BIRDS EYE VIEW - PERSONAL TAX - BUDGET 2015

[CS Swati Dodhi]

PERSONAL TAX - BUDGET 2015

• Sukanya Samriddhi Account Scheme - Tax benefits under section 80C for the girl child

A special small savings instrument for the welfare of the girl child has been introduced under the Sukanya Samriddhi Account Rules, 2014. The following tax benefits have been envisaged in the Sukanya Samriddhi Account scheme:

• The investments made in the Scheme will be eligible for deduction under section 80C of the Act.
• The interest accruing on deposits in such account will be exempt from income tax.
• The withdrawal from the said scheme in accordance with the rules of the said scheme will be exempt from tax.

Amendments will take effect from the assessment year 2015-16.

• Amendment in section 80D - deduction in respect of health insurance premia

The deduction allowed under Section 80D to individuals and HUF in respect of premium paid for health insurance is proposed to raise the limit of deduction from ₹ 15,000 to ₹ 25,000. It is further proposed to raise the limit of deduction for senior citizens from ₹ 20,000 to ₹ 30,000.

Also proposed to provide that any payment made on account of medical expenditure in respect of a very senior citizen, if no payment has been made to keep in force an insurance on the health of such person, as does not exceed INR 30,000 shall be allowed as deduction under section 80D.

The aggregate deduction available to any individual in respect of health insurance premia and the medical expenditure incurred would however be limited to ₹ 30,000. Also aggregate deduction for health insurance premia and medical expenditure incurred in respect of parents would be limited to ₹ 30,000.

These amendments will take effect from April 1, 2016.

• Limit of deduction under section 80DDB raised

Presently, an assessee, resident in India is allowed a deduction of a sum not exceeding ₹ 40,000, being the amount actually paid, for the medical treatment of certain chronic and protracted diseases such as Cancer, full blown AIDS, Thalassemia, Haemophilia etc. This deduction is allowed up to ₹ 60,000 where the expenditure is in respect of a senior citizen i.e. a person who is of the age of sixty years or more at any time during the relevant previous year.

It is proposed to amend section 80DDB so as to provide that the assessee will be required to obtain a prescription from a specialist doctor for the purpose of availing this deduction. Further, it is also proposed to amend section 80DDB to provide for a higher limit of deduction of upto ₹ 80,000, for the expenditure incurred in respect of the medical treatment of a “very senior citizen”. A “very senior citizen” is proposed to be defined as an individual resident in India who is of the age of eighty years or more at any time during the relevant previous year.

These amendments will take effect from April 1, 2016.

• Limit of deduction under section 80DD and 80U for persons with disability and severe disability raised

It is proposed to amend section 80DD and section 80U so as to raise the limit of deduction in respect of a person with disability from ₹ 50,000 to ₹ 75,000. It is further proposed to amend the section so as to raise the limit of deduction in respect of a person with severe disability from ₹ 100,000 to ₹ 125,000.

These amendments will take effect from April 1, 2016.

• Limit of deduction under 80CCC raised

Presently an individual is allowed a deduction under section 80CCC upto ₹ 100,000 in the computation of his total income, of an amount paid or deposited by him to effect or keep in force a contract for any annuity plan of Life Insurance Corporation of India or any other insurer for receiving pension from a fund set up under a pension scheme. It is proposed to raise the limit of deduction under section 80CCC from ₹ 100,000 to ₹ 150,000 within the overall limit provided in section 80CCE.

This amendment will take effect from April 1, 2016.

• Additional deduction under section 80CCD

Section 80CCD provides that the amount of deduction shall not exceed ₹ 100,000. Till date, under section 80CCD, only the National Pension System (NPS) has been notified by the Ministry of Finance. It is proposed to omit the aforementioned limit. In addition to the enhancement of the limit, it is further proposed to provide for an additional deduction in respect of any amount paid, of upto ₹ 50,000 for contributions made by any individual assessees under the NPS.

These amendments will take effect from April 1, 2016.

• Amend the provisions of section 197A - Enabling of filing of Form 15G/15H for payment made under life insurance policy

Section 194DA (effective from October 1, 2014) provides for deduction of tax at source at the rate of 2% from payments made under life insurance policy, which are chargeable to tax. It has been further provided that no deduction shall be made if the aggregate amount of payment during a financial year is less than ₹ 100,000.

It is proposed to amend the provisions of section 197A for making the recipients of payments referred to in section 194DA also eligible for filing self-declaration in Form 15G/15H for non-deduction of tax at source in accordance with the provisions of section 197A.

This amendment will take effect from June 1, 2015.

• Amend the provisions of section 203A - Relaxing the requirement of obtaining TAN for certain deductors

At present for reporting of tax deducted from payment over a specified threshold made for acquisition of immovable property (other than rural agricultural land) from a resident transferor under section 194-IA of the Act , the deductor is not required to obtain and quote TAN and he is allowed to report the tax deducted by quoting his Permanent Account Number (PAN).

It is proposed to amend the provisions of section 203A of the Act so as to provide that the requirement of obtaining and quoting of TAN under section 203A of the Act shall not apply to the notified deductors or collectors.

This amendment will take effect from June 1, 2015.

• National Fund for Control of Drug Abuse - 100% deduction allowed

Under the existing provisions of section 80G, an assessee is allowed a deduction from his total income in respect of donations made by him to certain funds and charitable institutions. The deduction is allowed at the rate of hundred percent of the amount of donations made to certain funds and institutions formed for a social purpose of national importance, like the Prime Ministers’ National Relief Fund, National Foundation for Communal Harmony etc.

The National Fund for Control of Drug Abuse is a fund created by the Government of India in the year 1989, under the Narcotic Drugs and Psychotropic Substances Act, 1985. Since National Fund for Control of Drug Abuse is also a Fund of national importance, it is proposed amend section 80G so as to provide hundred percent deduction in respect of donations made to the said National Fund for Control of Drug Abuse.

These amendments will take effect from April 1, 2016.