Budget & Your Money

Ventura Securities Ltd.1

Union Budget Impact on Individual

� No change in Tax Slabs. Surcharge increased from 12% to 15% for income above Rs. 1 crore

� No change in 80C limit

� 10% tax on individuals receiving dividend exceeding Rs. 10 lacs.

� Withdrawal of 40% corpus in NPS now made tax-free

March 08, 2016 1

Union Budget Impact on Individual

� Individuals to pay advance tax installment from 15 June onwards previously was from 15 September

� Service Tax to increase to 15% due to � Service Tax to increase to 15% due to introduction of 0.5% additional tax called KrishiKalyan Cess

� Tax-free bonds of Rs. 31,300 crores will be raised during FY 2016-17.

March 08, 2016 2

EPF withdrawal rules w.e.f 10th Feb 2016

Particulars Existing rule EPF withdrawal rules w.e.f 10th Feb

2016

EPF Withdrawal

The EPF members (employees)

can withdraw the full EPF

balance after 60 days of

unemployment.

Full EPF balance cannot be withdrawn. Employee

can withdraw his/her contributions + interest

portion only on cessation of employment.

Employer’s portion can be withdrawn only at

age of retirement(58 years).

Retirement Age 55 years 58 years

Provisions related to

Taxation/ TDS

Withdrawal before 5 years,

employee contribution is

taxable.

TDS is also applicable if the

amount is greater than Rs.

30,000/-

TDS applicable limit is being raised from

Rs.30,000 to Rs.50,000/-

TDS Rate

PAN submitted - @10%

PAN not submitted – @ 34.6%

Along with PAN 15G/15H

Submitted – NIL

No change

March 08, 2016 3

NPS: Current Features & changes proposed in budget 2016-17

Particulars Tier I AccountChanges Proposed in

Budget 2016-17

Deduction for

Employee

Contribution

Employee contribution up to 10% of

Salary is eligible for deduction under

Section 80C within the Rs 1.5 lakh limit

No Change

Deduction for

Employer

Contribution

The employer's contribution up to 10%

of Salary is eligible for deduction under

Section 80CCD(2) without any limit

No Change

Taxation on

Withdrawal

Post attaining 60 years – Maximum

60% of the corpus can be withdrawn.

Taxable

Maximum 60% of the

corpus can be withdrawn.

Up to 40% of the corpus

made tax exempt.

Taxation on

AnnuityTaxable No Change

March 08, 2016 4

Example : Contribution upto Rs. 25,000 p.m. (Rs. 3 lakhs p.a.) each

(Employee and Employer)

Particulars Current (Rs.) Proposed (Rs.)

Assumed Contribution (per month)

(Employee + Employer) 50,000 50,000

Contribution (per annum)

(Employee + Employer) (Rs. In lakhs)6.00 6.00

Contribution in 20 years

(Employee + Employer) (Rs. In lakhs)120.00 120.00

Capital Gains@10.25% p.a.*(Rs. In lakhs) 183.21 183.21

Tax @30.9% on Withdrawable corpus(Rs. In lakhs) 56.22 18.74

Net Corpus in hand(Rs. In lakhs) 246.99 284.47

Yield 7.03% p.a. 8.31% p.a.

*Note: Allocation to Equity (50%), Corporate debt (25%) and Government bonds (25%). Assumed rate of

return for Equity @12% p.a., Corporate debt@9% p.a. and Government bonds@8% p.a.

March 08, 2016 5

Key Highlights

� Tax on Dividends:

Current : Entire amount was tax-free.

Proposed: Additional tax at the rate of 10% of gross amountof dividend will be payable by the recipients receiving dividendfrom domestic companies exceeding Rs.10 lakh per annumwith effect from 01st April 2016.

For example, if the dividend amount is Rs 11 lakhs, earlier theFor example, if the dividend amount is Rs 11 lakhs, earlier theentire amount was tax free. Now, there will be tax of 10% onthe entire amount Rs 11 lakhs which comes to Rs. 1.1 lakhs.

