Salaried employees frequently justifiably declare to be the taxman’s milch cow. Unlike business people and professionals who can claim tax exemption on numerous costs, salaried personnel has to pay a large sum as taxes deducted at source by using the organization. A worker can best get the advantages of a few tax-exempt allowances. The maximum of the exemption limits has no longer been revised for years, eroding the actual tax benefit.
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For some allowances, the exemption limit has been revised upwards lately. However, even that did now not fully remember the price of inflation. For example, an exemption of transport allowance of Rs 800 in step with month existed from the financial yr 1997-98. The ultimate price range doubled it to Rs 1,600 in line with the month. Given the exchange within the inflation index, these discern need to be revised to Rs 2,600.
Every 12 months, Rs 1.5 lakh is permitted for deduction under phase 80C (available for a huge variety of investments inclusive of PPF, NSC, or housing mortgage compensation). It becomes remaining revised for FY 2014-15 from Rs 1 lakh that existed on account 2005-06. If inflation changed into taken into account, the revised cap has to have been Rs 2.17 lakh. Many other tax exemption limits haven’t visible any revisions for years (see chart).
The status Committee, which had tested the now-defunct direct tax code (DTC), had endorsed revisions in some cases, along with a hike in exemption restriction for scientific repayment from the contemporary Rs 15,000 to Rs 50,000. But, it had also recommended abolishing the go-away tour Allowance (LTA).
There are different situations in our tax legal guidelines that still are not fair to the taxpayer. For example, LTA for you and your circle of relatives is tax-exempt (limited to the economy class airfare for the shortest direction to be had to your vacation spot). However, you can avail of the LTA benefit simplest two times in a block of four calendar years for a journey within India. The exemption should be available for the annual tour.
The interest of as much as Rs 2 lakh per 12 months on housing loans is authorized as a deduction from ‘earnings from house assets’ – but with a trap. Production must be completed in three years; else, the hobby deduction is constrained to Rs 30,000 handiest. As this newspaper has written in the past, most housing initiatives are becoming not on time beyond three years. For no fault of taxpayers, their tax benefits are getting reduced notably.