BUDGET HIGHLIGHT – FINANCIAL YEAR 2016-17 IN RESPECT O TAXATION

  1. No change in income tax slabs.
  2. Rebate under section 87-A in respect of individuals whose total taxable income does not exceed Rs. 5,00,000 lakh, is increased from Rs.2,000/= to Rs.5,000/=.
  3. Maximum limit of deduction under section 80GG in respect of the individuals who do not receive any House Rent allowance and do not own any house and pay rent, is increased from Rs.2,000/= per month to Rs.5,000/= per month.
  4. The period of holding for computation of long term capital gain in respect of shares of unlisted companies is reduced to two years from three years.
  5. Securities Transaction Tax (STT) for options trading is increased from 0.017% to 0.05%.
  6. Surcharge on annual income exceeding Rs. One crore is increased from 12% to 15%.
  7. Exemption to employer’s contribution to recognized provident fund limited to Rs.1,50,000/=. Earlier the exemption was up to 12% of salary.
  8. Krishi Kalyan Cess will be levied 0.5% on all taxable services with effect from 01.06.2016.
  9. The limit of turnover of small business covered under section 44AD is increased from one crore to two crore. Section 44 AD covers a resident individual / HUF/partnership firm except limited liability partnership engaged in any business other than (1) business of plying, leasing or hiring trucks, (2) any profession specified under section 44AA, (3)a person earning income by way of commission/brokerage or (4) any agency business. Income of these businesses is computed 8% of total turnover or receipts. If any business firm shows income less than 8% of gross turnover of receipts then the audit of the concerned firm is necessary under section 44AB and it is necessary to maintain the required books of accounts under section 44AA.
  10. The limit of gross receipt is increased from 25 lakh to 50 lakh for Tax Audit purpose under section 44AB in respect of professional income.
  11. The small companies having turnover less than 5 crore in financial year 2014-15 are supposed to pay income tax 29% + surcharge + cess. Earlier the rate of tax was %.
  12. Currently the dividend received by an individual/Hindu Undivided Family/Partnership Firm is totally exempt from income tax because dividend distribution tax is already paid by the companies. In current budget it proposed to charge the individuals/Hindu Undivided Family/Partnership Firm, an additional tax of 10% on dividend received from equities in excess of Rs.10 lakh.
  13. Individuals having rental income less than the maximum amount not chargeable to tax can furnish Form 15G/15H for non-withholding TDS.
  14. If any individual is having exempt income from sale of equity shares or equity oriented mutual funds more than Rs.2,50,000/=, is required to file income tax return.
  15. Advance tax is to be paid by individuals as (a) 15% of tax payable by 15th June, (b) 45% of tax payable by 15th September (c) 75% of tax payable by 15th December and (d) 100% of tax payable by 15th
  16. For Individuals, additional deduction of Rs.50,000/= in respect on interest on loan, will be allowed for housing loan up to Rs.35 lakh and cost of house is Rs.50 lakh.
  17. Exemption limit from income from winning from horse race is increased from Rs.5,000/= to Rs.10,000/=. This amendment is related to TDS.
  18. Exemption limit of aggregate payment made to contractor during a financial year is increased from Rs.75,000/= to Rs.1,00,000/=. This amendment is related to TDS.
  19. In case of commission received from insurance, the limit is reduced from Rs.20,000/= to Rs.15,000/=. This amendment is related to TDS.
  20. Commission on lottery, the exemption limit is increased from Rs.1,000/= to Rs.15,000/=. This amendment is related to TDS. The rate of TDS is reduced to 5 % from 10%.
  21. Exemption limit on commission or brokerage is increased from Rs.5,000/= to Rs.15,000/=. This amendment is related to TDS. The rate of TDS is reduced to 5 % from 10%.

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