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Showing posts with label Budget 2016. Show all posts
Showing posts with label Budget 2016. Show all posts

Saturday, 12 March 2016

08:25

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.

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Thursday, 3 March 2016

08:25

Budget is a let-down for banking sector, says banks' union

Budget is a let-down for banking sector, says banks' union

C H Venkatachalam, general secretary, All India Bank Employees Association (AIBEA) said that Budget  2016-17 is yet another disappointment for banking sector. He said the Finance Minister has not announced any drastic measure to recover the bad loans.

AIBEA has been demanding that government should publish the names of the bank loan defaulters and also give more teeth to the recovery laws but no such announcement has been made in this Budget.

Particularly, the deliberate willful default of bank loans should be treated as criminal offence and criminal action should be taken on such defaulters. But here also, the government has not done anything.

On capital infusion, he questioned, when the PSBs belong to the government, why there should be partial recapitalisation of Banks.

According to Venkatachalam, the Rs 25,000 crores additional capital to PSBs, announced by the Finance Minister, is now sufficient as the actual requirement is said to be more than Rs 2 lakh crore.

"This means remaining capital will be mobilised from private investments including through FDI," said Venkatachalam.

"Thus reiteration that Banks will be under public sector is only a myth and the real agenda is privatisation. This is very clear from the declaration that IDBI Bank will be privatised. This is in negation of all repeated assurances on the floor of the Parliament in the past that IDBI Bank will be in public sector only," he said.

On permitting FDI in the Assert Reconstruction Companies, he said, "This is an undesirable move. This means that bank loans would be sold out at a discount to foreign companies in order to clean the balance sheets".

The union also wants the government to impound Vijay Mallya's passport. Venkatachalam alleged there are reports that Kingfisher's Vijay Mallya wants to leave country without repaying bank dues of over Rs 7,500 crore to 17 Banks.

"His passport should be impounded by the government and he should not be allowed to leave India without repaying the loans," said Venkatachalam.

He added, soft approach to bank loan defaulters and talking of more private capital in Banks only means that the bank loan defaulters can become owners of the Banks. 



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Wednesday, 2 March 2016

21:41

Despite high target, Mudra refinance to remain low

Despite high target, Mudra refinance to remain low

Even as the government has set a lofty target of Rs 1,80,000 crore worth loan sanction under Mudra Yojna, the actual refinance by Mudra, the non-banking finance arm of Small Industries Development Bank of India (SIDBI), will be not more than Rs 4,000 crore this year.

In the 2015-16 budget, the government had allocated Rs 20,000 crore for Mudra refinance.

So far, Mudra has sanctioned about Rs 3,000 crore under refinance, while the total disbursement has been close to Rs 2200 crore, said Jiji Mammen, chief executive officer, Mudra.

"This year, we are expecting total refinancing to be close to Rs 4000 crore," according to Mammen.

Notably, the stringent conditions attached with Mudra refinance has hindered it popularity. While banks get loans from Mudra at 6.72%, they are required to lend it at base rate.

However, in general, loans to small and medium enterprises are given at 1-2% higher than base rate by banks. Secondly, MFIs cannot earn spreads over 10% respectively under Mudra refinance scheme, whereas RBI allows MFIs to have spread between 10-12%, depending on its size.

"Taking refinance from Mudra is totally under the discretion of banks, and it depends on their liquidity condition and cost of fund. Moreover, there are certain conditions attached with Mudra refinance, which banks find restrictive,' said Mammen. In order to make Mudra a viable business model, recently the Cabinet approved conversion of MUDRA into a bank.

Mudra loans encompass three categories -- 'Shishu', 'Kishor' and Tarun' to signify the stage of growth and development and funding needs of the beneficiary micro unit entrepreneur. Shishu covers loans upto Rs 50,000, Kishor covers loans above Rs 50,000 and up to Rs 5 lakh and Tarun covers loans above Rs 5 lakh and up to Rs 10 lakh.

