • 3. Transport allowance has been raised from Rs 800 per month to Rs 1,600 per month, which could lead to annual savings of Rs 19,200 per year.
  • 4. Health insurance premium deduction has been hiked from Rs 15,000 to Rs 25,000, Section 80D leading to annual tax savings of Rs 10,000.
Rs 2.50 lakh + Rs 1.50 lakh + Rs 19,200 + Rs 25,000 = Rs 4,44,200

Budjet 2015 Highlights
  • Investment in Sukanya Samridhi Scheme will be fully exempted from tax
  • Specified Domestic Transaction Limit proposed to increase to 20 Crore from 5 Crore.
  • Retrospective tax provisions will be avoided.
  • Tax on Royalty from Technical Services cut to 10%
  • Reduced Custom Duty on 22 Items.
  • Wealth Tax act abolished and 2% Surcharge imposed on Super Rich having Income above 1 Crore – Additional 9000 crore expected
  • GAAR to be resolved in 2 Years- Implementation of GAAR deferred by 2 Years. To be applied from April 2017
  • Law to Curb Black Money in Property Transactions- PAN Mandatory for all Transactions above Rs. 1 Lakh
  • More Power Under Fema Act to Fight Black Money
  • New law to deal with Black Money Stashed outside India Up to 10 Year imprisonment for Black Money, Concealment of Income or Assets. Non Filing of Income Tax Return is proposed to make Punishable with Imprisonment
  • Fm proposes new law for dealing with Black Money
  • FM to Reduce Corporate tax rate from 30 to 25% over next 4 years.
  • Cut in corporate tax rates is accompanied by cut in Tax Exemption
  • Gross Tax Receipt Receipt Rs. 14.49 Lakh crore
  • Employee’s contribution to EPF below an income threshold will be optional without reducing employer’s contribution.
  • FM proposes to do away with different types of foreign investment and replace them with composite caps.
  • 150 countries to be included in Visa for arrival facility:
  • Amendment in SEBI and RBI Laws Proposed to merge commodities regulator with SEBI
  • Vision of a building direct regime which will be internationally competitive
  • Tax free infra bonds for road, rail and irrigation projects.
  • GST to be put in place by April 1, 2016
  • Govt allocates Rs 346.99 billion for NREGA scheme in Budget 2015 to insure no one is poor and without job
  • Bankruptcy law reform has been identified as a key to ease of doing business. Bring comprehensive Bankruptcy code in 2015-16.
  • Rs 5.20 lakh crore in taxes to go to states in 2015-16
  • This year fiscal deficit has been raised to 3.9%, which market may not react adversely….but would be heartening to see the roadmap for next three years where Fiscal deficit target of 3% of GDP in three years: Target is 3.9% in 2015-16, 3.5% in 2016-17, 3% in 2017-18.
  • Higher clean energy cess of INR 200/t is negative for all private IPP operating in competitive environment
  • This further increase in coal cost after recent increase in freight...negative for coal consuming industries
  • Nothing specific for Pharma - will benefit from lower corporate tax. Healthcare industry to benefit from increasing insurance penetration and purchasing power. Negative impact from increase in excuse duty for domestic manufacturers (kitted impact expected as most manufacture from SEZs).
  • Budget miss in terms of R&D expenditure exception.
  • Merging of FPI and FDI : Axis Bank and Yes Bank to be a key beneficiary. Majority of large Private banks already at 74% overall foreign limit whereas Axis is at 62% and Yes at 52% hence can increase FII limit without targeting ADR window.