In bad news for the salaried class, finance minister Arun Jaitley kept the slabs for personal income tax unchanged, while presenting his first full budget in Parliament on Saturday.
In his last budget, Jaitley had raised the exemption limit on personal income tax by Rs 50,000 to Rs 2.50 lakh. The tax exemption limit on repayment of housing loans was also raised from Rs 1.5 lakh to Rs 2 lakh.
The finance minister said while the focus was on tax exemptions in the previous budget, this time, the emphasis is on social security including pension and health insurance. “Exemptions to individual tax payers will, however, continue since they facilitate savings which get transferred to investment and economic growth.”
Jaitley said that on several occasions, he had advocated maintaining lower taxes.
The government, however, announced a cut in corporate tax by 5% to 25% over four years starting April 2016.
“There was a lot of expectation that tax exemptions would further increase but clearly that has not happened,” Parizad Sirwalla, head, global mobility services, tax, KPMG. “We have to understand that the government has to manage a tight fiscal situation and the slabs were increased just nine months ago, so may be it was too soon to further offer exemptions.”
“All in all, the focus on social security, countering black money and Ache Din for Aam Aadmi is good,” Sirwalla added.
However, there could be some relief with the health insurance premium deduction being raised to Rs 25,000 from Rs 15,000, while the deduction for senior citizens would be Rs 30,000. The transport allowance exemption would also be hiked to Rs 1,600 per month from Rs 800 per month.
“Having raised the basic exemption limit and 80C limit etc last year, there was hardly any scope for further concession,” said Kuldip Kumar, partner and leader, personal tax, PwC India. “Raising the limit of health insurance premium, transport allowance exemption and additional deduction of Rs 50,000 for NPS will help taxpayers to save little more in taxes.”