Union Budget 2014: Amendments in Direct Tax

In the Union Budget 2014 presented by Finance Minister Arun Jaitley, important amendments have been made in Direct Tax. 

Basic tax exemption limit extended to Rs 2.5 lakh, and Rs 3 lakh for senior citizens (60+). No amendment in corporate or other direct taxes. Limits under section 80C increased to Rs 1.5 lakh. Section 80C was introduced by the UPA government in 2005-06 with a limit of Rs 1 lakh, which was not amended since. EMI exemption for self-occupied property raised to Rs 2 lakh from 1.5 lakh.

Companies to get 15%  investment allowance for new investments exceeding Rs 25 crore. Foreign institutional investors to get tax-breaks to attract them to move back from Mauritius. Their incomes will be treated as capital gains - which is 15 percent for short-term gains and zero tax for long-term gains.

Ghastly news for debt funds: tax-break for long-term capital gains will happen only on three-year holdings, instead of one year. Rate of tax raised from 10 percent to 20 percent for long-term gains.

New Income Tax slab for Individual resident aged below 60 years (i.e. born on or after 1st April 1954) or any NRI / HUF / AOP / BOI / AJP

	Particulars
i.	Where the total income does not exceed Rs. 2,50,000/-.	NIL
ii.	Where the total income exceeds Rs. 2,50,000/- but does not exceed Rs. 5,00,000/-.	10% of amount by which the total income exceeds Rs. 2,50,000/-. Less** : Tax Credit - 10% of taxable income upto a maximum of Rs. 2000/-.
iii.	Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-.	Rs. 25,000/- + 20% of the amount by which the total income exceeds Rs. 5,00,000/-.
iv.	Where the total income exceeds Rs. 10,00,000/-.	Rs. 125,000/- + 30% of the amount by which the total income exceeds Rs. 10,00,000/-.

New Income Tax slab for Individual resident who is of the age of 60 years or more but below the age of 80 years at any time during the previous year (i.e. born on or after 1st April 1934 but before 1st April 1954)

	Particulars
i.	Where the total income does not exceed Rs. 3,00,000/-.	NIL
ii.	Where the total income exceeds Rs. 3,00,000/- but does not exceed Rs. 5,00,000/-	10% of the amount by which the total income exceeds Rs. 3,00,000/-. Less : Tax Credit - 10% of taxable income upto a maximum of Rs. 2000/-.
iii.	Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-	Rs. 20,000/- + 20% of the amount by which the total income exceeds Rs. 5,00,000/-.
iv.	Where the total income exceeds Rs. 10,00,000/-	Rs. 120,000/- + 30% of the amount by which the total income exceeds Rs. 10,00,000/-.