Impact of Budget on Individual taxpayers

Impact of Budget on Individual taxpayers

Impact Of Budget On Individuals

The Finance Minister, Mr. Arun Jaitely on February 29, 2016 presented his 3rd Union Budget in the Parliament. Various changes have been proposed in the income-tax provisions which would impact the taxable income of an individual. The key direct tax proposals made for an Individual are as under:

1) Rate of surcharge shall be increased to 15% from 12%, if total income of an individual exceeds Rs. 1 crore.

2) Relief under Section 87A is proposed to be raised from Rs. 2,000 to Rs. 5,000 if total income of a resident individual does not exceed Rs. 5,00,000.

3) Dividend income is exempt under section 10(34). However, the Finance Bill proposes an additional tax at the rate of 10% on gross amount of dividend income received from domestic company,if it exceeds Rs. 10 lakhs per annum.

4) Additional deduction up to Rs. 50,000 is proposed under section 80EE in respect of interest on housing loan to the first time individual buyers of a residential houseproperty.

5) Maximum deduction under section 80GG for individuals paying house rent but not receiving HRA shall be increased from Rs 24,000 to Rs. 60,000 per annum.

6) Time-limit to acquire or construct house property to claim deduction of interest on housing loan under section 24(b) has been proposed to be increased from 3 years to 5 years.

7) A new Section 54EE is proposed to provide exemption up to Rs. 50 lakhs for long-term capital gains invested in units of funds set-up by Government to promote start-ups.

8) Filing of return is now mandatory, even if entire income is exempt from tax under Section 10(38). However, in such case total income should exceed maximum exemption limit without giving effect to the provisions of Section 10(38).

9) Currently, belated return can be filed at any time before the expiry of 1 year from the end ofthe relevant Assessment Year. Now, it is proposed that belated return cannot be filed after expiry of relevant Assessment Year.

10) The period for completion of assessment under Section 143 (Scrutiny Assessments) or Section 144 be changed from existing 24 months to 21 months from the end of the assessment year in which the income was first assess able.

Source:Important BankingNews2