What this Budget Means for Middle Class Tax Players
Union Government under NDA presented its second budget today, it did not bring big tax relief but was forward looking and more on saving benefits of middle class. Service Tax has been increased be 1.64%, it will pinch you little when going for a movie or dinner, fancy restaurant or visiting a adventure park.
By 2015-16, India will be a country of 53.3 million middle class households, translating into 267 million people falling in the category according to ‘household income’. Union Budget present today, looked at this every growing middle class and focused on their health and long term corpus building which will give tax benefits immediately.
Key highlights from the budget for middle class:
- Limit of reduction of health insurance premium from Rs 15,000 to Rs 25,000 and for senior citizen this limit is increase from Rs 20,000 to Rs 30,00
- Senior citizen above the age of 80 years, not eligible to take health insurance, deduction is allowed for Rs 30,000 toward medical expenditure. Deduction limit of Rs 60,000 on expenditure on account of specified diseases is enhanced to Rs 80,000 in the case of senior citizens.
- Investment in Sukanya Samriddhi Scheme will be eligible for deduction under section 80C of the income-tax and any payment from the scheme shall not be liable to tax.
- Limit on deduction on account of contribution to a pension fund and the new pension scheme is proposed to be increased from Rs 1 lakh to Rs 1.5 lakh.
- Additional deduction of Rs 50,000 will be allowed for contribution to the new pension scheme u/s 80 CCD increasing from Rs 1 lakh to Rs 1.5 lakh
While these are benefits upto the tune of Rs 4,44,200 (Tax Exemption), middle class will shale out more as indirect tax, Service Tax increased by 1.64%