There is some respite for salaried class as Finance Minister Arun Jaitley on Thursday raised the I-T exemption limit by Rs 50,000 to Rs 2.5 lakh for citizens up to 60 years of age and to Rs 3 lakh for senior citizens.
The investment limit for tax savings has been hiked by Rs 50,000, enabling individuals to save up to Rs 40,000.
“I do not propose to make any change in the tax rate. However, with a view to provide relief to small and marginal taxpayers and senior citizens, I propose to increase personal income tax exemption limit by Rs 50,000 that is, from Rs 2 lakh to Rs 2.5 lakh in the case of individual taxpayers who are below the age of 60 years,” he said while presenting the Budget in Parliament.
Simultaneously, Jaitley raised the limit for small investments that are exempt from income tax, from existing Rs 1 lakh to Rs 1.5 lakh.
This relief is provided for investment made in schemes listed under 80C of Income Tax Act, like Public Provident Fund, life insurance, fixed deposits and Provident Fund.
For home loan borrowers, the Budget raised the tax benefit on interest payment of housing loans to Rs 2 lakh from Rs 1.5 lakh at present on self-occupied properties.
The hike in exemption limit and increase in saving ceiling will lead a maximum tax saving of Rs 39,655 where surcharge is applicable.
For people with net annual income of Rs 3 lakh, the relief provided will result in saving of Rs 5,150 in taxes. For individual with Rs 5 lakh net income, the tax benefit will come to Rs 10,300 after considering tax deduction under 80C.
For persons with income of Rs 10 lakh, the savings in taxes would Rs 15,450, according to calculations by KPMG.