Union Budget 2016 Highlights.
- Relief Section 87A Rs. 2000 to Rs. 5000:
Ceiling of tax rebate under section 87A increased from Rs 2000 to Rs 5000 to lessen tax burden on individuals with income upto Rs 5 laks
- Relief Sec 80GG Rs. 24000 to Rs. 60000:
Limit of deduction of rent paid under section 80GG increased from Rs 24000 per annum to Rs 60000, to provide relief to those who live in rented houses.
- Section 44AD limits Rs. 1 crores to Rs. 2 crores. Rs. 50 Lakh for professional:
Turnover limit under Presumptive taxation scheme under section 44AD of the Income Tax Act increased to Rs 2 crores to bring big relief to a large number of assessees in the MSME category. New section 44ADA is proposed to be inserted in the Act to provide for estimating the income of an assesse who is engaged in any profession referred to in sub-section (1) of section 44AA such as legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or any other profession as is notified by the Board in the Official Gazette and whose total gross receipts does not exceed fifty lakh rupees in a previous year, at a sum equal to fifty per cent. of the total gross receipts, or, as the case may be , a sum higher than the aforesaid sum earned by the assessee.
- Accelerated depreciation limited to 40%:
Accelerated depreciation wherever provided in IT Act will be limited to maximum 40% from 1.4.2017
- Research Deduction would be limited to 150%:
Benefit of deductions for Research would be limited to 150% from 1.4.2017 and 100% from 1.4.2020.
- New manufacturing companies will pay tax @ 25%. :
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
- LTCG on unlisted securities limited to 2 years:
Period for getting benefit of long term capital gain regime in case of unlisted companies reduced from three to two years.
- 100% tax deduction for companies building houses upto 30 sq. mtrs.:
100% deduction for profits to an undertaking in housing project for flats upto 30 sq. metres in four metro cities and 60 sq. metres in other cities,approved during June 2016 to March 2019 and completed in three years. MAT to apply.
- Additional interest deduction for first house:
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.
- No service tax for building houses upto 60 sq mtrs:
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.
- Dividend tax @10% for recipient over Rs. 10 lakh per annum:
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.
- TCS on purchase of asset over Rs. 2 Lakh in case and luxury cars:
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.
- Surcharge raised from 12% to 15%:
Surcharge to be raised from 12% to 15% on persons, other than companies, firms and cooperative societies having income above Rs 1 crore.
- Dispute resolution for appeal pending before Commissioner (Appeals):
New Dispute Resolution Scheme to be introduced. No penalty in respect of cases with disputed tax up to Rs 10 lakh. Cases with disputed tax exceeding Rs 10 lakh to be subjected to 25% of the minimum of the imposable penalty. Any pending appeal against a penalty order can also be settled by paying 25% of the minimum of the imposable penalty and tax interest on quantum addition.
- Penalty for concealment of Income from 100-300% to 50-200%:
Penalty rates to be 50% of tax in case of under reporting of income and 200% of tax where there is misreporting of facts.
- Declaration of undisclosed income by paying tax at 30% + 7.5% Surcharge:
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% (to be called Krishi Kalyan surcharge to be used for agriculture and rural economy) and penalty at 7.5%, which is a total of 45% of the undisclosed income. Declarants will have immunity from prosecution.
- Mandatory for the assessing officer to grant stay of demand:
Once the assesse pays 15% of the disputed demand, while the appeal is pending before Commissioner of Income-tax (Appeals).
- For non-residents providing alternative documents to PAN card, higher TDS not to apply.
- Krishi Kalyan Cess, @ 0.5% on all taxable services, w.e.f. 1 June 2016:
Proceeds would be exclusively used for financing initiatives for improvement of agriculture and welfare of farmers. Input tax credit ofthis cess will be available for payment of this cess.
Resulting Service Tax will be : 15% i.e ( 14% ST + .5% Swachh Bharat Cess + .5% Krishi Kalyan Cess)
- Payment EPF contribution for first 3 years of employment:
Government of India will pay contribution of 8.33% for of all new employees enrolling in
EPFO for the first three years of their employment. Budget provision of Rs 1000 crore for this scheme.
- Deduction under Section 80JJAA of the Income Tax Act will be available to all assesses who are subject to statutory audit under the Act
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