BUDGET 2015-16…Disappointment for the salaried middle class individuals…
In the May 2014 General Elections, Bharathiya Janatha Party under the leadership of Shri Narendra Modi came to power after a thumping victory and formed government at the centre. The Prime Minister assured and vowed to bring India in to a major power in the world and for achieving this; the government has taken some adequate measures to bring economic reforms and to build a solid infrastructure to the economy.
The new government’s full fledged General Budget for the year 2015-16 was presented in Parliament on February 28, 2015 by the Finance Minister Shri Arun Jaitley. He said that the credibility of India’s economy has been re-established in the last nine months. The last nine months witnessed India’s economy growing to new heights and it is the fastest growing economy in the world and expecting a real GDP growth of around 7.4% growth this year. The stock market also posted the world’s second best performance in the year 2014.
But as far as salaried middle class individuals are concerned it was a disappointment for them. The foremost expectation of every taxpayer is increase in the tax exemption limit. Neither an increase in the minimum taxable limit nor reduction in personal tax rates was announced in the Budget. It offered marginal benefits by increasing exemption limits for premium payments on health insurance and additional exemption for contribution towards the New Pension Scheme (NPS).
For an individual tax payer, the increase in the health insurance premium under Section 80D to Rs.25,000 from Rs.15,000 and increase in transport allowance to Rs.19,200 a year from Rs.9,600 a year. Also there is an additional exemption of Rs. 50,000 under Section 80CCD towards contribution to the NPS.
There was an expectation that the current minimum taxable limit would be raised from Rs.2.5 lakh, in order to leave more money in the hands of the middle class and boost spending as seen in Financial Express before the budget presentation. The tax deduction under Section 80C for individuals, which provides deduction in respect of investment in savings such as General Provident Fund, Equity Linked Fund, Life Insurance Premium, Housing Loan Repayment and National Saving Scheme was left unchanged at Rs. 1.5 lakh.
Example: Tax Calculation:
| Particulars |
Pre Budget |
Post Budget |
| Gross Total Income |
5,00,000 |
5,00,000 |
| Deduction under Section 80C |
1,50,000 |
1,50,000 |
| Deduction under Section 80CCD |
– |
50,000 |
| Deduction under Section 80D |
15,000 |
25,000 |
| Pre Tax Income |
3,35,000 |
2,75,000 |
| Income Tax |
8,500 |
2,500 |
| Less: Rebate under section 87A |
2,000 |
2,000 |
| Total Tax Payable after Rebate |
6,500 |
500 |
| Surcharge @12% |
0 |
0 |
| Total Tax Payable after surcharge |
6500 |
500 |
| Education Cess@3% |
195 |
15 |
| Total tax, surcharge and education cess |
6995 |
515 |
| Difference – Saving |
6,180 |