Area of taxation

Announcement

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Tax rate

No change in tax rates

Neutral

One-by-six scheme for filing tax returns

Abolished. Now you would have to file tax returns only if you have income over the tax-exempt limit of Rs 1 lakh (Rs 1.35 lakh for women and Rs 1.85 lakh for senior citizens)

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Pension policies

Ceiling of Rs 10,000 per annum for investments in pension policies under section 80CCC removed. You can now invest up to Rs 1 lakh in pension policies. This will give a boost to your retirement planning.

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Fixed deposits

Investments in fixed deposits of scheduled banks for a term of more than 5 years is now eligible for a deduction of up to Rs 1 lakh under section 80C. So now, along with investments in Public Provident Fund, National Savings Certificates, Insurance, ELSS, you can also invest in bank fixed deposits.

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Cash transaction tax

Cash transaction tax continues on cash withdrawals of over Rs 25,000 from current accounts

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Capital gains tax saving

Section 54EC for reinvestment of sale proceeds of capital asset amended. You can now invest the sale proceeds only in bonds of National Highways Authority of India and Rural Electrification Corporation, to enjoy tax-free capital gains, as against bonds of NABARD, NHB and SIDBI allowed earlier, thus narrowing your choice. Section 54ED, which allowed you to invest sale proceeds of capital assets in listed equities now abolished.

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Service tax

Service tax increased from 10% to 12%. More services brought under purview.

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Mutual Funds

Dividends from close-ended MFs are now tax-free for the investor.

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EET

Uncertain

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Securities Transaction Tax

STT has been increased by 25%.

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Superannuation

Contribution of up to Rs 1 lakh per employee to the superannuation fund exempted from FBT

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NRIs

TDS rate on short-term capital gains on equity and equity-oriented funds has been reduced

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