HYDERABAD: Earning below `10 lakh per annum with a self-occupied housing loan? You can now save `35,000 per annum as opposed to `22,500 in the form of tax exemptions. While Finance Minister Arun Jaitley on Thursday left Income Tax rates unchanged much to the dismay of citizens, he did raise the tax exemption limit. For those aged below 60, the basic exemption limit has been increased to `2.5 lakh from `2 lakh, allowing you to save `5,000 per year.
Similarly, to encourage household savings, limit of Section 80C has been raised to `1.5 lakh from the current `1 lakh that will let you save `15,000 instead of `10,000. The tax benefit for interest repayment towards loans for a self-occupied house has also been increased to `2 lakh annually from `1.5 lakh, which allows debtors to save `15,000 per year. Over 2 crore taxpayers are likely to benefit from these exemptions. It, however, is not applicable to those who have let out properties.
Senior citizens too have something to cheer about, with the Finance Minister increasing the tax exemption limit from `2.5 lakh to `3 lakh. It, however, won’t benefit those whose current basic exemption limit is `5 lakh. Investment limit in Public Provident Fund (PPF) has been increased to `1.5 lakh from `1 lakh, thus making it an attraction savings option. PPF offers an interest rate of 8.7 per cent, marginally lower than bank deposits that earn interest of 9 per cent.
More Deduction under Section 80C
Before slabs are applied to calculate your taxes, you are allowed certain deductions, one of which falls under Section 80C. As per the new budget, your taxable income is deductible up to `1,50,000 irrespective of your tax slab. Investments that qualify under this section include EPF, PPF, tuition fees, housing loan, life insurance premium and fixed deposits.