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Budget Benefits to Middle Class & Tax measures to promote Swatch Bharat Initiatives

Deepak Aggarwal
2015-16 Budget: Tax Benefits for Middle-Class, Health Deductions, Pension Fund Incentives, and Excise Duty Adjustments The 2015-16 budget introduced several tax benefits for middle-class taxpayers, including increased deductions for health insurance premiums and medical expenses, especially for senior citizens and differently-abled individuals. The budget also enhanced deductions for investments in pension funds and the Sukanya Samriddhi Scheme. To support the Swatch Bharat initiative, a 2% cess on certain services and increased Clean Energy Cess on coal were proposed. Excise duties on non-industrial polymer bags and tobacco products were raised, while duties on electric vehicle parts were extended. Additionally, the excise duty on ambulance chassis was reduced to promote public health. (AI Summary)

Benefits to Middle Class Tax Payers in the Budget 2015-16

  • Deduction for Health insurance premium increased from ₹ 15,000 to ₹ 25,000
  • Deduction for Health Insurance premium in case of Senior citizen increased from ₹ 20,000 to ₹ 30,000.
  • For senior citizen above the age of 80 years, not eligible to take health insurance, deduction is allowed for ₹ 30,000 toward medical expenditure
  • Deduction limit of ₹ 60,000 on expenditure on account of specified diseases is enhanced to ₹ 80,000 in the case of senior citizens.
  • Additional deduction of ₹ 25,000 is allowed for differently-abled persons, increasing the limit from ₹ 50,000 to ₹ 75,000.
  • It is also proposed to increase the limit of deduction from ₹ 1 lakh to ₹ 1.25 lakh in case of severe disability.
  • Investment in Sukanya Samriddhi Scheme will be eligible for deduction under section 80C of the income-tax. All income will be tax free.
  • Limit on deduction on account of contribution to a pension fund and the new pension scheme is proposed to be increased from ₹ 1 lakh to ₹ 1.5 lakh.
  • Additional deduction of ₹ 50,000 will be allowed for contribution to the new pension scheme u/s 80 CCD.

Tax Measures Announced to Promote Swatch Bharat Initiatives and Public Health in the Budget 2015-16

  • Swatch Bharat Cess on all or certain taxable services at a rate of 2% from a date to be notified
  • Scheduled rate of Clean Energy Cess levied on coal lignite and peat is being increased form ₹ 100 per tonne to ₹ 300 per tonne
  • The effective rate of Clean Energy Cess is being increased from ₹ 100 per tonne to ₹ 200 per tonne
  • Excise duty on sacks and bags of polymers of ethylene other than for industrial use is being increased from 12% to 15%.
  • Concessional customs and excise duty rates on specified parts of Electrically Operated Vehicles and Hybrid Vehicles, presently available up to 31.03.2015, is being extended up to 31.03.2016.
  • To promote public health, Excise duty on cigarettes is being increased by 25% for cigarettes of length not exceeding 65 mm and by 15% for cigarettes of other lengths
  • Similar increases are proposed on cigars, cheroots and cigarillos
  • Maximum speed of packing machine is being specified as a factor relevant to production for determining excise duty payable under the Compounded Levy Scheme presently applicable to pan masala, gutkha and chewing tobacco.
  • Excise duty on chassis for ambulances is being reduced from 24% to 12.5%.
Budget - Tax Proposals
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