UNION BUDGET 2016-17 : HIGHLIGHTS for Salaried,professionals and Businessmen
Monday,29th Feb 2016 the Finance Minister Mr.Arun Jaitley presented his 3rd Union budget,a budget that was being awaited with bated breath by different class of people .
There had been various pre budget discussions and seminars portraying the numerous demands and proposals from the common man,the tax experts and the politicians.People had huge expectations that FM would bring in various tax reforms, new policies,schemes and exemptions to benefit the individuals in different sectors as well as that leads to the overall growth of the economy.
However,the budget seemed to be farmer friendly and focused towards the development of the agricultural and the rural sector.But,there were few amendments affecting the salaried class,the professionals and the business class as well.
The major HIGHLIGHTS of the Union Budget 2016-17 are as follows :-
1. No change in the tax slabs for the Financial Year 2016-17 : This is the major change that the salaried class waits for in the budget every year.This year also there were huge expectations from the FM that the exemption limits would be increased,but in vain.The Income tax slabs for current year remain the same as for the Financial year 2015-16.
To go through Income tax slabs refer : Income tax slabs for F.Y.2016-17
2. Relief U/S 87 A : For the benefit of small tax payers i.e.Individuals having Income upto Rs.5 lakhs, the Tax relief U/s 87A has been increased from Rs.2000 to Rs.5000.This increase will be beneficial only to small taxpayers.
For details you can refer Relief U/s 87 A.
3. Surcharge : As per Union Budget 2016 Surcharge has been increased from 12% to 15% .This increased rate applies to persons other than companies, firms and co-operative societies where taxable Income is greater than Rs.1 crore. This means the super rich will have to shed more money out of their pockets.
4. Sec 80GG : Deduction for House Rent paid increased from Rs.24000 (i.e. Rs.2000 per month) to Rs.60000 (Rs.5000 per month).This applies to persons who don’t own any house and also don’t receive any HRA from their employer. This will basically benefit self employed individuals.
5. Interest on Home loan : First time home buyers will get an additional benefit of Rs.50000 on interest on loan upto Rs.35 lakhs provided the cost of house does not exceed Rs.50 lakhs.This is another welcome step by the FM for the aspiring home buyers.
6. EPF for new recruitments : Govt. has proposed to pay EPF Contribution of 8.33% for all new employees for first three years.
7. Tax on Superannuation funds, RPF and EPF : FM in his budget said that like the National Pension Scheme the corpus of Superannuation funds, RPF and EPF should be tax exempt to the extent of 40% only. As per FM, this move was made to make India a more insured and pensioned society and also to make the New Pension Scheme more popular among investors.
Till now withdrawal of EPF corpus after 5 years of continuous service was tax free. But, with this amendment if EPF is not invested in annuities employees will have to pay tax on 60% of withdrawal. Only 40% will be tax free.
This amendment brought a lot of unrest among the salaried class since taxing EPF will reduce their retirement benefits.There were huge protests against this move by the opposition and the salaried class.As a result of which it has been rolled back. Hence, for now there is some good news as there shall be no tax on EPF withdrawals.
Budget also proposed a limit for Employers contribution to EPF of Rs.1.5 lakh/year or 12% of Basic pay whichever is less.
Further, there is no change in Public Provident Fund or PPF Status i.e. it is 100% exempt.
8. Krishi Kalyan Cess : A new cess known as the Krishi Kalyan Cess @0.5% has been introduced in the Union budget 2016-17.This will be levied on all taxable services hence increasing the effective Service Tax Rate from 14.5% to 15% .The proceeds from this cess would be exclusively used for improvement of agriculture and farmers welfare.With increase in service tax availing the services will get more expensive on a whole.
To check details on change in service tax refer : New Service tax rate w.e.f 1st June 2016
9. Increase in threshold limit for persons opting Presumptive taxation U/s 44AD : The limit has been increased from Rs.1 crore to Rs.2 crores in respect of eligible businesses.This applies to persons other than companies and LLP having business income.
10. Presumptive taxation for professionals : The presumptive taxation scheme has been proposed to be extended to professionals whose receipts are upto Rs.50 lakhs .
