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While the tax announcements in the Union Budget 2014 were not in line with expectations, Finance Ministry Arun Jaitley did try to offer small perks on the personal taxation front.
The Finance Minister delivered a higher tax benefit limit for investments under Section 80C, first by increasing the investment limit for Public Provident Fund (PPF), to Rs 1.50 lakh from Rs 1 lakh and then by raising the Section 80C ceiling to Rs 1.50 lakh. The expectation was that the 80C limit would be hiked to Rs 2 lakh.
While the Finance Ministry did not tinker with the slab rates, he did hike the basic exemption limit to Rs 2.50 lakh from Rs 2 lakh for those aged below 60. He increased the basic exemption limit for senior citizens (those above the age of 60 years) to Rs 3 lakh from Rs 2.50 lakh. At present, the slab rates are as follows --- zero tax for income up to Rs 2 lakh, 10% for income between Rs 2 lakh and Rs 5 lakh, 20 per cen for the Rs 5-10 lakh income bracket and 30% for those earning more than Rs 10 lakh.
Those with incomes above Rs 1 crore suffer a surcharge of 10% on the slab rate of 30%, that is, an additional tax of 3%. But no change in surcharge was announced on July 10.
There is a yet another category of income earners --- very senior citizens ---- whose basic exemption limit is Rs 5 lakh. No change was announced even for this category.
The Finance Ministry made a positive announcement for house owners. He hiked the tax benefit for interest repayment towards housing loans for a self occupied house to Rs 2 lakh annually from Rs 1.50 lakh at present. This benefit is not available to house owners who have let out their properties.
Experts say that those earning Rs 10 lakh will save Rs 5,000 due to increase in basic exemption limit, another Rs 15,000 due to hike in section 80C limit and yet another Rs 15,000 with housing loan benefit.
