Union Budget 2014: Hats off to maiden Modi Budget

FM says: I have put more money and savings in the hands of people

July 10, 2014 5:18 IST | India Infoline News Service
It is “acche din” for the middle class of India as the Finance Minister, Arun Jaitley, raised the exemption limit for investments to Rs1.5 lakh from Rs 1 lakh.

The hike in the exemption limit will provide relief to salary earners who are reeling under the impact of high inflation. Currently, an individual gets an exemption of Rs1 lakh get exemptions under Section 80C, 80CC and 80CCC of the Income-Tax Act.

There is also a corresponding rise in the investment limit in the public provident fund or the PPF to Rs 1.5 lakh, from Rs 1 lakh, which is another attractive option for salary earners. PPF is an instrument that would help you save for the long term.

Senior citizens have a reason to cheer, as the basic exemption limit for them has been raised to Rs 3 lakh from Rs 2.5 lakh.

“I do not propose to make any change in the rate of surcharge for either for corporates or individual. The education cess for all tax payers shall continue at 3%,” he said. Thus, tax on income from Rs 2.5 lakh to Rs 5 lakh is retained at 10%, up to Rs 10 lakh at 20% and above Rs 10 lakh at 30%.”

Experts believe that all these steps will help the investor to take a look at his overall financial planning as he will now have more money to save along with a tax benefit attached. Individuals can now focus on planning their investments for the long term with the surplus money.

At the same time, there is a higher deduction on the interest paid on self occupied property, to Rs 2 lakh from the current Rs 1.5 lakh.

Talking about raising the income tax slabs for exemption to Rs 2.5 lakh, from the current Rs 2 lakh, Jaitley said: “I propose not to make any changes in the tax rate. However, with the view to provide relief to small and marginal and senior citizen, I propose to increase the personal income tax exemption limit by Rs 50,000 from Rs 2 lakh to Rs 2.50 lakh in case of all individual tax payers who are below the age of 60 years.”

The Government has taken all these steps to encourage household savings. The savings rate has dropped from over 38% of GDP in 2008 to 30% in 2012-13.

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