TAXATION SPECIAL ..................GUIDE TO PERSONAL TAX

TAXATION SPECIAL GUIDE TO PERSONAL TAX   Proposal: It is proposed to abolish wealth tax from financial year 2015-16. Impact: This will lower the compliance burden on taxpayers who will not have to value their taxable assets and file a separate wealth tax return. It will also ease the administrative burden on the tax department. However, the assets will now have to be disclosed in the income tax return. P: Rate of surcharge on income exceeding Rs 1 crore is to be increased to 12% from 10%. I: This will increase maximum marginal rate of tax to 34.61% from 33.99% for  the super rich. P: Exemption limit for transport allowance is to be increased to Rs 1,600 per month from Rs 800 per month. I: This will enable tax savings of up to Rs 3,322. P: Deduction for medical insurance premium paid for self and family is proposed to be increased to Rs 25,000 from Rs 15,000. Similar deduction for premium paid for parents is also proposed to be increased to Rs 25,000 from Rs 15,000. Where premium is paid for senior citizens (aged 60 years and above), the deduction is proposed to be increased from Rs 20,000 to Rs 30,000.For uninsured very senior citizens (aged 80 years and above), the deduction within the above ceiling of Rs 30,000 is available for medical expenses incurred. I: If all of the above are availed of, it will enable tax savings of up to Rs 6,922. P: Deduction for contributions to the New Pension Scheme is currently capped at Rs 1 lakh. It is proposed to remove such cap and allow deduction up to the overall ceiling of Rs 1.5 lakh (as available for deduction in various savings instruments). Further, an additional deduction of Rs 50,000 for contributions to the NPS is proposed. I: Taxpayer can claim deductions for contributions to the New Pension Scheme up to the overall ceiling of Rs 1.5 lakh. Further, an additional deduction of Rs 50,000 will enable tax savings of up to Rs 17,304. P: Cap for the deduction for contributions to prescribed annuity pension plan such as that of Life Insurance Corporation has gone up from Rs 1 lakh  to Rs 1.5 lakh. I: This will enable a taxpayer to claim deduction for contributions to such plans up to the overall ceiling of Rs 1.5 lakh. Rs 1.5 lakh.P: Deduction under Section 80C is proposed to be introduced retrospectively from FY 2014-15 for subscriptions made towards Sukanya Samriddhi Scheme, relating to education of the girl child. Further, any payment received from such a scheme is proposed to be exempt from tax. I: This will enable the parentlegal guardian of girl child to not only claim deduction on investment but also save tax on payments received from the scheme. P: Deduction under Section 80G is proposed to be introduced retrospectively from FY 2014-15 for donation made to Swachh Bharat Kosh and Clean Ganga Fund to the extent of 100% of the donation. Similar deduction is available for donations made to National Fund for Control of Drug Abuse from 2015-16. I: This will enable tax saving on the full amount of donation made to these funds. P: It is proposed to make the employer responsible for obtaining evidence of deductionsexemptionsset-off of certain losses of employees for computing  the amount of tax deductible at source. I: This will increase the administrative burden for employers. P: It is proposed to deduct tax @ 10% on premature taxable withdrawal from the provident fund where such payment exceeds Rs 30,000. Where the employee has not quoted his PAN, the deduction of tax will be required to be made at the applicable maximum marginal rate. I: This will enable tax authorities to ensure tax compliance on such premature  withdrawals from the provident fund. P: It is proposed that no person will accept from any person any loan Deposit advance, in relation to transfer of an immovable property, in cash for  Rs 20,000 or more. Also, it is proposed that no person will repay any loan deposit advance, in relation to transfer of an immovable property, in cash for Rs 20,000 or more. I: This move is intended to curb generation of black money by way of dealings in cash in immovable property transactions. POWERED BY EY TOI1MAR15