11. Tax Audit U/s 44 AB limit increased for Professionals : The tax audit limit U/s 44 AB for professionals has been increased from Rs.25 lakhs to Rs.50 lakhs.
12. Service Tax exemption for construction of Houses upto 60sq mts. Under central and state housing schemes.
13. Corporate Tax rate Proposals :
- New manufacturing Companies incorporated after 1.03.2016 will be given an option to be taxed @25%+Surcharge and cess provided they don’t claim any profit linked or investment linked deductions and also don’t avail of Investment allowance and accelerated depreciation.
- Corporate tax rate for Companies with turnover(in F.Y.ending March 2015)< Rs.5 crores lowered to 29% plus surcharge and cess.
14. Startups Proposals : The Startups will get 100% deduction of profits for 3 out of 5 years for startup set during Apr 2016 to March 2019.MAT will apply in such cases. This proposal has been brought in to promote the “Start up India Stand Up India “ and the “ Make in India”schemes.
For detailed analysis go through : Startup India : Benefits in Budget 2016
15. Tax on Dividend : An additional tax @10% of Gross amount of dividend will be payable by recipients receiving dividend >Rs.10lakhs p.a
16. TDS @1% on purchase of luxury cars exceeding value of Rs.10 lakhs and purchase of goods and services in cash exceeding Rs.2 lakhs.
17. Infrastructure cess : this is to be charged @1% on small petrol,LPG &CNG cars,4% on higher engine capacity vehicles and SUVs. Hence,small as well as big cars will get costlier in the coming financial year.
18. Securities Transaction tax : In case of “OPTIONS” STT is proposed to be increased from .017% to .05%.
19. Change in Excise duty :
- Excise duty on Jewellery : FM proposed 1% Excise duty without input tax credit or 12.5% with input tax credit on jewellery excluding silver jewellery other than studded with diamonds or other precious stones.Also, Exemption on jewellery withdrawn with a higher threshold limit of Rs.6 crores. This means that a jewellery manufacturer will be eligible for excise duty exemption on first clearance upto Rs. 6 crores during a financial year provided his aggregate domestic clearances during preceding f.y was Rs.12 crores.However, this change has led to protests among the jewellers all over India.
- Branded ready made garments and made up articles of textiles with Retail sale price of Rs.1000 or more changed from NIL( without Input tax credit) or 6% or 12.5%(with Input tax credit)to 2%( without Input tax credit)or 12.5%(with Input tax credit).This will add up to the cost of the products hence making them expensive for the end user.
- Excise duty on tobacco products other than beedi raised from 10% to 15%.This has been done in order to discourage people to consume such products.
So,these are the major points affecting the middle class,the rich and the super rich class of people.Some sectors may benefit out of these but there is no doubt that some have to get prepared to shed more money out of their pockets may it be in the form of various taxes,cess or increased duties.
All the above amendments will somehow directly or indirectly hit the common man and his savings.
Although,it is not possible for the budget to satisfy everyone but only a section of people.Like every coin has two sides, there are people who have favoured as well as opposed the recently presented Union Budget 2016-17.
Let us see,how well the budget plans are put into action and the various policies implemented over the Financial Year 2016-17 for the overall development of the economy.
Feel free to give your opinions ! This might be helpful to someone seeking information on the same.
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This information is based on the budget presented in Feb,2016. There might be certain amendments or changes in law during the financial year, the readers must take adequate professional advice before taking any decisions.
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https://fintrakk.com/union-budget-2016-17-highlights-for-salaried-professionals-and-businessmen/https://fintrakk.com/wp-content/uploads/2016/05/16630300167_994fa2f1a9_c.jpghttps://fintrakk.com/wp-content/uploads/2016/05/16630300167_994fa2f1a9_c-150x150.jpgFinanceBudget 2016,Budget 2016 Highlights,corporate tax rate,excise duty,krishi kalyan cess,service tax,Union budget 2016-17Monday,29th Feb 2016 the Finance Minister Mr.Arun Jaitley presented his 3rd Union budget,a budget that was being awaited with bated breath by different class of people . There had been various pre budget discussions and seminars portraying the numerous demands and proposals from the common man,the tax experts and the politicians.People...admin firstname.lastname@example.orgAdministratorFintrakk