The Finance Minister had announced rising Tax Exemption Limit for individual Taxpayers by Rs. 50000/- for Male and Female as well Pensions in Budget - 2014. With this increasing exemption they can get relief in Tax of Rs. 5150.00 whose Taxable Income below Rs. 500000/- annually. This is a great benefit for Individual Taxpayers.
There are Three Major updated in Budget - 2014 relating to Individual Taxpayers which are as under:
There are Three Major updated in Budget - 2014 relating to Individual Taxpayers which are as under:
- Hike in personal income-tax exemption limit.
- Advance forfeited on transfer of capital assets shall be taxable under the head 'income from other sources'.
- Proposal to raise limit of deductions under Sections 24 and 80C for individuals.
Personal Income Tax Exemption Limit:
The maximum exemption limit for an individual and a senior citizen has been raised by Rs. 50,000, that is, from Rs. 2 lakh to Rs. 2.5 lakh in case of individual taxpayers below the age of 60 years and from Rs. 2.5 lakh to Rs. 3 lakhs in case of resident senior citizens. There are no changes in the rate of surcharge and education cess.
The maximum exemption limit for an individual and a senior citizen has been raised by Rs. 50,000, that is, from Rs. 2 lakh to Rs. 2.5 lakh in case of individual taxpayers below the age of 60 years and from Rs. 2.5 lakh to Rs. 3 lakhs in case of resident senior citizens. There are no changes in the rate of surcharge and education cess.
1. Tax Slab for an Individual (resident & below 60 years) or HUF/AOP/BOI/AJP
Income Slabs
|
Tax Rates
|
Total income up to Rs. 2.5 Lac
|
0% Tax
|
Total income above Rs. 2.5 Lac and below Rs.5 Lac
|
10% on amount exceeding Rs. 2.5 Lac
|
Total income above Rs. 5 Lac and below Rs.10 Lac
|
20% on Income exceeding Rs. 5 Lac + Rs. 25,000
|
Total income more than Rs. 10 Lac
|
30% on Income exceeding Rs. 10 Lac + Rs. 1,25,000
|
- u/s 87A the Individual having taxable income up to Rs. 5 Lac , can claim rebate, on the Actual Tax amount subject to a maximum of Rs.2,000
- Where the Taxable Income exceeds Rs. 1 crore, Surcharge @ 10% of Income tax is applicable
2. Tax Slab for an Individual (resident & above 60 years but below 80 years)
Income Slabs
|
Tax Rates
|
Total income up to Rs. 3.00 Lac
|
0% Tax
|
Total income above Rs. 3.00 Lac and below Rs.5 Lac
|
10% on amount exceeding Rs. 3.00 Lac
|
Total income above Rs. 5 Lac and below Rs.10 Lac
|
20% on Income exceeding Rs. 5 Lac + Rs. 20,000
|
Total income more than Rs. 10 Lac
|
30% on Income exceeding Rs. 10 Lac + Rs. 1,20,000
|
- u/s 87A the Individual having taxable income up to Rs. 5 Lac , can claim rebate, on the Actual Tax amount subject to a maximum of Rs.2,000
- Where the Taxable Income exceeds Rs. 1 crore, Surcharge @ 10% of Income tax is applicable
3. Tax Slab for an Individual (resident & above 80 years)
Income Slabs
|
Tax Rates
|
Total income up to Rs. 5 Lac
|
0% Tax
|
Total income above Rs. 5 Lac and below Rs.10 Lac
|
20% on Income exceeding Rs. 5 Lac
|
Total income more than Rs. 10 Lac
|
30% on Income exceeding Rs. 10 Lac + Rs. 1 Lac
|
- Where the Taxable Income exceeds Rs. 1 crore, Surcharge @ 10% of Income tax is applicable
EDUCATION CESS
- The amount of Income-tax shall be increased by Education Cess of 3% on Income-tax.
Advance forfeited on transfer of capital assets shall be taxable under the head 'income from other sources':
The existing provisions of Section 51 provide that any advance forfeited in course of transfer of capital assets shall be reduced from cost of acquisition/WDV/market value of assets. It has been proposed to insert a new clause in Section 56(2) to provide that any advance received on transfer of capital assets shall be chargeable to tax under head 'income from other sources', if such sum is forfeited and the negotiations do not result in transfer of capital assets. A consequential amendment is also proposed to Section 2(24) to include such income in the definition of the term 'income'.
The effect of this proposed amendment would be that the advance money forfeited under a contract for transfer of an immovable property, which could not materialize, shall not be reduced from the actual cost of acquisition of the immovable property. If the immovable property, in relation to which the advance money was forfeited, was a long-term capital asset the existing treatment of forfeited amount had an escalating effect as it reduced the benefit of cost of inflation indexes. With the proposed amendment the indexed cost of acquisition will remain same and the advance money forfeited shall be taxable as residual income.
Proposal to raise limit of deductions under Sections 24 and 80C for individuals:
The existing provisions of Section 51 provide that any advance forfeited in course of transfer of capital assets shall be reduced from cost of acquisition/WDV/market value of assets. It has been proposed to insert a new clause in Section 56(2) to provide that any advance received on transfer of capital assets shall be chargeable to tax under head 'income from other sources', if such sum is forfeited and the negotiations do not result in transfer of capital assets. A consequential amendment is also proposed to Section 2(24) to include such income in the definition of the term 'income'.
The effect of this proposed amendment would be that the advance money forfeited under a contract for transfer of an immovable property, which could not materialize, shall not be reduced from the actual cost of acquisition of the immovable property. If the immovable property, in relation to which the advance money was forfeited, was a long-term capital asset the existing treatment of forfeited amount had an escalating effect as it reduced the benefit of cost of inflation indexes. With the proposed amendment the indexed cost of acquisition will remain same and the advance money forfeited shall be taxable as residual income.
Proposal to raise limit of deductions under Sections 24 and 80C for individuals:
- Interest on housing loan: The existing provisions of clause (b) of Section 24 provide for deduction of Rs 1,50,000 in case of acquisition or construction of self-occupied house property with borrowed capital.
The existing limit of Rs 1,50,000 was fixed way back in 2001 by the Finance Act, 2001. Since then the cost of financing has gone up due to appreciation in value of house property. Thus, it has been proposed to increase said limit of deduction from existing limit of Rs 1,50,000 to Rs 2,00,000.
- Deductions under Section 80C/80CCD/80CCE: Under the existing provisions an individual or an HUF is allowed a deduction of upto Rs 1,00,000 with respect to sums deposited in certain specified instruments. The said deduction includes life insurance premium, contribution to PF, etc. Thus, in order to encourage household saving, it has been proposed to increase the said limit from Rs 1,00,000 to Rs 1,50,000. In view of same, consequential amendments are proposed to Sections 80CCD and 80CCE.
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