Budget Proposals for F.Y. 2015-16 related to Individual Taxation: Update in 80CCD

The Government of India has announced the Annual Union Budget FY 2015-16. Here are the budget proposals pertaining to individual taxation.

• Deduction for medi-claim insurance premium (Section 80D):

Increase in limit from Rs. 15,000 p.a. to Rs. 25,000 p.a. (Senior citizen from Rs. 20,000 p. a. to Rs. 30,000 p.a.).
Tax saving from Rs. 1,030 to Rs. 3,090 depending upon applicable tax slabs.

• Transport allowance:

Increase in exemption limit from Rs. 9,600 p.a. to Rs. 19,200 p.a.
Tax saving from Rs. 989 to Rs. 2,966 depending upon applicable tax slabs.

• Deduction of medical treatment of a person with disability and severe disability (Section 80DD & 80U):

Increase in limit from Rs. 50,000/ 1,00,000 p.a. to Rs. 75,000/ 1,25,000 p.a. respectively.
Tax saving from Rs. 2,575 to Rs. 7,725 depending upon applicable tax slabs.

• Annuity plan of LIC or Pension Scheme (Section 80CCC)*:

Increase in limit from Rs. 1,00,000 p.a. to Rs. 1,50,000 p.a.
Tax saving from Rs. 5,150 to Rs. 15,450 depending upon applicable slabs.

• Contribution to New Pension Scheme or Pension Fund (Section 80CCD)*:

Increase in limit from Rs. 1,00,000 p.a. to Rs. 1,50,000 p.a.
Tax saving from Rs. 5,150 to Rs. 15,450 depending upon applicable tax slabs.
Based on the fine print of Finance Bill, 2015 released, deduction limit u/s 80CCD is hereby clarified.


Note:  *Cumulative/ aggregate limit for deduction u/s 80C (PF, NSC, Housing loan principal repayment etc.), 80CCC and 80CCD is Rs. 1,50,000/- only.
IMPORTANT: Since the limit of Rs. 1,50,000 is generally utilised under the existing provisions, the proposed increase will most probably theoretical for most of the assesses.  

• Investment in Sukanya Samriddi Account will be eligible for deduction u/s 80C. Interest on such investment will be exempt from income tax w.e. from F.Y.’14-‘15
• Medical expenses upto Rs. 30,000/- is allowable as deduction u/s 80D in case of very senior citizen (80 years or more). However aggregate deduction in respect of premium and medical expenditure is Rs. 30,000/-.
• Amount paid on account of medical treatment of specific disease of very senior citizen is allowable as deduction u/s 80DDB upto Rs. 80,000/-.
• Donation to Swachh Bharat Kosh and Clean Ganga Fund will be eligible for 100% deduction u/s 80G from total income. w.e.f. A.Y. 2015-16)
• Wealth Tax to be abolished. However additional 2% surcharge will be levied on the income tax of a person whose income exceeds 1 Crore.
• TDS u/s 194A would be deducted on following interest (w.e.f. 1-06-2015) (applicable for all assessee).
• Interest received from co-operative society
• Interest on recurring deposit
• Interest from bank (earlier the threshold limit of Rs. 10,000 p.a. was applicable to a branch, now the limit applicable to the bank per se.)
• Employer has to collect/obtain all the proofs, evidence of the prescribed claim or deductions or exemptions or allowances or claim for set off of losses in prescribed form and manner (Section 192) (w.e.f. 01-06-2015).
• Pre mature withdrawal from Provident Fund maintained with the trust:

Currently, amounts withdrawn before 5 years of PF membership, was treated as income of respective contribution period and subjected to tax.
Proposed TDS at flat rate of 10% on pre mature withdrawal proposed unless the withdrawal is for less than Rs. 30,000 or the employee submits Form 15G/H. In the absence of PAN of the employee, TDS at Maximum Marginal Rate.

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