In a relief to tax payers, Finance Minister Arun Jaitley announced a number of changes to the Income Tax Act.
The FM has raised the exemption limit on income tax from Rs. 2 lakh to Rs. 2.5 lakh.
For senior citizens, the exemption on income has been raised to Rs. 3 lakh per annum.
Mr Jaitley has also hiked the exemption limit on long-term financial savings, currently capped at Rs. 1 lakh, by Rs. 50,000.
Savings instruments such as housing loan repayment (principal), five-year and above tenure fixed deposits, provident funds (PFs) and life insurance policy premiums are some investment vehicles that qualify for tax exemption under Section 80C of the Income Tax Act.
The Finance Minister has also hiked the tax-free cap on home loan interest from Rs. 1.5 to Rs. 2 lakh.
However, income tax rates and slabs have not been changed.
Jaitley: Cannot spend beyond our means, Stresses Fiscal Prudence
Finance Minister Arun Jaitley in his first Union Budget in Parliament stated that the Narendra Modi government “looks forward to lower levels of inflation,” stressing on fiscal prudence and stating, “we cannot spend beyond our means.”
The Budget, which Mr Jaitley said would be a “broad policy indicator of the direction we intend to take,” is being seen as the first major test of the Narendra Modi government’s reform credentials.
Mr Jaitley presented the Modi’s government first Union Budget 2014 in Parliament today. Here are the highlights:
• Slowdown in India broadly reflects the trend in many economies. Fortunately, there are green shoots of recovery seen in the global economy
• People have decided for a change
• Those below poverty lines anxious to free themselves
• Look forward to lower levels of inflation
• Country in no mood to suffer unemployment, lack of infrastructure
• Broad policy indicator of the direction we want to take
• Poor who suffer the most
• We have to ensure anti-poverty programmes are well targeted
• Mandate of sab ka saath, sab ka vikaas will be followed
• Will leave no stone unturned in creating a vibrant India
• Need to revive growth in manufacturing and infrastructure sector • Can’t spend beyond our means, need fiscal prudence
• Conscious choice has to be made by all of us…should we allow our future to suffer because if our indecisiveness
• Need to revive growth in manufacturing and infrastructure
• The task is simple if we accept we cannot spend beyond our means
• We need to introduce fiscal prudence
• We have large subsidy burden
• Target of 4.1% fiscal deficit is daunting
• I have accepted this target as challenge
• Tax-to-GDP ratio must be raised
• Will streamline taxation and avoid harassment. This government will not bring any restrospective amendments
• Banking Sector needs to be strengthened
• There is urgent need to generate more resources
• We need to revive growth particularly in manufacturing sector and infrastructure • Anti-poverty programmes will be targeted well.
• We wish to achieve 7 to 8 per cent growth in next 3-4 years
• Will leave no stone unturned to create a vibrant India
• Will usher in policy regime that will usher in higher growth, low inflation
• Slow decision making has resulted in loss of opportunity
• Pradhan Mantri Krishi Sichai Yojana -1000 crores set aside
• Swach Bharat Abhiyaan – sanitation is of prime importance
• Van Bandhu Kalyan Yojana launched with initial allocation of 100 crores for welfare of tribals
• Rs. 500 crore for Deen Dayal Upadhyay rural electrification programme.
• Sardar Patel statue work will be completed in Gujarat
• Outlay of Rs. 50 crores for a pilot scheme on road safety
• Another 150 crores to be spent by MHA on safety on women in larger cities
• ‘Beti Bachao, Beti Padhao Yojana’ – 100 crores