Finance minister Arun Jaitley on Saturday announced a 5% reduction in corporate tax over next four years, abolished wealth tax and replaced it with an additional 2% surcharge on super-rich individuals, while increasing service tax that will result in higher cost of variety of services.
In the first full-year Budget of the NDA government that shunned populism, he proposed no changes in personal and corporate income-tax rates for 2015-16 but extended benefits to middle-class by increasing the limit of deduction on health insurance premium from Rs 15,000 to Rs 20,000.
For senior citizens, it will go up from Rs 20,000 to Rs 30,000 and for those above 80 years, not covered by health insurance, deduction of Rs 30,000 towards expenditure on medical treatment will be allowed.
Combining these incentives with others including an enhanced deduction of Rs 1.5 lakh on account of contribution to pension fund as against Rs 1 lakh now, the relief of tax deductions under various sections, including 80C and 80CCD, go up to Rs 4.42 lakh.
The transport allowance exemption has been doubled to Rs 1,600.
With the levy of 2% additional surcharge, the total surcharge on 'super-rich' individuals with an income of over Rs 1 crore, becomes 12% as against 10% now. In the case of domestic companies having income between Rs 1 crore and Rs 10 crore, it will be 7% and 12% for firms with income above Rs 10 crore.
Presenting the Budget in the Lok Sabha, Jaitley announced fresh measures to tackle blackmoney, including a comprehensive legislation that will make concealment of income and assets abroad a punishment with rigorous imprisonment of 10 years.