Budget 2016: What is in it for you
Written on Monday, February 29, 2016
By Mr. Anil Chopra - Group CEO & Director, Bajaj Capital Ltd.
Union Budget is an annual exercise with the main objective of giving a direction to country's economy. This year's Budget tabled today in the Parliament has cheered middle classes or the common man with quite a few announcements.
First of all, every taxpayer whose annual income is below Rs.5 lacs will get an additional tax rebate of Rs.3,000 U/s 87A. In the last Budget, this marginal relief was announced and the amount was restricted to Rs.2,000 per individual. Now this rebate has been enhanced to Rs.5,000/- This rebate is available to all taxpayers whether salaried or business or self-employed.
In addition to above, for salaried individuals who live in rented property and do not get any rent reimbursements from their employer, they will get extra relief which has now been increased from Rs.24,000 per year to Rs.60,000 per year.
There is good news for the first time new home buyer also provided the total house value is less than Rs.50 lacs and the housing loan taken for buying this property is up to Rs.35 lacs, there is an additional deduction of Rs.50,000/- for such individuals (Section 80 EE).
Whereas taxpayers with low income have been given additional relief as explained above, on the other hand super rich taxpayers will have to now pay a higher tax than before. These are small steps in the direction of reducing inequality in incomes. For super-rich taxpayers whose annual taxable income is more than Rs.1 crore, they will have to pay additional surcharge @ 15% on their total tax liability as against 12% the previous year. Also, if annual dividend income is higher than Rs.10 lacs then same will be taxed @ 10% whereas the same was exempt from tax in the previous year.
On the whole, it is a mix Budget with marginal changes here and there and the only change which will have an impact on everybody, including housewives and senior citizens is increase in Service Tax rate from 14.5% to 15% due to levy of a new Krishi Kalyan Cess @ 0.5%.