When the goal is to improve the economic condition then it is quite obvious that focus will be more on increasing the income and reduction of expenses along with providing opportunities of growth and that’s what was seen in this budget 2015. Since every government has responsibility towards social sector and under privileged ones too, so this area cannot be ignored in any budget statement. Schemes like Pradhan mantra Suraksha bima Yojana, Atal pension yojana, Pradhanmantri jeevan jyoti bema yojana were announced in budget 2015 to provide a universal social security system for poor.
For the next few days you will see a series of articles and TV shows on various media platforms giving reviews on budget 2015. But I believe It doesn’t matter what anyone thinks about budget and what rating it gets, the main thing is to know how it’s going to impact your personal finances, as this is what you need to work on and can control. Your financial future depends not on the budget 2015 speech but how well you manage your money matters accepting the changes announced. As the saying goes – What lies before us and behind us are tiny matters compared to what lies within us.
There are slew of measures announced in the budget 2015 which will impact your personal finances.
- Section 80C – Sukanya Samriddhi account is the new addition in the list of products under section 80C. This product was announced in January 22 2015, under government initiative of Beti Bachao Beti Padhao. This product is to promote savings for the girl child.
In Budget 2015 this product has been given EEE status like PPF. EEE (Exempt-Exempt-Exempt) means the money you invest will come under tax saving u/s 80C, the interest you get in this will also be non-taxable and even the maturity will also not be taxed. The current rate of Interest in Sukanya product is 9.1% and it will be revised every year. (will write a detailed review on this product very soon)
- Section 80CCD(1b) – Now you can save more on tax outgo by investing up to Rs 50000 more in New pension scheme. This Rs 50000 is over and above Rs 1.50 lakh u/s 80C. Please do note that NPS is already part of Rs 1.50 lakh of total savings u/s 80C. To promote savings towards retirement government has announced this measure.
- Section 80D – Health insurance premium limit u/s 80D tax benefit has been increased from Rs 15000 to Rs 25000 in case of individual and family, Rs 20000 to Rs 30000 in case of senior citizen/parents.
There’s one new measure announced for Very senior citizen people who don’t get health insurance cover easily and thus can’t take section 80D benefit. As a welfare measure towards very senior citizen, it is proposed to provide that any payment made on account of medical expenditure up to Rs 30000 shall be allowed as deduction u/s 80D.
- Section 80DD and Section 80U – These sections are meant towards medical expenditure of handicapped dependents or self. The limits under these sections have been increased from Rs 50000 to Rs 1 lakh (for up to 80% disability) and Rs 1 lakh to Rs 1.25 lakh (for more than 80% disability).
- Section 80DDB – This section is towards medical treatment of self or dependents for specified chronic illnesses. Till now there were 2 sections of people covered in it like senior citizens and non-senior citizens. Now there’s new addition in the form of Very Senior citizens i.e. those who are above 80 years of age. The deduction limit has also been increased in their cases to Rs 80000.
Some other changes announced/ proposed in budget 2015
- Wealth tax has been abolished w.e.f FY 2016-17 and additional surcharge of 2% is levied on Super rich i.e. with taxable income more than Rs 1 crore.
- Travelling allowance limit has been increased from Rs 800 p.m. to Rs 1600 p.m.( Check all salary slip components)
- Your personal spending budget is going to take hit as service tax rate has been increased from 12.36% to 14%.
- Now you can submit form 15G/15H to life insurance company to avoid TDS deducted from the surrender or maturity proceeds.
- Amendment in section 80G results in addition of National fund for control of drug abuse, Swachh Bharat kosh and Clean ganga fund to be eligible for 100% deduction on donation.
- Tax free infra bonds will come back in FY 2015-16.
- Gold Monetization scheme was proposed. Under this gold depositors will earn interest in their metal accounts and jewelers can obtain loan in their metal accounts. ( details are awaited)
- Formal sector employees may get option to contribute to NPS instead of EPF. They will also be provided with option of going with ESI benefit or health insurance recognized by IRDA. It is also proposed that if a worker’s wages are below a certain threshold, then it would be optional for him to contribute towards EPF. But this option will not be given to the employers.
The best part which I liked in this budget 2015 was the intention of FM towards curbing of Black Money. It is because of those few people who don’t pay genuine taxes, we all have to suffer with high taxes and fake increase in prices like in real estate. Though I don’t know how effective would be the measures announced but the point is government is working towards it.
How do you plan to make use of the new changes? Do you find any other measure announced in budget 2015 that will impact your personal finance…do share.