What’s in the budget for 2016-17 ?
Union Minister for Finance, Mr. Arun Jaitley announced the budget 2016-17 that seems to have brought some relief to the small taxpayers and the business owners. The budget also has no relief in the Income tax slabs or the 80C limits. The EPF withdrawal will also be taxed on 60% corpus. There are of course mixed reaction from people at various income levels and strata.
The details of the budget
The budget’s focus is on the rural economy and of course, the farmers were getting neglected for decades. There is tax relief for small taxpayers and has the affluent to pay more. There has been a push in the agriculture sector, the rural development, and the social sector. The push towards enhancing irrigation was also apparent. There will also be a good investment in public roads in the rural and urban areas.
For the taxpayers
We see no changes in tax slab or the 80C, although everyone was expecting the limits to be increased which never took place. Around 40% of NPS corpus will be now tax-free when it matures, and the rest 60% will be taxed if withdrawn completely. There is no tax on the annuity from the 60% corpus. The next is the EPF interest becomes taxable for the corpus of 60%. The EPF was an important point of discussion in the budget and is told that the only interest component is taxed during withdrawal and is applicable to the interest that will be earned after 1st April 2016. On the brighter side, the PPF still remains tax-free. The other one is the HTA exemption under the section 80 GG, raised from 24 thousand to 60 thousand annually. If you are a first time home buyer, you will definitely get Rs. 50 thousand deduction in the interest rate if the loan does not exceed 35 lacs and the total house value does not exceed 50 lacs. Get to know the Krishi Kalyan cess that have not added to the service tax and is applicable on all taxable services. The service tax will now see a hike from 14.5 % to 15%.
Budget for startups
The budget, this time, was interesting when the Finance Minister emphasized in the Prime Minister's visible campaign to boost investment and jobs with the ‘Start-up India, stand – up India’s plan. The budget says that the new manufacturing firms shall be taxed at 25%, and there will be no further exemptions. Companies with turnover of less than Rs. 5 crores will now be taxed at 29%. The startups will now get a 100 % tax exemption for the next three years.
Banking
A big boost has been given to the banking sector with almost Rs. 25,000 crore in the recapitalization of the public sector banks. Public sector banks have been focused on the current budget. There will also be ATM facilities in rural post offices for the convenience of the rural people. The general insurance companies will now be listed in the stock exchange.
Education sector
There will be Rs. 500 crore schemes for promoting entrepreneurship among the reserved calluses. Private and public educational institutes will be made world class. There can be an allotment for multi – skill development centers that will amount to Rs. 1,700 crore for 1500 centers.
Others
The focus will be on providing digital literacy scheme to be launched that will cover 6 crores to the additional rural household. The recent budget also announced the turnover of the limit under the Presumptive taxation scheme under section 44AD of Income Tax Act to 2 crores.
The budget has been set keeping in mind the global economic crises and to strengthen the existing economic reforms in India.