There's a general consensus the Budget 2014 has ticked all the boxes and will steer the economy to a positive direction, with the finance minister's priority on fiscal prudence and reform measures. The commitment to meet the fiscal deficit to gross domestic product target of 4.1 per cent in FY15 reiterates the government's commitment towards controlled inflation. While more was expected on the retrospective amendments to the Income Tax Act, measures such as e-visas at nine airports, rise in the number of Income Tax Seva Kendras, steps to reduce income tax litigation and proposed discussions on the Direct Taxes Code are welcome. In keeping with the expectations, though there is no change in tax rates, the threshold limit for taxable income has been increased from Rs 2 lakh to 2.5 lakh (Rs 2.5 to Rs 3 lakh for resident citizens aged above 60 years). The maximum limit for deduction under Section 80C, for investments, has been increased from Rs 1 lakh to Rs 1.5 lakh. This is consistent with the enhancement of the limit, from Rs 1 lakh to Rs 1.5 lakh for annual deposits in the Public Provident Fund scheme. These measures will promote greater savings and pave the way for the government to channelise resources to finance economic growth. Another welcome step is the increase in the limit of deduction available for interest paid on housing loans for self-occupied property, which rose from Rs 1.5 lakh to Rs 2 lakh per annum; this is expected to provide stimulus for revival of the realty market.
Tax partner, EY