Finance Minister Arun Jaitley concluded his budget by stating a mantra inspired from Upanishad, which meant everyone to be happy. In this article we will try to understand and decode the budget impact for the common man and the implication of the tax increase/ decrease on the common man and also contemplating how the FM managed to make the mango people calm and happy.
In the budget 2015, the rates for personal tax were not tinkered. This means year 2015-16 will see the same income slab as was in 2014-15. At the same time, some exemptions and deductions were introduced during the budget speech. Here we decode the 10 interesting things that happened during the budget 2015-16:
1. Sukanya Samriddhi
Various government account schemes have deductions. For instance, if you contribute anything for the Sukanya Samriddhi scheme, you are entitled for deductions. Any interest on withdrawal and deposit from this scheme will be tax free. This new scheme is a clean indication of the focus of the current government on girl child as well as commitment of the government towards empowerment and up-liftment of women across our society.
2. Medical Insurance/Health Insurance
Health insurance contributions have been increased to 25,000 rupees from the current 15,000 rupees, for HUF. However, individual amendments under this scheme are unclear and also the effect of the increase is a bit ambiguous. Similarly, insurance premium for senior individuals have been increased to 30,000 rupees from the current 20,000 rupees. This is beneficial for senior individuals having premium health insurance or medical insurance accounts. To sum up, the overall deductions have been 55,000 rupees, as opposed to the 35,000 rupees sum deducted during the last fiscal budget. While the common man was expecting much more than what they received during the current fiscal budget, never the less, the current act will subsidize the medical costs that have sky rocketed over the past few years.
3. Medical Expenditure
For senior citizens who are more than 80 years of age, deductions have been introduced for various medical treatments, for certain specific diseases. This means that hospitals and medical practitioners will be able to purchase this equipment at lesser costs and in turn, the overall cost of treatment is going to subsidize. You just need to acquire a prescription certified by the specialist doctor so that you are able to claim the deduction without any hassle. This has been a welcoming approach as well as a fresh change for the medical equipment sector as the high-cost of the equipment have been barring various clinics and small hospitals to introduce departments or treatment opportunity for those specific diseases.
4. Medical treatment expenditure and exemptions for disabled individuals
At present, any Indian citizen suffering from medical disability is provided an exemption of Rs. 50,000. Similarly, for individuals with severe disability a deduction of 1 Lakh is at present. However, as per the new budget proposed, for people with disability, the deduction has become 75,000 rupees and for people with severe disability, the deduction limit has been improved to rupees 1, 25,000.
5. Pension Scheme
As per the current Pension Scheme, an individual can deduct up to Rupees 1 Lakh from his/her total income. This amount has been augmented to Rupees 1, 50,000 under the new financial budget 2015.
6. Wealth Tax Abolished
Tax disparity between the poor and the rich has always been a burning issue for the Indian economy. While no such big measures were taken to resolve this issue and induce equality, the government announced abolishment of the wealth tax during this financial budget. With the objective of portraying a growing as well as stable tax administration, income tax tariffs were kept unchanged. Also, a new proposal was given to abolish the present wealth tax. Instead, it was proposed that the super-rich will have to provide additional 2 percent surcharge. This additional surcharge will be implemented for all individuals and corporate entities bearing income higher than 1 Crore. It has been also proposed that all assets of the wealthy are to be properly disclosed, failing which stringent actions can be taken by the taxation department.
7. Transportation exemption
Transportation allowance exclusion has been augmented from the current 800 rupees monthly to 1600 monthly. This will help individuals in meeting the sky-rocketing expenditure incurred during travel, daily commute and other transport usages. During the budget, it was also announced that any individual or entity contributing to the Clean-Ganga Fund shall be eligible for income tax deductions. This measure is not only useful for attracting more donations for cleaning Ganga, but will also be helpful in saving crucial tax money.
8. Measures for curbing black money
Apart from the above measures on taxation, the government also announced a slew of measures to bring back black money from foreign accounts as well as control the black money market currently prevailing in the nation. FATCA, a compliance act currently practised by the US has been proposed to be implemented in India too. The objective of the act is to prevent any camouflage of the assets and income of entities and evading of tax through illegal measures. The act will also held individuals or entities guilty of confiscating unaccounted foreign assets with the objective of evading taxation.
9. Corporate tax
Another bunch of entities that were smiling after the end of the budget session 2015-17 were corporates. A big amendment for the corporate sector came when it was announced that the corporate tax shall be exempted to 25 %. This will occur in a time period of four years.
10. Real estate and Import tax
For enhancing the overall trust and sentiment for real estate and enhancing capital gains, the government announced rationalization of the tax regime. From 2016, April onwards, this initiative is expected to launch. Also, during the financial budget speech, it was announced that for 22 items, custom duty will be condensed. Thus, there is some relief for consumers in this economy of ever going commodity prices.