March 08, 2016 6

Personal Tax - Individuals

Tax slabs (Rs.) Tax rate (%) Effective Tax rate (%)

Up to 2,50,000 Nil Nil

2,50,001-5,00,000 10 10.32,50,001-5,00,000 10 10.3

5,00,001-10,00,000 20 20.6

Above 10,00,000 30 30.9

Above Rs. 1 crore 30 35.54*

*Increased from 34.61% due to additional surcharge of 15% (increased from 12%) forindividual earning more than Rs. 1 crore p.a.

March 08, 2016 7

Personal Tax Slab - Senior citizens

Tax slabs (Rs.)

Tax rate (%) for

Senior Citizens

(Age 60 years or

more but less than

80 years)

Tax slabs (Rs.)

Tax rate (%)For

Very Senior

Citizens (Age 80

years or more)

Up toNil

Up to

3,00,000Nil

Upto Rs. 5,00,000 Nil3,00,001-

5,00,00010.3

5,00,001-

10,00,00020.6

5,00,001-

10,00,000 20.6

Above 10,00,000 30.9

Above Rs.

10,00,000 30.9

March 08, 2016 8

Section ParticularsCurrent

Post Budget

Fourth schedule to IT act in Part A

Contribution of employer to provident fund

Upto 12% of the Salary exempt from tax

No Change

Post attaining 60Post attaining 60 years –

Deductions

9

80CCDContribution to National PensionSystem (NPS)

Post attaining 60years – 60% can bewithdrawn which isfully taxable. Also,annuity fund whichgoes to legal heir isfully taxable.

Post attaining 60 years –60% can be withdrawn ofwhich upto 40% amount isexempt from tax.Annuity fund which goes tolegal heir is fully taxable

87A

Tax Rebate for individual with income upto Rs. 5 lakhs

Tax rebate of Rs 2,000

Tax rebate limit raised to Rs5,000

March 08, 2016

Tax impact on your investments

InvestmentTax incentive

when investing

Tax implication of

Dividend

Tax implication on

Sale

Equity

SharesNone

Additional tax at the rate of

10% of gross amount of

dividend will be payable by

the recipients receiving

dividend from domestic

companies exceeding Rs.10

LTCG – Nil after 1 yr

STCG – taxable @15.45% if

sold within 1 yr

companies exceeding Rs.10

lakh p.a.

Mutual

Funds

Investment in ELSS

funds is eligible for

tax deduction

within the overall

cap of Rs. 1.5 lacs

available under

Sec. 80C

Dividend from non-equity

oriented funds would

attract DDT.

Equity-oriented :

LTCG – Nil after 1 yr

STCG – taxable @15.45% if

sold before 1 yr

Debt-oriented:

LTCG – taxable @20.6%

(with indexation) if sold after

3 yrs

STCG – taxable as per tax

slab – if sold before 3 yrsLTCG - Long term capital gainSTCG - Short term capital gain

March 08, 2016 10

InvestmentTax incentive

when investing

Tax implication of

InterestTax implication on Sale

Tax-Free

BondsNo tax exemption at

the time of

investment

Interest from notified

tax-free bonds is exempt

from tax

LTCG – taxable @10%

(without indexation)

[if held more than 1 yr]

STCG – taxable as per tax

slab (if sold before 1 yr)Debentures

Interest income from

debentures is taxable.

However, no TDS if held

Tax impact on your investments

slab (if sold before 1 yr)Debentures

However, no TDS if held

in demat

Bank/

Company

Fixed Deposits

Investment in 5

year tax saving

bank deposit is

eligible for

deduction within the

overall cap of Rs.

1.5 lacs available

under Sec 80C

Interest income will be

taxable as per the tax

slab of the individual.

TDS would be deducted

as applicable

Not Applicable

March 08, 2016 11

Disclaimer

Ventura Securities Limited. Corporate Office: C-112/116, Bldg No. 1, Kailash Industrial Complex, ParkSite, Vikhroli (W), Mumbai – 400079

This report is neither an offer nor a solicitation to purchase or sellsecurities. The information and views expressed herein are believed to bereliable, but no responsibility (or liability) is accepted for errors of fact orreliable, but no responsibility (or liability) is accepted for errors of fact oropinion. Writers and contributors may be trading in or have positions inthe securities mentioned in their articles. Neither Ventura SecuritiesLimited nor any of the contributors accepts any liability arising out of theabove information/articles. Reproduction in whole or in part withoutwritten permission is prohibited. This report is for private circulation.

March 08, 2016 12