Before you rush to save more taxesFebruary 26, 2016
Taxation Changes that FM Didn’t Spell Out in His SpeechMarch 1, 2016
- On home loans worth upto Rs. 35 lacs, you can claim additional deduction of Rs. 50,000 if you are a first time home buyer.
- Professionals like doctors, freelancers, etc. can now file an ITR-4S if your income is less than 50 lakhs. Tax filing has been simplified for them (ITR-4S is 2 pages vs. 30 pages for ITR-4).
- As a tax payer, if your income is less than 5 lakhs, you will get tax benefits of up to Rs. 5,000 (under section 87A).
- Under Section 80GG, you can get deduction of Rs. 60,000 on rent paid if your company does not provide you any house rent allowance. This was earlier set to 24,000.
- The rate of surcharge on income tax has been increased to 15% from 12% for income above Rs. 1 crore.
- Business owners also get a benefit. They can file ITR-4S up to Rs. 2 crore in revenue. Earlier limit was Rs. 1 crore.
- 40% NPS withdrawal at time of retirement will be exempt from tax.
- For taxpayers with dividend income exceeding Rs. 10 lakhs, an additional tax of 10% will be charged.
- Govt. proposes to pay EPF contribution of 8.33% for all new employees for first three years with salary less than Rs. 15,000.
- Good news for all who are subject to tax audit as they will now be eligible for deductions under section 80JJAA. It was earlier restricted to only manufacturing companies.
Other Budget 2016 Updates
- Start-ups can now register in a day, thanks to amendments in the Companies Act.
- INR 55,000 Cr for roads and highways have been allocated in budget 2016, summing up to a total investment of INR 97K crores in Road Sector.
- A new credit rating system will be developed for infrastructure.
- Government allocates INR 19,000 Cr in Gram Sadak Yojna.
- 500 Cr will be allocated to Stand-Up India for SC/ST and Women entrepreneurs.
- Rs. 100 crores will be provided for higher education financing.
- INR 30,000 Crore coverage to be provided for senior citizens (above 60 years).
- Government proposes to launch a new health care scheme for the poor with families getting Rs. 100K as medical cover.
- A new Krishi Kalyan cess to be imposed on all taxable services.
Mr. Arun Jaitley says, Budget 2016 will focus on infrastructure and enhancing quality of life. According to him Budget 2016 aims to work on tax reforms to reduce burden of compliance. He further added that the Indian economy has held its strong ground despite a global economic slowdown. GDP growth rate has accelerated to 7.6%.