The Budget 2016-17 had a mixed impact on the taxation. There are certain areas which has remained unaltered, like tax on income, etc., and then there were areas where changes were felt, like alteration in the rate of service tax. To sum up the whole budget from the perspective of taxation, here is all that you need to know!
Impact of Taxation on Individuals
1) Rate of Income Tax Unaltered!
There has been no change in the income tax slab for individuals. They would continue to pay taxes in the same percentage as they were paying previously.
2) EPF @ 8.33% from the Government for new employees
People who have recently joined a Government job will be getting EPF @ 8.33% for the first three years. People who have already been a part of the Government machinery for the more than 3 years would get their EPF in the old percentage only. For this purpose, a fund of INR 1,000 crore has been allocated.
3) Deduction for HRA increased to INR 60, 000
Individuals can now claim a deduction upto INR 60,000 as house rent. Previously, the same was fixed at INR 20, 000.
4) Exemption upto INR 50,000 for House Loan
For individuals who are bearing the cost of house loan, they can now claim an exemption of INR 50,000 for the same. However, the value of the house should not exceed INR 50 lacs and the loan value should be less than INR 35 lacs.
5) 15% surcharge on Income, if it is above INR 1 crore
If the income of a tax payer is more than INR 1 crore, then the person has to pay a 15% surcharge on his income. The amount is exclusive of the tax which needs to be paid generally.
6) Payment of undisclosed income
The budget presented a different approach towards handling black money. A provision has made whereby individuals can reveal their undisclosed income by paying a tax of 45% (30% basic, 7.5% penalty and 7.5% surcharge) and they will have an assurance of their immunity from any further prosecution. The surcharge collected from the same would be credited to Krishi Kalyan.
Impact on Taxation on Acquisitions and Companies
1) Introduction of Infrastructure and Agriculture cess
2) Introduction of 1% service charge on cars whose purchase value in more than INR 10,00,000. The same is also applicable for purchase of goods or service valued at more than INR 2,00,000.
3) 15% excise duty on all tobacco products. Taxation on beedi remains unaffected.
4) SUVs to attract a 4% high capacity tax
5) 1% excise on jewellery made out of gold and diamond; silver excluded
6) Companies, whose annual turnover is more than INR 5 crore are to be taxed @ 29% and surcharge.
7) 0.5% Krishi Kalyan Cess to be imposed on all type of services.
8) Cases where the received dividend is more than INR 10,00,000 per year, an additional tax of 10% is required to be paid.