UNION BUDGET 2016-17 HIGHLIGHTS

CA PULKIT SHARMA WWW.TIKSHARE.COM

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INCOME TAX

• 87A Rebate for Taxable Income below 5 Lakhs increased from 2000 to 5000.• 80GG benefits increased from Rs. 24,000 to Rs. 60,000.• 44AD limit increased from Rs. 1 crore to Rs. 2 Crore. Lakhs of MSME will benefit from this.• Presumptive taxation scheme now extended to Professional having receipts upto Rs. 50 Lakhs.

Presumption of profit being 50%.• New manufacturing companies incorporated on or after 01/03/2015 are given an option to pay

income tax at 25% + cess and surcharge provided they do not claim profit linked or investment linked deductions and do not avail of investment allowance and accelerated depreciation.

• Corporate Tax Rate for small companies (Turnover not exceeding 5 crore) is reduced to 29% plus surcharge and cess.

• 100% deduction of profits for 3 out of 5 years for startups set up during April 2016 to March 2019. MAT will apply in such cases. Capital gains will not be taxed if invested in regulated/notified Fund of Funds and by individuals in notified startups, in which they hold majority shares.

• Withdrawal up to 40% of the corpus at the time of retirement tax exempt in the case of National Pension Scheme, superannuation funds and recognized provident funds, including EPF .

INCOME TAX

• For the ‘first – home buyers’, deduction for additional interest of Rs. 50,000 per annum for loans up to Rs. 35 lakh sanctioned during the next financial year, provided the value of the house does not exceed Rs. 50 lakh.

• Surcharge from 12% to 15% on persons, other than companies, firms and cooperative societies having income above Rs. 1 crore.

• Rate of Securities Transaction tax in case of ‘Options’ is proposed to be increased from .017% to .05%.

• In case of foreign E-Commerce companies, who does not have permanent establishment in India, a person making payment of more than 1 lakh in a year as advertising fee, should deduct tax at 6% of gross amount paid. Applicable only for B2B transactions.

• Changes in TDS Limits.• Upon self-certification, No tax will be deducted on rental payments if the income of the payee

does not exceed the maximum amount not chargeable to tax.

INDIRECT TAXES –Key Changes

• Additional Cess at .5% called as Krishi Kalyan Cess to be imposed on all taxable services. Applicable from June 1, 2016. Effective service tax rate will become 15%.

• Excise Duty of 1% without input credit and 12.5% with input credit to be imposed on Article of Jewellery (except Silver Jewellery…. ).

• Excise duty on Readymade garments increased from existing NILor6/12.5% to 2 or 12.5% without and with input credits. Tariff value is increased from 30% to 60%. Applicable to article with RSP of Rs.1000 or above.

• Excise duties on various tobacco products other than beedi increased by about 10 to 15%.