Budget 2014 Provides Relief To Tax Payers

The much-awaited budget 2014 under Modi government is finally out providing much relief to the people regarding their finances.

The Finance Minister Arun Jaitley raised the personal tax exemption limit from Rs.2 lakh to Rs.2.5 lakh for individuals, while the senior citizens viewed a rise in the exemption on income tax to Rs.3 lakh per annum.

The rise in the exemption made the common man happy and would benefit the salary earners coming under pressure of inflation.

Deduction under section 80CC increased from Rs.1 lakh to Rs.1.5 lakh.

With no changes in direct taxes, rate of tax for long term capital gains increased from 10 percent to 15 percent.

 Arun Jaitley also increased the exemption limit on long-term financial savings, by Rs.50,000; while keeping the tax rates and designated slabs not touched and been retained.

The government will lose Rs.22, 000 crore on account of these changes in income tax. The savings rate has come down from over 38 percent of GDP in 2008 to 30 percent in 2012-13. Additionally, the limit for the Public Provident Fund (PPF) has also been to Rs.1.5 lakh.

The financial instruments which enjoy exemption include life insurance premium, public provident fund, employee’s provident fund, National Savings Certificates, repayment of capital on home loan, equity linked saving schemes sold by mutual funds and bank FDs of five year maturity.

With happy news of the hike in exemptions, Surabhi Arora, Associate Director, Research Colliers International, quoted, “Enhancement of the exemption limit for the general category of individual taxpayers from  Rs.200,000 to Rs.250,000; Increase in the exemption limit of home loan interest payable from 1.5 Lakh to 2.0 Lakh and increase in exemption under section 80C from Rs.1.5 lakh to 2 lakh is a positive move. Increase in disposable income in the hand of common man will in turn increase the spending power and boost domestic investments. This increase will promote home ownership in turn give boost to the housing sector and other related industries like steel, cement, brick, wood, glass.”