Budget 2016: A Relief For Small Taxpayers

Budget 2016-17
On 29th February 2016, the Indian Finance Minister, Mr Arun Jaitley made the presentation of budget for the financial year 2016-2017. Like all sectors, salaried people will also look for the gains that they can get from this year’s budget. Though, this time we can not see any change in the tax slab, still there are many sections in Income Tax where we can see the changes. Due to such changes, the EMIs for the home loans have become cheaper, and now salaried people can do effective investment plans easily
  • Section 87A: This is one of the biggest reliefs given to salaried people, earning up to Rs 500000/- annually. People in this income bracket will now enjoy a tax relief of Rs 5000. Previously this exemption was Rs 2000/-.
  • Basic Exemption: Salaried people with a yearly income up to Rs 5 lakhs will enjoy the basic exemption of Rs 3 lakhs.
  • Surcharge for super rich tax payers: Super rich taxpayers, with a yearly income of more that Rs 1 crore will now be liable to pay a surcharge of 15 percent which was 12 percent in previous financial year. Due to this hike in surcharge, as per calculation nearly Rs 1 lakh more need to be paid by the super rich tax payers as surcharge.
  • Benefits in home loans: Tax payers who are seeking advantages in home loans, the Government has proposed some relief for them. The tax benefit which was previously limited to three years has been extended to five years. Hence, the buyers of home who are not able to get the possession of the house due to stoppage in construction works and other issues, are now able to take the breath of relief for a period of 5 years in place of 3.

Union Budget 2016-17

  • Relief U/S 80EE: Another good news for the first time home buyers. The Government has planned to re-introduce deduction under this section of Rs 50000/- on the interest for home loans for the first time home buyers. However, the value of the house should not exceed Rs 50 lakhs and the loan amount should not exceed Rs 35 lakhs.
  • Deduction on House Rent: Salaried people, who are not eligible for getting HRA but residing in a rented house, will now be able to get a higher deduction on rent they paid. This exemption was previously available up to Rs 24000/- under section 80GG. Based on this year budget, the salaried people residing in a rented house and not getting any HRA will be eligible to get Rs 60000 deduction per annum.
Besides those areas applicable for salaried people, the Government has also paid attention towards rural development. To give a boost to new companies, tax holiday has been announced for three years for every start ups in the country. EPF has been declared at 8.33 percent for the new employees who are eligible to join in this scheme.

Report By JUI