Know what the budget 2016 might hold for taxpayers

TomorrowMakers ™

Know what the budget 2016 might hold for taxpayers

10 February 2016
Even though there is only few weeks left for the union budget 2016-17 to be introduced in the parliament, speculations around what benefits will the budget give to taxpayers are already doing the rounds. Let’s have a look at what tax reforms we can hope to see this year.
 
 

We taxpayers have been waiting for easier tax regime since quite some time. Therefore, with the annual budget 2016-2017 only a few weeks away from being tabled in the parliament, hopes are high again for big tax reforms during the upcoming fiscal year.

Among major speculations, we are expecting some recommendations of the Tax Administration Reform Commission headed by economist Parthsarhty Shome to get implemented in budget 2016-2017.

The Tax Administration Reform Commission, constituted in August 2013 by the then Prime Minister Manmohan Singh, came up with the following recommendations in July, 2014.

  1. Development of PAN no. as Common Business Identification Number (CBIN), which can be used by other government departments like central excise, customs, service tax, etc.
  2. Inclusion of wealth tax returns with IT tax returns. Common filing of both the returns along with common processing of both at the CPC in Bengaluru.
  3. Establishment of a dedicated organisation for taxpayer services and facility of pre-filled tax returns.
  4. Creating an account with running balance that can be used by the taxpayer to set off his or her tax liabilities. Crediting TDS to this account after every TDS deduction from a payment.

Also, as per Finance Minister Mr. Arun Jaitley, the government is looking into Easwar committee’s report to simplify Income Tax Act. And if reports are to be believed, government might also consider lowering TDS by 50%.

Apart from the recommendations of these two committees, experts are expecting the following changes in the taxation system.

  • Increasing basic tax exemption limit from 2.5 lakhs to 3 lakhs and linking it with inflation to increase it automatically every year.
  • Raising deduction limit under section 80 C and adding some saving products in it.
  • Raising the deduction limit for home loan under section 24B
  • Change in rules for tax benefits on home loans in case of under construction projects
  • Introduction of tax benefits on house insurance premiums
  • Raising deduction limit under medical allowance, education allowance, hostel allowance, travel allowance etc.

As per some reports, Finance ministry is mulling raising tax exemption limit on savings from Rs 1.5 lakh per year to Rs 2.5 lakh per annum. It might also be considering reducing maturity period of tax free term deposit from five years to one year.

To read taxpayers’ mind, a prominent financial publication conducted a survey, in which almost all taxpayers unanimously revealed that they are hopeful of a raise in the basic tax exemption limit, at least for senior citizens.

Most participants in the survey felt that the service tax should come down from the current 14%. They are also looking forward to removal of certain kinds of taxes like capital gain tax on long term gain on equity investment, tax on agricultural income, etc.

Taxpayers’ eyes are eagerly anticipating the budget that is set to be introduced on February 29th, 2016. As to how many of these recommendations and expectations will finally find a place inside the budget, we’ll know only after a few weeks. So, let’s hope for the best.

 

Do you know how much industries contribute to the Indian GDP

POLL

 

MOST VIEWED CONTENT

Dummy’s guide to Form 16

Dummy’s guide to Form 16

If you are a salaried individual paying tax, Form 16 is an important document, provided by your employer for the previous financial year.

Components of your salary and their tax benefits [Infographic]

Components of your salary and their tax benefits [Infographic]

Structuring the salary, including tax efficient components is what employers should look at to maximise the take home of their employees

GST 101: What India’s biggest tax reform means for you

GST 101: What India’s biggest tax reform means for you

The goods and services tax (GST Bill) and its impact on consumers explained in terms you will actually understand

Tax Benefits after Retirement

Tax Benefits after Retirement

The law grants tax exemptions on retirement benefits like PF, pension, gratuity and other retirement benefits. Learn more about the applicable rules to avoid tax hassles in your retired life.

How does insurance help you save tax?

How does insurance help you save tax?

Insurance is a great means to save tax. However, given the dynamic nature of tax rules on deduction of insurance premiums, one must keep oneself aware of the latest tax changes and rules so as to be mindful of the same while purchasing insurance, to get the best tax benefits that are available on such products.

Time to submit investment proofs for tax? Here’s the guide

Time to submit investment proofs for tax? Here’s the guide

Confused how to submit investment proofs to avail tax deductions? Here’s a detailed look at which sections you can claim under and which instruments you can use to claim.

What the Internet has to say about GST (Goods and service tax)

What the Internet has to say about GST (Goods and service tax)

After a lot of back and forth, the Rajya Sabha finally passed the Goods and Services Tax (GST) bill on 3rd of August, 2016.

boy

We would love to hear from you!

Question, comment or concern? Our contact form is the best way to get in touch. We will respond to you within 5 working days.

NEWSLETTER