- Date : 12/10/2017
- Read: 4 mins
Let’s take a quick look at some of the highlights of union budget 2016 compared with the 2015 one
Yesterday, Finance Minister Arun Jaitley presented the FY2016-17 Union budget in the parliament. Although the income tax slab rates were unchanged, there were some respite for the common man too. Let’s take a quick look at some of the highlights of this year’s budget compared with the 2015 one:
Income Tax Slab
Last year, the government had kept the IT slab unchanged. This year too, it decided to continue with the earlier slab, but gave respite to the salaried person by raising the ceiling of tax rebate under Section 87A to Rs. 5,000 from Rs 2,000 if taxable income is less than 5 lakhs. Additionally, house rent paid under section 80 GG has been hiked from 24,000 to 60,000 giving relief to people living in rented homes.
Increase in excise duty/service tax:
The FM last year hiked the excised duty on cigarettes, tobacco products, condensed milk, peanut butter making them expensive. In cigarettes, the excise duty was hiked by 15% to 25%. However, excise duty for leather footwear costing above Rs. 1,000 was reduced from 12% to 6% as well as for LED drivers.
This year, the FM has continued with the increase of excise duty by 10-15% for tobacco products, except bidi. Also excise duty of 1% has been imposed on purchase of goods and services in cash exceeding 2 lakhs. Additionally, excise duty of 2% to 5% on branded garments will effectively make them dearer. Aerated water and mineral waters will also bear an excise duty of 18% to 21%.
In 2015-16, service tax was increased from 12.3% to 14% making several services including eating out, cabs, mobile, DTH, beauty parlor charges all expensive. This year, buying car has become expensive with the introduction of 1% to 4% infrastructure cess depending on the vehicle.
Surcharge on income of super-rich
Budget 2015-16 had increased surcharge for the super-rich with income of more than 1 crore to 12%. This year, an additional surcharge of 3% (total of 15%) has been levied to this category.
New home buyers:
First time home buyers can get an additional deduction of Rs. 50,000 on a housing loan within 30 lakhs. Service tax exemption has also been given for construction of affordable housing up to 60 sq. m. under state and central housing schemes.
Budget 2015-16 announced that the corporate tax rate will get reduced from 30% to 25% over a period of 4 years. In keeping with the promise, the government this year fixed the corporate tax for new manufacturing units at 25% and proposed to lower the corporate IT rate for small companies with turnover of less than Rs. 5 crore.
SC/ST businesses, women entrepreneurs:
In last year’s budget, the government had announced a Mudra bank to provide boost to SC/ST entrepreneurs as well as women empowerment. In this budget, FM Jaitley has allocated Rs. 500 crores under the Stand Up India scheme giving boost to the SC/ST and women entrepreneurs.
Tax on withdrawal of EPF deposits:
The Budget 2016 has made 60% of interest earned on employee-contributed EPF corpus taxable, for all contributions made by employees after 1st April, 2016. This is a major shift from a long-running tradition of exemption at all stages on EPF and PPF, the latter of which has remained tax-exempt.
In 2015-16, Rs 25, 000 crores were allocated for Rural Infrastructure Development Bank. To support Micro Irrigation Programme, Rs 5300 crore were separately assigned and farmers’ credit-target was set at of 8.5 lakh crore. This year, Mr. Jaitley set the agriculture credit target at 9 lakh crore. He also announced the Paramparagat Krishi Vikas Yojana to bring 5 lakh acres under organic farming and committed to bring 28.5 lakh hectares to be brought under irrigation and to reorganise agricultural policy to double farmer income in 5 years.
To get an idea of how Budget 2016 will affect your personal budget, here is: what’s become cheaper and what’s become more expensive with Budget 2016.