Landmark Income Tax changes: All you need to know
These changes in the past 10 years have evoked varied reactions from taxpayers
Our financial choices require re-evaluation and re-imagination in a post-Covid world. Things are changing at very fast pace and so must your financial planning.
But before doing that, take a quick look at what were some of the key Income Tax changes over the last decade.
April, 2012
No tax on savings account interest up to Rs 10,000
The limit consists of all types of interest income from FDs, RDs, etc.
July, 2014
Section 80C investment limit increased up to Rs 1.5 lakh
Section 80C of the Income-Tax Act, 1961 provides numerous investment options that generates significant returns and can also be claimed a deduction while calculation total taxable income of the taxpayer. The maximum amount of deduction that can be claimed under the Act was increased up to Rs 1.5 lakh for the current financial year. People often invest in insurance policies, public provident funds (PPFs) and equity-linked saving schemes (ELSS) to avail this deduction.
Deduction for housing loan interest increased to Rs 2 lakh
Homeowners were allowed to claim a deduction up to Rs 2 lakh on the home loan interest if the owner of the house resided in the property.
Non-equity funds: Holding period for long term capital gains increased up to 3 years
Long term capital gains for unlisted equity funds were announced to be taxed at 20% with the benefit of indexation.
April, 2015
NPS Contribution: Additional Rs 50,000 deduction under Section 80CCD
Until 2015, taxpayers were eligible to claim to an income tax deduction up to Rs 1 lakh against NPS contributions. The Union Budget that year, however, changed the maximum amount payable to NPS to Rs 1.5 lakh annually. A new sub section (1B) was introduced offering additional deduction up to Rs 50,000 for individual contributions made to the NPS.
April, 2017
Home loan interest on rented houses fixed at Rs 2 lakh
The home loan interest for a property given on rent was clapped at Rs 2 lakh
Real Estate: Minimum holding period for long term capital gains reduced to 2 years
Any immovable property only if held for minimum of 2 years would be classified under long-term capital gains.
Rs 50,000 deduction under 80 CCG for RGESS fund removed
The Rajiv Gandhi Equity Saving Scheme (RGESS) was introduced in the Union Budget 2012. Starting April 1, 2017, this fund was phased out as only a few assesses availed the deduction.
April, 2018
Interest earned up to Rs 50,000 to be tax free for senior citizens
Applicable under Section 80TTA, senior citizens wouldn’t have to pay any taxes on their interests earned up to Rs 50,000 in the current financial year. This would include interests from savings account and deposits in post office.
July, 2019
TDS threshold for interests raised to Rs 40,000
The threshold for tax deducted at source (TDS) for bank and post office deposits was raised from Rs 10,000 to Rs 40,000 in the Union Budget 2019.
NPS: 60% corpus withdrawn on maturity will be tax free
Earlier the tax-free withdrawal for National Pension Scheme (NPS) was allowed up to 40% of the corpus. This was increased to 60% in the Budget.
April, 2021
ULIP premium of Rs 2.5 lakh and above to be taxed
Returns on the ULIP investment with a premium amount of more than Rs 2.5 lakh lost the tax free status according the the Union Budget of 2021. It will be taxed at par with mutual funds.
PF interest contribution above Rs 2.5 lakh to be taxed as regular income
In her Budget speech this year, FM Nirmala Sitharaman announced interest earned on the EPF (employee contribution) above Rs 2.5 lakh will be taxable from April 1.