The Budget 2014 was long awaited with an expectation to give greater benefits to
taxpayers. The Finance Minister announced the Tax Proposals making few changes
in the exemption limits and allowing small taxpayers to save some money. Salaried
Individuals find it difficult to save taxes as the major part of their salary are
deducted as TDS before they even get hold of their salary. The Budget 2014 will
allow employees to plan their taxes better and reduce their tax liability to a greater
extent.
Below are enlisted the changes brought in by Budget 2014 that
would bring a smile to the face of small taxpayers:-
No change in income tax rates.
Income Tax Exemption limit increased to Rs. 2.5 Lakh from Rs. 2 lakh.
For Senior citizens exemption limit increased to Rs. 3 lakh.
Deduction u/s 80C increased to Rs. 1.5 lakh from Rs. 1 lakh
Deduction for Interest on housing loan for Self Occupied property
increased to Rs. 2 Lakh from 1.5 lakh.
Increase of Basic exemption limit:
The basic exemption limit has been increased from Rs.2 lakhs to Rs. 2.50 lakhs for
individuals except senior citizens and for senior citizens between 60 to 80 years has
been increased from Rs. 2.50 lakhs to Rs. 3 lakhs.
The revised income tax slabs are given below the table
Rates for Individuals below 60 years
Income slabs
Income tax rate
Income up to Rs. 2.50 lakhs
Nil
Rs. 2.50 to Rs. 5 lakhs
10%
Rs.5 Lakhs to Rs. 10 Lakhs
20%
Rs. 10 lakhs above
30%
Rates for Individuals below 60 years below 80 Years
Income slabs
Income tax rate
Income up to Rs. 3 lakhs
Nil
Rs. 3 to Rs. 5 lakhs
10%
Rs.5 Lakhs to Rs. 10 Lakhs
20%
Rs. 10 lakhs above
30%
Rates for Individuals 80 years & above
Income slabs
Income tax rate
Income up to Rs. 3 lakhs
Nil
Rs. 3 to Rs. 5 lakhs
Nil
Rs.5 Lakhs to Rs. 10 Lakhs
20%
Rs. 10 lakhs above
30%
Surcharge of 10% on Income tax those taxable income exceeds Rs. 1.0 crore will
apply.
Education cess will apply 3% on the Income tax & Surcharge will apply for all.
These changes in slab will give to individuals a minimum tax relief of Rs.5150
Hewitt Associates (India) Pvt Ltd
Private & Confidential
3 of 4
Increase in limit under section 80C:
Very famous section among individuals is section 80C, the section gives rebate for
various savings scheme till now Rs. 1 lakhs has been enhanced to Rs. 1.50 lakhs .
This change will give boost to habit of savings by the individuals and also give the
minimum tax relief of Rs.5150
Increase in Public provident fund:
Present investment cap of Rs. 1 Lakh under PPF scheme has been enhanced to
Rs.1.50 lakhs which will help in the cap under section 80C. This change will attract &
help to make savings under PPF by the individuals.
Increase in housing interest deduction:
One more major section which individuals claim is housing loan interest under
section 24. Existing limit of Rs.1.50 lakhs for self occupied property interest
deduction has been enhanced to Rs. 2 lakhs. This will give the marginal tax relief of
Rs.5150 for those are claiming interest for self occupied property.
To Conclude: Looking into the amendments all together, small and marginal tax
payers can save taxes by planning out their expenses properly and availing more
benefits and tax reliefs. With the changes announced by the Finance Minister in the
Budget 2014, a normal individual can structure his income in a way to reduce his tax
liability by 15,000.