New Delhi: Eating out in restaurants, staying in hotels and other such activities will get costlier as the Union Budget 2015, presented by Finance Minister Arun Jaitley in Parliament on Saturday, proposes to increase the present rate of service tax and education taxes from the existing 12.36 per cent to a consolidated rate of 14 per cent to facilitate a smooth transition to levy of tax on services by both the Centre and the States.
The Budget exempted services by common affluent treatment plants from service tax. The concessions from customs and excise duties currently available on specified parts for manufacture of electrically-operated vehicles and hybrid vehicles were extended by one more year up to March 31, 2016.
However, the Budget extended benefits to middle class tax-payers by increasing the limit of deduction in respect of health insurance premium from Rs 15,000 to Rs 25,000. For senior citizens, the limit has been increased to Rs 30,000 from the existing Rs 20,000. For very senior citizens of the age of 80 years or more, who are not covered by health insurance, deduction of Rs 30,000 towards expenditure incurred on their treatment has been allowed.
The deduction limit of Rs 60,000 towards expenditure on account of specified diseases of serious nature has been enhanced to Rs 80,000 in case of very senior citizens. Additional deduction of Rs 25,000 will be allowed for differently-abled persons under Section 80DD and Section 80U of the Income-tax Act.
The limit on deduction on account of contribution to a Pension Fund and the New Pension Scheme has been increased from Rs 1 lakh to Rs 1.5 lakh. To provide social safety net and the facility of pension to individuals, an additional deduction of Rs 50,000 has been provided for contribution to the New Pension Scheme under Section 80CCD. This will enable India to become a pensioned society instead of a pensionless society.
Investments in Sukanya Samriddhi Scheme are already eligible for deduction under Section 80C. All payments to the beneficiaries including interest payment on deposit will also be fully exempt.
Transport allowance exemption has been increased from Rs 800 to Rs 1,600 per month. For the benefit of senior citizens, service tax exemption will be provided on Varishta Bima Yojana.
There are several stand-alone proposals as well relating to taxation. These include conversion of existing excise duty on petrol and diesel to the extent of Rs 4 per litre into Road Cess to fund investment in roads and other infrastructure.
An additional sum of Rs 40,000 crore will be made available through this measure for these sectors. In service tax, exemption has been extended to certain pre-cold storage services in relation to fruits and vegetables so as to incentivise value addition in this crucial sector. The Negative List under service tax has been slightly pruned and certain other exemptions have been withdrawn to widen the tax base.
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