Relief to small taxpayers
l The ceiling of tax rebate under section 87A raised from Rs. 2000 to Rs. 5000 to lessen tax burden on individuals with income upto Rs.5 lakh.
l Limit of deduction of rent paid under section 80GG increased from Rs. 24,000 per annum to Rs. 60,000, to provide relief to those who live in rented houses.
Health Care
l New health protection scheme will provide health cover up to Rs. One lakh per family. For senior citizens an additional top-up package up to Rs. 30,000 will be provided.
l ‘National Dialysis Services Programme’ to be started under National Health Mission through PPP mode
Tax Proposals
l Turnover limit under Presumptive taxation scheme under section 44AD of the Income Tax Act has been increased to Rs. 2 crores to bring big relief taxpayers in the MSME (Medium & Small &Medium Entp) category.
l Presumptive taxation scheme extended to professionals with gross receipts up to Rs. 50 lakh also –profit deemed to be 50%
l Accelerated depreciation wherever provided in IT Act will be limited to maximum 40% from 1.4.2017
l New manufacturing companies incorporated on or after 1.3.2016 to be given an option to be taxed at 25% + surcharge and cess provided they do not claim profit linked or investment linked deductions and do not avail of investment allowance and accelerated depreciation.
l Lower the corporate tax rate for the next financial year for relatively small enterprises i.e companies with turnover not exceeding Rs. 5 crore (in the financial year ending March 2015), to 29% plus surcharge and cess.
l 100% deduction of profits for 3 out of 5 years for startups setup during April, 2016 to March, 2019. MAT will apply in such cases.
l Period for getting benefit of long term capital gain regime in case of unlisted companies is proposed to be reduced from 3 to 2 years.
Pension Reforms – Moving towards a pensioned society
l Withdrawal up to 40% of the corpus at the time of retirement to be tax exempt in the case of National Pension Scheme (NPS). Annuity fund which goes to legal heir will not be taxable.
l In case of superannuation funds and recognized provident funds, including EPF, the same norm of 40% of corpus to be tax free will apply in respect of corpus created out of contributions made on or from 1.4.2016.
l Limit for contribution of employer in recognized Provident and Superannuation Fund of Rs. 1.5 lakh per annum for taking tax benefit.
Promotion of affordable housing
l Deduction for additional interest of Rs. 50,000 per annum for loans up to Rs. 35 lakh sanctioned in 2016-17 for first time home buyers, where house cost does not exceed Rs. 50 lakh.
l Exemption from service tax on construction of affordable houses up to 60 square metres under any scheme of the Central or State Government including PPP Schemes.
Other tax measures
l Additional tax at the rate of 10% of gross amount of dividend will be payable by the recipients receiving dividend in excess of Rs. 10 lakh per annum.
l The Government of India has introduced the Sovereign Gold Bond Scheme with the aim of reducing the demand for physical gold so as to reduce the outflow of foreign exchange on account of import of gold. The Gold Bond is a mode for substitution of physical gold and also provides security to the individual investor who invests in Gold for meeting their social obligation. Accordingly, with a view to providing parity in tax treatment between physical gold and Sovereign Gold Bond, it is proposed to amend Section 47 of the Income-tax Act, so as to provide that any redemption of Sovereign Gold Bond under the Scheme, by an individual shall not be treated as transfer and therefore shall be exempt from tax on capital gains
l Surcharge to be raised from 12% to 15% on persons, other than companies, firms and cooperative societies having income above Rs. 1 crore. This raises the effective tax rate from 34.61% to 35.54%
l Tax to be deducted at source at the rate of 1 % on purchase of luxury cars exceeding value of Rs. Ten Lakh and purchase of goods and services in cash exceeding Rs. Two lakh.
l Securities Transaction tax in case of ‘Options’ is proposed to be increased from .017% to .05%.
l Krishi Kalyan Cess, @ 0.5% on all taxable services, w.e.f. 1 June 2016.
l Infrastructure cess, of 1% on small petrol, LPG, CNG cars, 2.5% on diesel cars of certain capacity and 4% on other higher engine capacity vehicles 13 and SUVs. No credit of this cess will be available nor credit of any other tax or duty be utilized for paying this cess.
l Domestic taxpayers can declare undisclosed income or such income represented in the form of any asset by paying tax at 30%, and surcharge at 7.5% and penalty at 7.5%, which is a total of 45% of the undisclosed income. Declarants will have immunity from prosecution.
l For non-residents providing alternative documents to PAN card, higher TDS not to apply.
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