Balawant Jain
Everyone is busy assessing performance of Narendra Modi led government on various parameters. I take this opportunity to look at various changes this government has brought about in the area of personal taxation in the first year of its office. Let us take main changes one by one.
Increase in the basic exemption Limit:
The limit of basic exemption for an ordinary individual tax payer as well as for senior citizen was increased from Rs 2 lac and Rs 2.5 lac respectively to Rs 2.5 lac and Rs 3 lac. This works out to basic exemption limit of roughly Rs. 20,000 per month. If we take into account the basic cost of living for a family staying in urban area it is more than this monthly amount of basic exemption. The government should extract any money as tax from its citizen, if anything is left after meeting the expenses for its basic needs and survival.
Increase in the limit for deduction of interest for home loan:
The tax benefit available for interest for self occupied house has been raised from Rs 1.5 lacs to Rs 2 lacs. Looking at the increase in the prices of house property during the period since 1999 when the limit of Rs. 1.50 lacs was introduced, the increase is commensurate with increase in the prices of the properties.
Increase in the deduction available for various investments
The deduction available for various items if investments, and expenses like premium towards life insurance policies, School fee, ELSS, repayment of home loans, PPF was raised from Rs 1 lac to Rs. 1.5 lacs in first budget. The limit of Rs. 1 lac was fixed in 2002. And looking at the inflation during last 12 years, the 50% increase is not even sufficient to cover the inflation. Separate deduction of Rs. 50,000/- for NPS is also very good amendment to motivate people to save for their retirement.
Increase in the deduction available for health insurance and for medical treatment;In the last budget, amount of deduction for health insurance premium has been increased from Rs. 15,000/- to Rs. 25,000/-. For senior citizen this has gone up from Rs, 20,000/- to Rs, 30,000/-. Any medical expenditure incurred by an individual above 80 years of age shall be tax deductible upto Rs. 30,000/- in case he/she does not have any health insurance. As many a senior citizens do not get and do not have the health insurance and incur huge expenses on medication this will give real relief to senior citizen
Increase in the exemption for conveyance allowance
The amount of conveyance allowance exemption has also been raised from Rs. 800/- to Rs. 1,600/- for salaried people. This will reduce the tax liability of every salaried tax payer.From above it appears that the government has given various tax benefits to individual tax payers in short time of one year. As far as it being commensurate with inflation is concerned we cannot blame this government but expect it to take corrective measure going forward.
Balwant Jain is a CA, CS and CFP. Presently working as Company Secretary of Bombay Oxygen Corporation. He can be reached at jainbalwant@gmail.com
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