Union Budget 2015-16: No change in IT slabs; hike in mediclaim, pension exemption limits

Contrary to widespread expectations of an increase in the maximum limit of income not to be considered taxable, the finance minister Arun Jaitley has proposed no changes in personal income-tax rates for 2015-16 in his Budget speech in Lok Sabha today.

Furthermore, he has kept the limit for deductions allowed under section 80C also unchanged.

Jaitley, however, proposed to increase the limit of deduction on health insurance premium from Rs15,000 to Rs25,000 and for senior citizen this limit is increased to Rs30,000 from Rs20,000, with a view to encourage savings and to promote health care among individual tax payers.

For senior citizen above the age of 80 years, not eligible to take health insurance, the deduction is allowed for Rs.30,000 toward medical expenditure, while in the case of senior citizens, the deduction limit of Rs.60,000 on expenditure on account of specified diseases is enhanced to Rs.80,000.

Additional deduction of Rs.25,000 is allowed for differently-abled persons, increasing the limit to Rs.75,000 from Rs.50,000. It is also proposed to increase the limit of deduction to Rs.1.25 lakh from Rs.1 lakh in case of severe disability.

The finance minister also proposed to provide that investment in Sukanya Samriddhi Scheme will be eligible for deduction under section 80C of the income-tax and any payment from the scheme shall not be liable to tax.

The limit on deduction on account of contribution to a pension fund and the new pension scheme U/S 80 CCD is proposed to be increased to Rs1.5 lakh from Rs1 lakh. Also, the transport allowance exemption has been doubled to Rs1,600.

However, unlike the finance minister's claims of common man gaining Rs.444,200 in tax benefits, it comes to only Rs.269,600 as the benefits of Rs.200,000 on interest on housing loan was announced in July 2014 (Also see: Union Budget 2015-16: Tax exemptions for salary earners).