- Hike in Income Tax Slabs by Rs. 50000/-: Good news for the taxpayers as FM has increased the basic exemption limit of income tax though marginally by Rs. 50000/- as against the existing limit of Rs. 2,00,000/-. For senior citizens the existing limit of Rs. 250000 has been hiked to Rs. 300000 /-.
- Increase in the Investment limit u/s 80C by Rs. 50,000: The limit under this section is also hiked by another Rs. 50000/- to make it to Rs.150000/-. Now you can invest more in Insurance, mutual funds ELSS, PPF, NSCs, and PF or can claim higher benefits on your expenses on Principal on your home loan or tuition fees for your children.
- Increase in the limit of Interest on your home loan by Rs. 50,000/-: Now get higher benefit on your existing home loan EMI payments as interest benefit u/s 24(b) has been increased by Rs. 50,000/- to take the total limit of interest benefit on a self occupied house from an existing Rs. 1,50,000/- to Rs. 2,00,000/-.
- Increase in the deposit limit of PPF: Good news for all the PPF lovers as now you can invest Rs. 1.5 lakh in PPF as against the existing deposit limit of Rs. 1,00,000/-
- A quick Snapshot of Tax benefits and your take home
Note: The above example is calculated based on the latest tax proposal and for a first tax slab of 10.3% but If your income is under 20.6% tax slab say Rs. 10 Lakhs then your net tax saving would be Rs. 25,750/- & If your income is under 30.9% tax slab say Rs 15 Lakhs then you can increase your take home by Rs. 36,050/-.
What is going down?: Branded Clothing/solar power units/, smart cards, sport equipments, Computers, TVs, Oil, Soaps, Foot-wears, LED’s below 19”, water purifiers, diamonds and LED lights.
What is going up? Cigarettes, aerated drinks, pan masala, chewing tobacco, radio taxi and imported electronic items.
Smart Tips to leverage this budget for a better financial use:
- Savings on account of hike in Interest on home loan and basic exemption limit should be utilized to invest for increased 80C limit of Rs. 50000/-.
- Invest monthly say Rs. 4000/- per month in PPF to optimize the benefit of higher deposit limit of PPF i.e. 150000 overall and get assured return.
- Take a joint home loan to optimize the benefits of higher interest on home loan and get benefits of as good as Rs. 4 lakhs deduction, in all.
- Make sure to utilize the amount of Tuition Fees paid for your kids as it comes under 80C with an increased benefit of additional Rs. 50000/-.
- If you are young or in thirties, invest the additional amount of Rs. 50000 under 80C in Mutual Funds ELSS to leverage equity market and savings both.
- If you are in fifties and looking forward for tax savings and safety of investments then go for PPF to get dual benefits, tax advantage & safety both.
- Work on your 80C Tax Planning investment looking at your overall Financial Planning.
- Invest the savings arising due to the reduced outflow on branded cloths and home appliances henceforth for better use as penny saved is penny earned.
My Views on the overall Budget:
Overall the budget has given good respite to Taxpayers in terms of more take home salary or income but still there are lot of things which needs to done with respect to the tax benefits on Medical reimbursement amount of Rs. 15000/- which was expected to be increased to at least Rs. 50000 or hike in children’s Tuition fees tax benefits. Even FM’s move of allocating Rs. 200 crore for building a statue of Sardar Patel came as a big surprise because that is as good as congress giving money to Rajiv Gandhi Institute or Mayawati building her own statutes, what’s the difference. Let’s hope to have more “Acche Din” ahead.
Thanks & Regards
CA Rishabh Parakh