Now your clients having annual income of up to Rs.5 lakh can invest more in mutual funds.
The government has proposed to introduce full tax rebate for individuals earning up to Rs.5 lakh. Simply put, such clients will no longer required to pay taxes. However, such individuals will need to file returns to take benefits of tax rebate.
The benefits can be extended to individuals having higher annual income if they invest up to Rs.1.50 lakh under section 80 C, Rs.50000 in NPS, Rs.20,000 in health insurance and have availed home loans.
Government has estimated that nearly 3 crore individuals will benefit from these proposals.
TDS relief: There will be no TDS on interest earned up to Rs.40000 from savings bank account and post office savings schemes.
Also, there will be no TDS on rental income of up to Rs.2.40 lakh per annum.
Higher standard deduction limit: Salaried individuals can claim standard deduction of up to Rs.50,000 (up from Rs.40,000) in lieu of transport and medical reimbursement.
Higher tax free gratuity: A good news for private sector employees. The government has proposed to double the approved ceiling limit for gratuity payouts from Rs 10 lakh to Rs 20 lakh. That means, gratuity of up to Rs.20 will not be taxable anymore.
No income tax on notional rent: So far, if an individual owned a second house, even if his house is vacant, he had to pay income tax on notional rent (i.e. market value of rent of the property in a particular location). However, individuals having unoccupied second house will not be required to pay tax on such a property.
Amending Section 54EC: Individuals can invest up to Rs.2 crore in two residential properties under Section 54 EC. At present, Section 54EC of the Income Tax Act lists the cases in which capital gains tax from long- term assets (held for more than three years) need not be charged if the gains are up to Rs. 1 crore and are invested in certain specified areas.
Some interesting statistics
Nearly 34 crore individuals have Jan Dhan account.
6.85 crore individuals have filed income tax returns last fiscal
The government has collected close to Rs.12 lakh crore from direct tax