Conceding a widely voiced demand, the Finance Minister (FM) has put more money in the hands of the aam aadmi . But only just. You will be able to save a maximum of ₹5,150, thanks to the hike in the personal income tax exemption limit by ₹50,000 to ₹2.5 lakh for those below the age of 60 years and to ₹3 lakh for senior citizens (those aged 60 and above).

This may disappoint many of us who were hoping for a hike in the basic exemption limit from ₹2 lakh to at least ₹3 lakh or even to ₹5 lakh. Guess a tight financial position tied the Government’s hands.

There is no increase in the exemption limit (₹5,00,000) for the super senior citizen (those aged 80 and above). Also, there is no respite from the 10 per cent surcharge for those with annual taxable income of over ₹1 crore.

That said, the FM has given all of us another avenue to save taxes — by increasing the investment limit under Section 80C of the Income Tax Act from ₹1 lakh to ₹1.5 lakh. This additional ₹50,000 invested in specified instruments can reduce your taxable income and save an additional ₹5,150 if you are in the 10 per cent tax slab. Those in the 20 per cent and 30 per cent tax slabs can save ₹10,300 and ₹15,450. In sync with this, the ceiling for investment in the public provident fund has been enhanced from ₹1 lakh to ₹1.5 lakh.

And if you have a housing loan on a self-occupied property, the increase in the deduction on interest paid from ₹1.5 lakh to ₹2 lakh can reduce your tax outgo by another ₹5,150 — ₹15,450, depending on your tax slab. The FM may not have opened his purse-strings for the taxpayer, but he hasn’t been Uncle Scrooge either.

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