The Budget 2014 was long awaited with an expectation to give greater benefits to taxpayers. With the Budget going live today the Finance Minister announced the Tax Proposals making few changes in the exemption limits and allowing small taxpayers to save some money. The Individuals in the higher tax bracket will benefit more as they usually paid more taxes and can now reduce their income so save those taxes.

Salaried Individuals find it difficult to save taxes as the major part of their salary are deducted as TDS before they even get hold of their salary.  We are discussing on 4 Big Impact of Budget 2014 on Individuals, more opportunity to save with tax exemption .

The Budget 2014 will allow them to plan their taxes better and reduce their tax liability to a greater extent. Below are enlisted the changes brought in by Budget 2014 that would bring a smile to the face of small taxpayers:-

Invest in PPF upto Rs. 1.5 Lakhs

Public Provident Fund (PPF) is a tax saving investment scheme which an Individual can open in their name. The minimum investment amount is Rs. 500 and the maximum amount was Rs. 1 Lakh until today when the Finance Minister increases the PPF limit to 1.5  Lakhs.  Individuals can now invest Rs. 50000 more in each PPF account and plan a greater saving for their future. They can also get this investment benefit in the Income Tax Act u/s 80 C. This will help an individual to save taxes upto Rs. 15000 by investing more in PPF.

No taxes for income below 2.5 Lakhs 

Individuals and HUF’s are charged to income tax on a slab basis. The tax slab for normal citizen has been amended frequently and was exempted upto Rs. 2 Lakhs for Individuals below the age of 60 years till FY 13-14. The Senior Citizens were exempted from taxes upto a limit of Rs. 2.5 Lakhs. The Budget 2014, has given a slight tax relief by increasing the limit to Rs. 2.5 Lakhs for normal individuals and Rs. 3 Lakhs for Senior Citizens. This hike was a much need benefit for small and marginal tax payers as it would allow them to save Rs. 5000 of taxes.

Invest and save more taxes under 80C upto 1.5 Lakhs

The Income Tax Act provides tax reliefs by investing in certain tax saving investments under Chapter VI-A. The section 80C has various list of investments Individuals can opt to reduce their tax burden but the limit of Rs. 1 Lakh seemed to less. The Budget 2014 amends the limit to Rs. 1.5 Lakhs giving small taxpayers more area to invest and save taxes. This would benefit the taxpayers who had already used up their limit of Rs. 1 Lakhs on 80C investments. With the increased limit an Individuals utilizing the full limit of 1.5 Lakhs in 80C can save a maximum of Rs.  15000 of taxes. This will surely benefit the Individuals in the higher tax bracket.

Claim housing loan interest benefit upto 2 Lakhs for Self Occupied Property

Housing loan has always been a cheap mode of finance for Individuals looking to invest in a House Property. The Income Tax Act provides a benefit of Rs. 1.5 Lakhs for payment of interest on housing loan against a self occupied property. The Let-out property has no such restriction but in a normal scenario a new property is brought with a view to settle down rather than letting it out on rent. The fact that Individuals pay an amount of interest greater than 1.5 Lakhs on housing loan but only being able to claim tax benefit of upto Rs. 1.5 Lakhs has been restricting them from availing higher value loan. With the Budget 2014, the Finance Minister increasing the limit to Rs. 2 Lakhs, the amendment would now help these Individuals to claim greater value to save more taxes. The increased limit would allow them to save upto Rs. 15000 of taxes if they properly plan out their investments.

To Conclude: Looking into the amendments all together, small and marginal tax payers can save huge taxes by planning out their expenses properly and availing more benefits and tax reliefs. With the changes announced by the Finance Minister in the Budget 2014, a normal individual can structure his income in a way to reduce his tax liability by Rs. 1.5 Lakhs saving huge taxes. Individuals in the higher tax slab will save more than the small taxpayers. This would benefit the taxpayers a lot if they can save money for themselves rather than paying that to the Govt. as taxes. The crux is Save more with tax exemptions – 4 Big Impact of Budget 2014 on Individuals  .