Monday, 29 February 2016

Union Budget 2016-17 to be presented today; Income tax exemption limit likely to be hiked

Highlights of Union Budget 2016-17

Income Tax:
<1>Infrastructure and agriculture cess to be levied.Excise duty raised from 10 to 15 per cent on tobacco products other than beedis
<2>1 per cent service charge on purchase of luxury cars over Rs. 10 lakh and in-cash purchase of goods and services over Rs. 2 lakh.
<3>SUVs, Luxury cars to be more expensive. 4% high capacity tax for SUVs.Companies with revenue less than Rs 5 crore to be taxed at 29% plus surcharge
<4>Limited tax compliance window from Jun 1 - Sep 30 for declaring undisclosed income at 45% incl. surcharge and penalties Excise 1 per cent imposed on articles of jewellery, excluding silver.
<5>0.5 per cent Krishi Kalyan Cess to be levied on all services.
<6>Pollution cess of 1 per cent on small petrol, LPG and CNG cars; 2.5 per cent on diesel cars of certain specifications; 4 per cent on higher-end models.
<7>Dividend in excess of Rs. 10 lakh per annum to be taxed at additional 10 per cent.
Personal Finance:
<1>No changes have been made to existing income tax slabs Rs 1,000 crore allocated for new EPF (Employees' Provident Fund) scheme Govt. will pay EPF contribution of 8.33% for all new employees for first three years
<2>Deduction for rent paid will be raised from Rs 20,000 to Rs 60,000 to benefit those living in rented houses.
<3>Additional exemption of Rs. 50,000 for housing loans up to Rs. 35 lakh, provided cost of house is not above Rs. 50 lakh.
<4>Service tax exempted for housing construction of houses less than 60 sq. m 15 per cent surcharge on income above Rs. 1 crore.

HRA deduction increased to Rs. 60,000 per annum; 40% of withdrawal under NPS to be tax exempt; additional exemption for housing loans.

A. Normal tax rates applicable to an individual
The normal tax rates applicable to a resident individual will depend on the age of the individual. However, in case of a non-resident individual the tax rates will be same irrespective of his age. For the purpose of ascertainment of the applicable tax slab, an individual can be classified as follows:
  • Resident individual below the age of 60 years. i.e. born on or after 1.4.1956
  • Resident individual of the age of 60 years or above at any time during the year but below the age of 80 years. (i.e. born during 1-4-1936 to 31-3-1956)
  • Resident individual of the age of 80 years or above at any time during the year. i.e. born before 1.4.1936
  • Non-resident individual irrespective of the age.
i. individual below the age of 60 years i.e. born on or after 1.4.1956, Non-resident individual irrespective of age, Resident/Non-Resident Hindu undivided family, association of persons, body of individuals, artificial juridical person.
Tax Slab
Net income rangeIncome-tax ratesEducation CessSecondary and higher Education Cess
Up to Rs. 2,50,000NilNilNil
Rs. 2,50,000 – Rs. 5,00,00010% of (total income minus Rs. 2,50,000) [*]2% of income-tax1% of income-tax
Rs. 5,00,000 – Rs. 10,00,000Rs. 25,000 + 20% of (total income minus Rs. 5,00,000)2% of income-tax1% of income-tax
Above Rs. 10,00,000Rs. 1,25,000 + 30% of (total income minus Rs. 10,00,000)2% of income-tax1% of income-tax