Wealth tax to Section 80D: Key changes for taxpayers in Budget 2015 (recap ahead of Budget 2026)

In today's article, we look back at the tax and personal finance changes announced in Budget 2015-16 and whether they remain relevant today.

Key changes from Budget 2015-16 and their relevance today

Wealth tax abolished

Budget 2015 proposed to abolish the wealth tax.

"The total wealth tax collection in the country was ₹1,008 crore in 2013-14. Should a tax which leads to high cost of collection and a low yield be continued or should it be replaced with a low cost and higher yield tax? The rich and wealthy must pay more tax than the less affluent ones. I have therefore decided to abolish the wealth tax and replace it with an additional surcharge of 2% on the super-rich with a taxable income of over ₹1 crore," Jaitley said.

"Further, to track the wealth held by individuals and entities, the information regarding the assets which are currently required to be furnished in wealth-tax return will be captured in the income tax returns. This will ensure that the abolition of wealth tax does not lead to escape of any income from the tax net," he added.

While Budget 2015 announced no change in the rate of personal income-tax and the rate of tax for companies, it proposed to levy a surcharge @12% on individuals, HUFs, AOPs, BOIs, artificial juridical persons, firms, cooperative societies and local authorities having income exceeding ₹1 crore.

Surcharge in the case of domestic companies having income exceeding ₹1 crore and up to ₹10 crore was proposed to be levied @ 7% and surcharge @ 12% was proposed to be levied on domestic companies having income exceeding ₹10 crore.

SSY became tax-free

Budget 2015 made investments in Sukanya Samriddhi Yojana account eligible for deduction under section 80C. It also said that any payment from the scheme will not be liable to tax.

"Investments in Sukanya Samriddhi Scheme is already eligible for deduction under Section 80C. All payments to the beneficiaries including interest payment on deposit will also be fully exempt," Jaitley said.

Section 80D deduction hike

Budget 2015 proposed to increase the limit of deduction under section 80D of the Income-tax Act from ₹15,000 to ₹25,000 on health insurance premium (in case of a senior citizen from ₹20,000 to ₹30,000). It is also proposed to allow deduction of expenditure of a similar amount in case of a very senior citizen not eligible to take health insurance.

The limit of deduction in case of very senior citizens under section 80DDB of the Income-tax Act on expenditure on account of specified diseases was increased from ₹60,000 to ₹80,000.

The limit of deduction under section 80DD of the Income-tax Act in respect of maintenance, including medical treatment of a dependent, who is a person with disability, was increased from ₹50,000 to ₹75,000. It was also proposed to increase the limit of deduction from ₹1 lakh to ₹1.25 lakh in case of severe disability

Further, Budget 2015 proposed to increase the limit of deduction under section 80U of the Income-tax Act in case of a person with disability, from ₹50,000 to ₹75,000. It also proposed to increase the limit of deduction from ₹1 lakh to ₹1.25 lakh in case of severe disability.

Deduction limit increased on insurance, NPS

Budget 2014 increased the limit of deduction limit under Section 80C from from ₹1 lakh to ₹1.5 lakh for various investments:

• Contribution to a pension fund of LIC or IRDAI-approved insurer

• Contribution by the employee to National Pension Scheme (NPS)

Budget 2015 proposed to provide a deduction of up to ₹50,000 over and above the limit of ₹1.50 lakh in respect of contributions made to NPS.

Budget 2014 proposed to amend the provisions of section 197A of the Income-tax Act to provide the facility of filing self-declaration of non-deduction of tax by the recipients of taxable maturity proceeds of life insurance policy.

Transport allowance exemption was increased from ₹800 to ₹1,600 per month.

Property purchase from non-residents

Budget 2015 relaxed the requirement of obtaining TAN by the individual or HUF who is required to deduct tax on acquisition of immovable property from a non-resident.

"Under the existing provisions of the Income-tax Act, an individual buying an immovable property from a resident is required to deduct tax but is not required to obtain TAN for depositing the tax so deducted. With a view to extend the same facility to an individual or HUF purchasing an immovable property from a non-resident, it is proposed to relax the requirement of obtaining TAN by the individual or HUF who is required to deduct tax on acquisition of immovable property from a non-resident," it said.

Mutual funds

Budget 2015 proposed to amend the provisions of the Income-tax Act to provide tax neutrality on transfer of units of a scheme of a Mutual Fund under the process of consolidation of schemes of Mutual Funds.

EPF proposals

Jaitley made the following statements with respect to EPF and ESI. However, none of these have been implemented full till now:

• Firstly, the employee may opt for EPF or the New Pension Scheme (NPS).

• Secondly, for employees below a certain threshold of monthly income, contribution to EPF should be optional, without affecting or reducing the employer’s contribution.

• With respect to ESI, the employee should have the option of choosing either ESI or a Health Insurance product, recognised by the Insurance Regulatory Development Authority (IRDA).

SGB introduced

Budget 2015 made three announcements related to gold, including the government's decision to launch Sovereign Gold Bond.

1. Introduction Gold Monetisation Scheme to replace the Gold Deposit and Gold metal Loan Schemes.

"The new scheme will allow the depositors of gold to earn interest in their metal accounts and the jewelers to obtain loans in their metal account. Banks/other dealers would also be able to monetize this gold," Jaitley said.

2. SGB: Jaitley proposed to develop an alternate financial asset, a Sovereign Gold Bond as an alternative to purchasing metal gold.

"The Bonds will carry a fixed rate of interest, and also be redeemable in cash in terms of the face value of the gold, at the time of redemption by the holder of the Bond," Jaitley said.

3. Gold coin: Jaitley said the government will commence work on developing an Indian Gold Coin, which will carry the Ashok Chakra on its face. "Such an Indian Gold Coin would help reduce the demand for coins minted outside India and also help to recycle the gold available in the country," he said.

Corporate tax reduced

Budget 2015 decreased the rate corproate tax from 30% to 25%.

"The basic rate of Corporate Tax in India at 30% is higher than the rates prevalent in the other major Asian economies, making our domestic industry uncompetitive. Moreover, the effective collection of Corporate Tax is about 23%. We lose out on both counts, i.e. we are considered as having a high Corporate Tax regime but we do not get that tax due to excessive exemptions. A regime of exemptions has led to pressure groups, litigation and loss of revenue. It also gives room for avoidable discretion. I, therefore, propose to reduce the rate of Corporate Tax from 30% to 25% over the next 4 years."

"This will lead to higher level of investment, higher growth and more jobs. This process of reduction has to be necessarily accompanied by rationalisation and removal of various kinds of tax exemptions and incentives for corporate taxpayers, which incidentally account for a large number of tax disputes."

No cash payment above ₹20,000 for property purchase

Budget 29015 prohibited acceptance or payment of an advance of ₹20,000 or more in cash for purchase of immovable property. Quoting of PAN was made mandatory for any purchase or sale exceeding the value of ₹1 lakh.