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Taxes, HRA and home loan: How Budget 2016 impacts you

In a relief to individual tax payers, Finance Minister Arun Jaitley today increased the tax deduction limit to Rs 60,000 per annum from the current Rs 24,000 on the housing rent.

union budget Updated: Feb 29, 2016 18:30 IST
The Finance Minister also announced an additional tax relief of Rs 50,000 per annum on a loan of Rs 35 lakh in 2016-17 for the first-time home buyers, provided the house cost does not exceed Rs 50 lakh
The Finance Minister also announced an additional tax relief of Rs 50,000 per annum on a loan of Rs 35 lakh in 2016-17 for the first-time home buyers, provided the house cost does not exceed Rs 50 lakh(Shutterstock)

Tax relief and HRA

In a relief to individual tax payers, Finance Minister Arun Jaitley on Monday increased the tax deduction limit to Rs 60,000 per annum from the current Rs 24,000 on the housing rent.

The Finance Minister also announced an additional tax relief of Rs 50,000 per annum on a loan of Rs 35 lakh in 2016-17 for the first-time home buyers, provided the house cost does not exceed Rs 50 lakh.

Read more: Budget 2016: Cigarettes, cars, jewellery get costlier

He also proposed to raise the ceiling of tax rebate under 87A from Rs 2,000 to Rs 5,000.

With this, individuals with income up to Rs 5 lakh will get a relief of Rs 3,000 in their tax liability, he said.

Surcharge on super rich

Jaitley has increased the surcharge on income tax levied on individuals earning income of Rs 1 crore or more from 12 percent to 15 percent. This move is aimed at taxing the super rich.

40% tax exemption for NPS

Jaitley has proposed to make withdrawal up to 40% of the corpus at the time of retirement tax exempt in the case of National Pension Scheme (NPS).

What more for investors

The government has also proposed to increase the turnover limit under presumptive taxation scheme under 44 AD of the Income Tax Act to Rs 2 crore from existing limit of Rs 1 crore, which will benefit more than 30 lakh small business people.

Read more: I-T slab unchanged; tax on super-rich rises

He also proposed to extend the presumptive taxation scheme with profit deemed to be 50 per cent, to professionals with gross receipts up to Rs 50 lakh.

The Finance Minister also announced to increase security transaction tax in case of ‘Options’ from 0.017 to 0.05 percent.

Stressing on simplification and rationalisation of taxation, the Finance Minister said that 13 cesses, levied by various Ministries in which revenue collection is less than Rs 50 crore, will be abolished.

Read more: Budget highlights: Rs 3,000 relief for taxpayers earning below Rs 5 lakh

NRIs can provide alternative documents to PAN Card

For non residents, providing alternative documents to PAN Card will be allowed and TDS provisions for Income Tax will be rationalised, he said. A facility for revision of return will also be extended to Central Excise Assesses, he added.

Car prices to go up

Meanwhile, car prices, including those of mass market small ones, are set to go up as Finance Minister Arun Jaitley proposed to levy an infrastructure cess of up to 4 per cent on various kinds of vehicles. Diesel vehicles would see the highest increase in prices. The Finance Minister proposed a cess of 1 per cent on small petrol, LPG and CNG cars, 2.5 per cent on diesel cars of certain capacity and 4 per cent on other high-powered vehicles and SUVs.

Jaitley also proposed “to collect tax at source at the rate of 1 per cent on purchase of luxury cars exceeding value of Rs ten lakh and purchase of goods and services in cash exceeding Rs two lakh.

Govt to contribute 8.33% to EPS for new workers, gives Rs 1000 Crore

To create new jobs, the government has decided to pay 8.33 per cent of wages to EPS on behalf of employers for workers during first three years of employment, and has given Rs 1,000 crore for the same.