After the budget speech of Finance Minister, Media is trying to highlight the magic tax saving figure of Rs. 4,44,200 available to the tax payers. It seems like a paid advertisement, as the government offered nothing to the common man through its budget. Instead of giving any relief, service tax rate is increased, which will result in increase in prices of many consumables and services like mobile phone, Internet etc. Further to give bonus to the Aam Aadmi, increase in Petrol and Diesel prices are also declared.
Those who highlight the magic tax saving figure of Rs. 4,44,200 might not have tried to analyse whether this tax saving option is practically useful to the normal tax payers or not.
This figure is the
sum of the following tax saving options.
1. Rs. 1,50,000/- for Investment under section 80-C
2. Rs. 50,000/- as contribution for NPS under 80CCD
3. Rs. 2,00,000/- allowed as deduction against interest paid for self-occupied house property. (Union Budget Joke of the year)
4. Rs. 25,000/- as medical insurance under Section 80D
5. Rs. 19,200/- per year against transport allowance
Now we have reached the magic figure and saved tax against Rs. 4,44,200/- Income.
1. Rs. 1,50,000/-
investment under Section 80-C
My experience in the taxation field shows that, for most of the tax payers, it is very difficult to save Rs. 1,00,000/- under 80-C. More than 50% of the employees do not have even minimum balance in their bank accounts. So how can they save Rs. 1,50,000/- under 80-C. Since this figure is as per the last budget there is nothing to explain more.
2. Rs. 50,000/- as contribution to NPS under 80CCD
This deduction is available against contribution to notified pension schemes. Conditions are:
Maximum amount allowed under this Section is 10% of salary +Dearness allowance for salaried employees
In case of non salaried employees 10% of gross total income
This option is also beyond imagination for ordinary employees, unless they do not have a fat salary package. This option may be useful for employees of few MNC and Indian Companies, but not useful for major portion of tax payers.
3. Rs. 2,00,000/- allowed as deduction for interest paid on self occupied house property.
This is the big joke in Indian budget 2015. How many employees has the capacity to pay interest upto Rs. 200,000/- for a self occupied property?. If the interest amount is upto Rs. 2 lacs, the loan amount will be in Crores and the monthly installment amount will be in lacs. This option is not useful for ordinary employees and only beneficial for the rich.
4. Rs. 25,000/- against medical Insurance Section 80D
In my practical experience most of the tax payers are paying Medical insurance premium below 15,000/- as this is non recoverable yearly expense. This option is useful only for high income earning people and not affordable to an ordinary employee. Instead of offering all these sops the government should think about providing social security to the citizens. After all our finance ministers are most intelligent in the world in imposing new taxes.
5. Rs. 19,200/- per against Transport Allowance
Existing provision for deduction against transport allowance is Rs. 9600/- per year. Now this amount is increased to Rs. 19,200/- per year. This is the only option useful for ordinary tax payers for tax saving as per the Union Budget 2015. But the tax payer will be compelled to spend this amount automatically to meet increased transportation expenses, as the government is keen to increase petrol and diesel prices according to the increase in crude oil prices, but not bothered to decrease prices when crude oil prices come down.
In nutshell there is nothing to celebrate about this magic figure of Rs. 4,44,200/-. Media should do their work politely, instead of advertising for the government.
Baba ji perk is the
exemption against income from yoga training defined under section 2(5) of Income
Tax Act. Definitely this is an additional perk to Baba ji after getting Z+ level
security at tax payers cost.
Another joke is the government plan for construction of only 50000 toilets. When they have thousands of Crores of money for construction of statues, why this figure is only 50000 Nos?.
Wealth tax abolition is also a good decision, because many of the politicians are with multiple Crores of wealth and they deserve it.
Dear ordinary tax payers, chill, we deserve it, because we believe in preachers.