In a bold move to simplify tax laws, the finance ministry is considering a plan to replace the tax benefits given to individuals for investing in specified savings instruments such as life insurance and provident funds with an upfront higher basic tax exemption limit.
If the proposal makes it into Union Budget for 2015-16, the current R1.5 lakh deduction from the taxable income of individuals for investments in specified savings instruments under Section 80C of the Income Tax Act would be discontinued. Instead, the basic exemption limit would be correspondingly enhanced.
That is, individual’s income up to R4 lakh, or thereabouts, could be exempt from tax, up from Rs 2.5 lakh currently.
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