Thus, almost all the loans by MFIs, which are of the value of up to Rs 50000, are re-categorized as Mudra loans, even though there has been no refinance from the NBFC arm of Mudra. The government has partnered with about 36 MFIs, 17 public sector banks and 25 NBFCs, among other entities who have reclassified their loans as Mudra loans.

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Tuesday, 1 March 2016

07:46

Measures for moving towards a pensioned society

Measures for moving towards a pensioned society 

While presenting the General Budget 2016-17 in Lok Sabha today, the Union Finance Minister Shri Arun Jaitley said that pension schemes offer financial protection to senior citizens. He 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). In case of superannuation funds and recognized provident funds, including EPF, the same norm of 40% of corpus to be tax free will apply in respect of corpus created out of contributions made after 1.4.2016. Further, the annuity fund which goes to the legal heir after the death of pensioner will not be taxable in all three cases. 

He also proposed a monetary limit for contribution of employer in recognized Provident and Superannuation Fund of Rs. 1.5 lakh per annum for taking tax benefit. 

He proposed to exempt from service tax the Annuity services provided by the National Pension Scheme (NPS) and Services provided by EPFO to employees. Also, he proposed to reduce service tax on Single premium Annuity (Insurance) Policies from 3.5% to 1.4% of the premium paid in certain cases. 

Source:PIBNEWS

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Monday, 29 February 2016

20:43

Budget 2016:Direct Tax and Indirect Tax Announced

Budget 2016:Direct Tax and Indirect Tax Announced

Finance Minister Arun Jaitley did not change income tax slabs in his third Budget, but he did tweak some deductions and announced multiple new cesses, which will impact tax liability for the common man.

Here is a complete list of new tax measures announced in Budget 2016:

Direct Tax:

1) Deduction limit under Section 87A of the Income Tax Act has been raised from Rs. 2,000 to Rs. 5,000 per annum. This will help over 2 crore taxpayers save more.

2) Taxpayers who live in rented houses and don't get house rent allowance (HRA) can deduct Rs. 60,000 per annum from their income from the current Rs. 24,000.

3) An additional deduction of Rs. 50,000 on interest paid by first-time home buyers on home loans of up to Rs. 35 lakh, provided the house value doesn't exceed Rs. 50 lakh, has been announced.

4) Super-rich, or those with an income of over Rs. 1 crore, will have to pay more taxes as surcharge has been raised from 12 per cent to 15 per cent.

5) Individuals who receive dividends in excess of Rs. 10 lakh per annum will now have to pay 10 per cent tax on gross amount of dividend.

Indirect Tax:

6) Cars priced Rs. 10 lakh and above will attract 1 per cent tax. Purchase of goods and services in cash exceeding Rs. 2 lakh will also attract 1 per cent tax. An infrastructure 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 SUVs will make buying all cars costlier.

7) Eating out in restaurants, buying property and insurance, and making mobile phone calls will become more expensive from June 1, 2016 because of a "Krishi Kalyan" cess of 0.5 per cent, which will be levied on all services.

8) Cigarette prices will go up from next financial year as excise duty on tobacco products (other than beedi) has been hiked from 10 per cent to 15 per cent.

9) Single-premium insurance premiums will get cheaper as service tax on policy premiums has been cut from 3.5 per cent to 1.4 per cent.

10) Branded retail garments will become costlier as Budget 2016 has proposed a 6 per cent excise on branded retail garments priced more than Rs. 1,000. Imitation jewellery is also set to cost more as basic customs duty has been increased from 10 per cent to 15 per cent.

Source:NDTV
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20:04

Budget 2016: Govt moves towards privatisation of IDBI Bank

Budget 2016: Govt moves towards privatisation of IDBI Bank

Union Finance Minister Arun Jaitley said in his Budget speech that the government has started the process of transformation of IDBI Bank and will look at bringing down government's stake in the bank below 51%.

Following an intent in the Budget, the IDBI Bank share shot up by 8% to 60 per share on Bombay Stock Exchange.

Currently, government's stake in the bank is more than 80%.

This is the first official announcement on such a move, even as discussion were on to dilute stake in the bank. IDBI Bank could be test case for the government before it moves to reduce stake in other banks as capital infusion is becoming challenging for the government considering its tight fiscal stance. 

