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BW Businessworld

What's In It For you?

Measure Monetising Gold The government has introduced a gold monetisation scheme that will allow investors in gold deposit schemes and gold loan schemes to earn interest. The government is also trying to structure a sovereign gold bond that could act as an alternative to physical gold

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Measure
Monetising Gold
The government has introduced a gold monetisation scheme that will allow investors in gold deposit schemes and gold loan schemes to earn interest. The government is also trying to structure a sovereign gold bond that could act as an alternative to physical gold

Impact
People with idle gold/jewellery will now be able to earn interest on their holdings. While the modalities of this scheme are not clear, investment managers expect the government to pay out a fixed coupon on physical gold kept with the government

Measure
Transport Allowance
Transportation allowance exemption raised from Rs 800 to Rs 1,600 a month

Impact
Total annual benefit will go up from Rs 9,600 to Rs 19,200. This sum is tax-exempt as it is considered an out-of-pocket expenditure

Measure
Declare Overseas Assets
Concealment of income and assets and evasion of tax in relation to foreign assets will be prosecutable with punishment of rigorous imprisonment up to 10 years. Beneficial owner or beneficiary of foreign assets will be mandatorily required to file returns, even if there is no taxable income

Impact
Indians with assets in foreign countries will have to declare the nature of assets (and gains from it) every time they file tax returns in India. Non-filing of returns or filing of returns with inadequate disclosure of foreign assets will be liable for prosecution

Measure
Donations To Swach Bharat/ Ganga clean-up
Donations made to Swachch Bharat Kosh (by both resident and non-resident Indians) and Clean Ganga Fund (by residents) shall be eligible for 100 per cent deduction under Section 80G of the Income Tax Act

Impact
Donations to Swachchh Bharat Kosh and Clean Ganga Fund can be deducted 100 per cent from taxable income. This route could get popular among people who are conscious of the need to preserve the environment

Measure
New Pension Scheme
The limit on deduction on account of contribution to New Pension Scheme (NPS) (under Section 80CCD) has been increased from Rs 1 lakh to Rs 1.5 lakh. Also, formal sector workers have been given the option to choose between Employee Provident Fund and NPS

Impact
The move will popularise NPS. NPS fund managers charge just about 0.25 per cent of assets managed as asset management fees

Measure
Wealth Tax Out, Additional Surcharge In
The government has decided to abolish wealth tax and replace it with an additional surcharge of 2 per cent on the super rich with a taxable income of over Rs 1 crore

Impact
Taxpayers with taxable income exceeding Rs 1 crore will have to shell out more due to increase in surcharge from 10 to 12 per cent. Scrapping of wealth tax will mean a marginally higher burden on the rich. This move is intended to curb black money

Measure
Health Insurance Choice
Employees can choose between Employees State Insurance health cover or a health insurance scheme recognised by IRDA

Impact
This can bring down the cost of private health insurance over a longer term. The move could also bring down the incidence of ‘under-insurance’. “Fungibility between ESIC and health insurance is a great idea,” says Sumit Shukla of HDFC Pension

Measure
Deducation Of Health Insurance Premium
Tax deduction (under Section 80D) for health premiums paid  is raised from Rs 15,000 to Rs 25,000 and from Rs 20,000 to Rs 30,000 in the case of senior citizens

Impact

This will encourage people to take / increase health insurance cover. It may also increase the penetration of health insurance products in the country

Measure
Infrastructure Bonds
The government intends to permit tax-free infrastructure bonds for projects in the rail, road and irrigation sectors

Impact
Infrastructure bonds are good for long-term investment as interest earned is tax free. Coupon rates on infra bonds range between 8-9 per cent vis-à-vis pre-tax yields of 12-12.5 per cent among rated securities
 
Incentive To Save
A reading of the budget fineprint reveals that taxpayers do not have to pay tax on an aggregate income up to Rs 6,94,200. Here’s how...
  • You can claim an exemption of Rs 50,000 under Section 80CCD for contributions to the National Pension Scheme
  • A deduction of Rs 25,000 under Section 80D (mediclaim or health insurance premiums)
  • An increase in transportation allowance to Rs 19,200 per annum
  • You can invest Rs 1,50,000 and enjoy a tax waiver under Section 80C
  • You can also claim a deduction of up to Rs 2,00,000 on account of interest on a housing loan for a self-occupied property
  • Apart from these is your basic exemption limit — Rs 2.5 lakh — which has not been altered in this Budget


(This story was published in BW | Businessworld Issue Dated 23-03-2015)