Union Budget (2016) Highlights


Key Features of Budget 2016-2017



Direct Taxes


1.No changes have been made to existing income tax slabs.

2. Tax rebate/ Relief of Rs 3,000 per year to taxpayers with income below Rs.5 Lakh per year; 1 Crore tax payers to get benefit.- Section 87A

3. Deduction in respect of Rent Paid (80GG) up from Rs. 24,000 to Rs. 60,000 p.a., - This is applicable for individuals who are not in receipt of HRA.

4. Additional exemption of Rs. 50,000 for housing loans up to Rs. 35 lakh, provided cost of house is not above Rs. 50 lakh.

5. 40% of withdrawal at the time of retirement under National Pension Scheme (NPS) to be tax exempt.

6. Surcharge on Income tax for those with incomes exceeding 1 crore per annum increased from 12% to 15%.

7. Limited period compliance window for domestic taxpayers to declare undisclosed income @ Tax rate of 45% including surcharge from 1st June, 2016 to 31st Dec, 2016. Declarations to have immunity from prosecutions.

8 Penalty: Under reporting on income: 50 % ; Misreporting: 200 % (Current penalty as discretion of the Assessing Officer 100 - 300 %)

9. Committed to stable taxation regime. No more retrospective amendments.

10. Lowering of Corporate IT rate for companies not exceeding Rs. 5 crore turnovers to 29% plus surcharge.

11. Start-up Companies to get 100% tax exemption for 3 years of 5 years except MAT.

12. For businesses / traders etc: Increase in the turnover limit to Rs. 2 crores from Rs. 1 crore under Section 44AD i.e. no audit required and tax is payable on presumptive basis @ 8 %

13. Presumptive income tax scheme under Section 44AD to all professionals for turnover up to Rs. 50 Lacs with presumptive income of 50 % of gross revenue (optional for the assessee).

14. Benefit of deduction of research to be limited to 150 % in FY 16-17 and 100 % in FY17-18.

15. Sunset clause for SEZs: Benefits under Section 10AA to new SEZ entities to be available for entities who commencement of production before 31st Mar, 2020. 

16. New manufacturing Companies incorporated on or after 1st Apr, 2016 to be taxed at 25 % for 3 years out the first 5 years provided they do not take any investment allowance.

17. NBFCs to get 5 % deduction for bad and doubtful debts.
18. Tax @ 10 % on dividend > 10 Lacs p.a. on the recipients of Dividend. This is over and above the Dividend Distribution Tax deposited by Companies.

19. Securities Transaction Tax (STT) increased from 0.017% to 0.05 % on options. 
20. Holding period for determining Long Term capital gain on transfer of shares of unlisted companies reduced from 3 years to 2 years.

21. Govt will pay interest @ 9 % (instead of 6 %) in delay beyond 90 days for refunds.

22. Higher rate will not apply to non residents without PAN upon submission of other documents ( residency documents )

23. GAAR ( General Anti Avoidance rule )to be implemented from 01 April 2017.


Indirect Taxes :

1. Krishi Kalyan Cess of 0.5% on all taxable services from 1st June 2016.
2. No Service Tax for houses built less than 60 square meters.

3. Excise duty on tobacco increased by 10-15 per cent.
 
4. Excise duty @ 1 % (without input tax credit) or 12.5 % with input tax credit on branded Jewellery (excluding silver jewellery and excluding diamond studded Jewellery)

5.  Infrastructure and agriculture cess to be levied.

6. 1 per cent service charge on purchase of luxury cars over Rs. 10 lakh and in-cash purchase of goods and services over Rs. 2 lakh.

7. Govt to levy 1 % infra cess on small cars, 2.5 % on diesel and 4 percent of SUVs for anti pollution.

8. The govt will pay EPF contribution of 8.33% for all new employees for 1st three year.

9. Services provided by EPFO exempted from service tax.


General

1. Government to provide health insurance of upto Rs. 1 lakh per family; top up of Rs. 35,000 for people above 60 years. 3,000 stores to be opened for generic drugs.
2. Amendment to the Companies Act to ensure speedy registration and boost start-ups.
3. Small shops should be given the choice to remain open on all 7 days a week.
 
4. Rs. 9,000 crore for Swachh Bharat Abhiyan.
 
5. Total rural sector allocation Rs. 87,769 crore.
6.  Two schemes for digital literacy for rural India to cover 6 crore households in the next three years.

7. 5,542 villages have been electrified, more than the last three years combined.
  
8. Rs. 1,060 crore revenue loss through direct tax proposals, and Rs. 20,670 crore revenue gain through indirect tax proposals. Revenue gain of Rs 19,600 crore in Union Budget 2016 proposals.

9. New scheme for BPL families for gas connections. Statutory backing for Aadhar platform to ensure delivery of benefits.
10. 13 different cesses levied by various ministries with collections less than Rs.50 crore a year to be done away with.

11. Fiscal deficit at 3.5% of GDP in 2016-17.

12. CAD is 1.4% of GDP.

13. Forex reserves are at the highest ever levels — $350 billion.

14. GDP growth has accelerated to 7.6%. CPI inflation has come down to 5.4%.

15. A bill on targeted delivery of financial services using Aadhar to be introduced.

16. Dept of Disinvestment renamed as Dept of Investment and Public Asset Management.

17. Direct Benefit Transfer for fertilizer subsidy.

18. Rs. 25,000 crore for recapitalization of public sector banks. General insurance companies owned by the govt to be listed in stock exchanges.

19. Amendments to boost Asset Reconstruction Companies to manage NPAs of public sector banks.

20. RBI Act to be amended to set up monetary policy committee.

21. 100% FDI through FAPB route in marketing of food products produced and manufactured in India.

22. Motor Vehicles Act to be amended to enable entrepreneurship in the road transport sector.
23. Rs. 1,700 crore for 1500 multi-skill development centre.

24. 10 public and 10 private educational institutions to be made world-class. Digital repository for all school leaving certificates and diplomas. Rs. 1,000 crore for higher education financing.

25. Hub to support SC/ST entrepreneurs.

26. National dialysis service programme under PPP model. LPG connection for women members of rural homes.

27. Paramparagat Krishi Vikas Yojana to bring 5 lakh acres under organic farming.

28. 28.5 lakh hectares to be brought under irrigation.

29. Govt will reorganize agricultural policy to double farmer income in five years.

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