Developed By: iNFOTYKE
Union Budget 2016-17
What it has for common people
Focusing on rural econ
omy and infrastruc
ture with minor rebate for small taxpayers but amnesty for defaulters, Finance Minister Arun Jaitley on Monday unveiled a Rs.19.78 lakh crore ($300 billion) budget for 2016-17, earmarking more money for health, literacy and roads.
Given below are some points of the Budget that the common man may be interested in:
Marginal tax relief for small tax payers
In relief to small tax payers, the Budget proposes to raise the ceiling of tax rebate under Section 87(A) from Rs 2000 to Rs 5000 for incomes not exceeding Rs 5 lakh per annum. There are two crore tax payers in this category who would get a relief of Rs 3000 in their tax liability.
Those who do not have house of their own and do not get house rent allowance from employers will get a deduction of Rs 60,000 per year as against existing Rs 24,000.
Breather for home-buyers
First time home buyers will get a deduction of an additional interest of Rs 50,000 per annum for loan up to Rs 35 lakh, during 2016-17, provided the house value does not exceed Rs 50 lakh.
60% of EPF deposits to be taxed on withdrawal
after April 1
Breaking from the long-held practice of exemption at all stages, the Budget for 2016-17 seeks to impose a retirement tax at the time of final withdrawal on 60 per cent of contributions made after April 1, 2016, to EPF and other schemes.
At present, social security schemes run by retirement fund body EPFO are tax free ‘Exempt-Exempt-Exempt (EEE)’ scheme under which deposits, accrual of interest and withdrawals are tax free.
Launch of new health protection scheme
The budgetary allocation for the Health Ministry in 2016-17 stood at over Rs 38,000 crore, an increase of over Rs 4,000 crore over the previous year, even as the Centre decided to launch a new health protection scheme under which a cover of up to Rs 1 lakh per family will be provided to common people. Besides this, the government will also open around 3,000 medical stores to provide quality medicines at affordable prices across the country.
Employment generation through start-ups
Government announced a slew of initiatives in the Budget for startups, including 100 per cent tax exemption for three years and allocation of Rs 500 crore for SC/ST and women entrepreneurs, aimed at facilitating growth for these new businesses. These will stand good for companies set up between April 2016 and March 2019.
Smoking to be dearer
Continuing the trend set by his predecessors, Finance Minister Arun Jaitley on Monday came down heavily on smokers and tobacco consumers by imposing up to 15 per cent excise duty on all tobacco products. “To discourage consumption of tobacco and tobacco products, I propose to increase the excise duties on various tobacco products other than beedi by about 10 to 15 per cent,” Jaitley said in his Budget speech.
Cars to get costly
Potential car buyers will have to shell out more – from as low as Rs 3,000 to over Rs 1 lakh – on new purchases as the Finance Minister announced infrastructure cess of up to 4 per cent on vehicles.
Garments prices to go up by 2-5 per cent
Prices of branded garments are set to go up by “2 to 5 per cent” with the Union government levying excise duty on ready-made products of Rs 1,000 or more in the Budget 2016-17. While presenting the Budget, Union Finance Minister Arun Jaitley said, “I propose to change the excise duty on branded readymade garments and made up articles of textiles with a retail sale price of Rs 1,000 and above from ‘Nil without input tax credit or 6 per cent/12.5 per cent with input tax credit’ to ‘2 per cent without input tax credit or 12.5 per cent with input tax credit’.”
Air travel to become expensive
Airfares are set to get costlier with higher excise duty of 14 per cent proposed on jet fuel in the Union Budget, even as it offers relief to the aviation sector with rationalisation of taxes for MRO works.
The Budget for 2016-17 has brought both cheers as well as tears to the aviation sector as airlines have been seeking lower levy on Aviation Turbine Fuel (ATF), which accounts for over 40 per cent of a carrier’s operating expenses.
And more costly items
Customs duty on imported imitation jewelery has gone up from 10 per cent to 15 per cent while customs duty on industrial solar water heater has increased from 7.5 per cent to 10 per cent which will make these items costlier.
Soft drinks and mineral water will also be dearer as Jaitley proposed to hike excise duty on “water including mineral water, aerated water containing added sugar or sweetening matter” to 21 per cent from 18 per cent earlier.
Locally manufactured mobiles will become costlier by about 1 per cent because government has imposed duty on imported circuit boards used in them.
Traveling by hiring air-conditioned stage carriage will also become more expensive as it will now come under service tax with a rate of 5.6 per cent.
Smart watches will also be dearer as they will now be subjected to retail sales price-based assessment of excise duty with an abatement of 35 per cent.
Hiring of agency to pack and move household items while shifting premises will also become expensive as it will now attract a service tax of 5.6 per cent as against 4.2 per cent earlier.
Lottery tickets will also become expensive as that will come in the service tax net. (Agencies)