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Finance Act. 2014 ( Highlights)

 
  • Tax rates kept un-changed.

  • Basic l-T exemption limit raised from Rs. 2,00,000 to 2,50,000 in case of Individuals beow 60 years of age (for both Male & Female), HUF’s & AOP.

  • For all Senior Citizens (for Men/Women of age 60 and below 80): Exemption limit raised from Rs. 2,50,000 to 3,00,000

  • For Very Senior Citizens (for Men/Women of age 80 and above): Exemption limit retained at Rs. 5 lakh.

  • Surcharge retained @ 10% if total income exceeds 1 crore,

Income-Tax Rates applicable for Financial Year 2014-2015

Annual Net Income from all sources
(After all permissible deductions)

Income-tax rates (in Rs.)

upto 2,50,000

NIL

2,50,001- 5,00,000
[Rs. 2000/- tax credit allowed only to tax payers in this bracket Sec.87A)]

(5,00,000 - 2,50,000=2,50,000 x10%) = 25,000
Less : (-) 2000 + 3% education cess Rs. 690 = 23,690

5,00,000 to 10,00,000

25,000+ 20% on the amount exceeding 5,00,000
[10,00,000 - 5,00,000 = 5,00,000 X 20% = 1,00,0001]
= 1,25,000 + 3% education cess Rs. 3,750 = 1,28,750   

10,00,001 & above

1,25,000 + 30% on the amount exceeding 10,00,000
+ 3% education cess on net income tax payable

For Senior Citizens :

upto 3,00,000

NIL

3,00,001- 5,00,000 :   

10% of the amount exceeding 3,00,000
(5,00,000 -3,00,000 =2,00,000 x 10%) = 20,000
Iess(-) 2000 + 3% education cess Rs. 540 = 18,540

5,00,001 - 10,00,000

20,000+ 20% on the amount exceeding 5,00,000
[10,00,000 - 5,00,000 5,00,000 X 20% = 1,00,000]
1,20,000 + 3% education cess Rs. 3,600 = 1,23,600

10,00,001 & above

1,20,000 + 30% on the amount exceeding 10,00,000
+ 3% education cess on net income tax payable

 

For Very Senior Citizens :

upto5,00,000

NIL

5,00,001 - 10,00,000

20% on the amount exceeding 5,00,000 [10,00,000 - 5,00,000 = 5,00,000 X 20% =  1,00,000 ]
1,00,000 + 3% education cess Rs.3,000 = 1,03,000

10,00,001 & above

1,00,000 + 30% on the amount exceeding 10,00,000
+ 3% education cess on net income tax payable

 

  • Tax rebate in the form of Rs. 2000 tax credit has been given to individuals with income between Rs. 2.5 lakh to 5 lakh. For the mentioned tax bracket, the threshold exemption limit has been raised from Rs. 2,50,000 to Rs. 2,70,000.

  • No respite for those earning more than 1 crore as the ‘super-rich’ surcharge of 10% stays

  • The limit for deduction of interest paid on housing loan in the case of self-occupied property has been hiked from Rs.1.5 lakh to Rs. 2 lakh

  • Deductions available u/s 80C increased from Rs.1 Iakh to Rs.1.5 Iakh

  • Investment ceiling in Public Provident Fund raised from Rs.1 lakh to Rs. 1.5 lakh.

  • Capital gain tax rate on debt funds raised from 10% to 20%

  • Tenure to claim long term tax gains raised from 12 months to 36 months on unlisted shares and other equity oriented funds

  • Exemption from tax on long term capital gains on sale of residential property or any other asset is on re-investment in only one residential house situated in India.

  • Maximum tax exemption on long term capital gains for total reinvestment in certain bonds is capped at Rs. 50 lakh. This clarifies that the tax exemption will be limited to Rs. 50 lakh even where re-investment in bonds is split between two different financial years.

  • For those who travel abroad, an additional incentive is allowed in the form of a higher baggage allowance which goes up from Rs. 35,000 to Rs. 45,000.

  • TDS of 2% to be collected for some Life Insurance Policies on Survival Benefits on policy maturing after October 1st, 2014, for both unit- linked insurance plans and traditional plans.

  • Varishtha Pension Bima Yojana (VPBY), a pension scheme for senior citizens introduced for a limited period from August 16th, 2014 to August 14fh, 2015 for the benefit of citizens aged 60 years and above.

  • Members of Employment Pension Scheme-95 (EPS-95), now onwards, will get a minimum monthly pension of Rs. 1,000.

  • A single Common Demat account for all financial products. Uniform KYC norms to be introduced and inter-usability of KYC records will be across financial sectors

  • FDI upto 49% in insurance

  • Dividend distribution tax has been raised

  • All private sector Employees who are part of the NPS scheme, irrespective of the date of joining the service will get tax benefit

  • Presumptive income amount increased to Rs. 7500 for Business of Plying, Hiring or Leasing Goods Carriages

Under existing provisions of Income Tax Act ( Sec. 8OCCD), if an individual, employed by the central government or any other employer on or after January 1, 2004, has made payments to a notified pension scheme, a tax deduction of 10% of his/ her salary is allowed. For private sector employees, the date of joining the service is not relevant for joining the National Pension Schems (NPS). So, it provides the condition of the date of joining the service on or after January 2004, is not applicable to them for tax deductions. All private sector employees part of the NPS scheme irrespective of the date of joining the service will get tax benefits.

 
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