On recapitalisation, Jaitley said government will infuse Rs 25,000 crore in public sector banks, while the government stands to infuse more if need be. The figure is part of the planned recapitalisation that the government announced last year, under its Indradhanush programme. 

Under the plan, the government will infuse Rs 70,000 crore in phases and has already infused Rs 19,950 crore to 13 public sector banks. Hence, there is nothing much new in the racapitalisation front except the government assurance that it stands "solidly behind banks."

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Sunday, 21 February 2016

07:06

Budget 2016: PFRDA seeks complete tax exemptions for NPS

Budget 2016: PFRDA seeks complete tax exemptions for NPS

With an aim to increase its customer base, PFRDA Chairman Hemant Contractor today urged the government to provide 'Triple E' benefits to the schemes under the National Pension System (NPS) to bring them at par with EPFO and PPF where the maturity amount is not taxed.

"Our request to the government is with regard to making NPS a Triple E product," Contractor said on his expectations from the Union Budget to be presented by Finance Minister Arun Jaitley on February 29.

Under the 'Triple E' category investment, all three accrued interest and withdrawal are exempt from tax.
Talking to reporters, he said making the NPS a 'Exempt, Exempt, Exempt' product would go a long way in increasing the customer base of PFRDA.
"If this happens then our customer base will surely increase and it will help raise our corpus substantially," he said.

He said as compared to other pension schemes, NPS is a bit disadvantageous as both EPFO and PPF enjoy the 'Triple E' benefit.

"If our schemes too offer such facility, we think this will help us make join in a large number with our scheme, Contractor said.

The retirement saving scheme NPS falls under EET (Exempt-Exempt-Taxable) category, wherein investment gets deduction in the taxable income and also income/interest/gains are not taxed. However, maturity proceeds are taxable.

Pension Fund Regulatory and Development Authority (PFRDA) runs the NPS.
Contractor further said PFRDA has urged the government for continuation of the additional deduction of Rs 50,000 for contribution towards the NPS under Section 80CCD.

The PFRDA is also demanding that service tax on purchase of annuity should be removed.
Source:BankingUpdates

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Wednesday, 17 February 2016

20:14

Budget 2016-17 :FDI limit in Public Sector Banks may increase from 20 to 49%

Budget 2016-17 :FDI limit in Public Sector Banks may increase from 20 to 49%

Govt mulls hiking FDI cap in PSU banks to 49%

NEW DELHI, FEB 16:  The government is considering to increase the foreign investment limit in public sector banks to 49 per cent from 20 per cent with a view to attract overseas inflows.

The Finance Ministry is looking into the proposal, sources said, adding that it may be announced in the forthcoming Budget 2016-17.

If the government accepts this proposal, it would lead to amendments in various Acts dealing with public sector banks to enable raising foreign investment limit.

Currently, 20 per cent foreign investment is permitted in the PSU banks under government approval route.

Last year, the government had relaxed the foreign investment norms in private sector banks. It had introduced full fungibility of foreign investment and accordingly FIIs, FPIs, QFIs were permitted to invest up to a sectoral limit of 74 per cent, provided there is no change of control and management of the investee company.

Earlier, portfolio investment was permitted up to 49 per cent in private sector banks.

The increase in foreign investment would result in flow of capital which public sector banks require urgently. The government can provide limited support to state-owned banks as the resources are limited.

Last year, the government had announced a revamp plan ‘Indradhanush’ to infuse Rs. 70,000 crore in state-owned banks over four years, while they will have to raise a further Rs. 1.1 lakh crore from the markets to meet their capital requirements in line with global risk norms Basel III.

As per the blueprint, PSU banks will get Rs. 25,000 crore this fiscal and also in the next fiscal. Besides, Rs. 10,000 crore each would be infused in 2017-18 and 2018-19.

Of the Rs. 25,000 crore earmarked for 2015-16, the government has pumped in about Rs. 20,088 crore in 13 public sector banks so far.

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