Union Budget 2015-16: Tax exemptions for salary earners

The finance minister today proposed rationalisation of various tax exemptions and incentives to reduce tax disputes and improve tax administration.

He said to encourage savings and promote health care among individual tax payers, it is proposed to increase the limit of reduction of health insurance premium from Rs15,000 to Rs25,000 and for senior citizen from Rs20,000 to Rs30,000.

For what he termed a ''very senior citizens'' above the age of 80, who were ineligible for health insurance, the deduction would be Rs30,000 toward medical expenditure. 

The earlier deduction limit of Rs60,000 on expenditure on account of treatment for specified diseases has proposed to be enhanced to Rs80,000 for senior citizens.

An additional deduction of Rs25,000 is being allowed for differently-abled persons, increasing the limit from Rs 50,000 to Rs 75,000. He also proposed to increase the limit of deduction from Rs1 lakh to Rs1.25 lakh in case of severe disability.

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

He also said the limit on deduction for contribution to a pension fund and the new pension scheme is proposed to be increased from Rs1 lakh to Rs1.5 lakh.

An also announced an additional deduction of Rs50,000 for contribution to the new pension scheme under section 80 CCD rising it from Rs 1 lakh at present to Rs1.5 lakh.

Details of tax deductions proposed are as follows:
Deduction u/s 80C Rs 1,50,000
Deduction u/s 80CCD
Rs 50,000
Deduction on account of interest on house property loan (Self occupied property)
Rs 2,00,000
Deduction u/s 80D on health insurance premium
Rs 25,000
Exemption of transport allowance
Rs 19,200
Total
Rs 4,44,200