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Union Budget 2016 and income tax payers: Top 7 key takeaways

Mon February 01 2016, 11:33 am
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    Budget 2016: The foremost thing on income tax payers minds is how will the Budget impact them. Reports so far are pointing towards a positive impact. With the finance minister Arun Jaitley stating that the government is looking into recommendations of Parthasarthi Shome Committee and Easwar panel report, tax reforms seem to be high on the agenda of the government for the upcoming Budget for 2016-17. The first draft of Justice RV Easwar-led committee’s report on simplifying the Income-Tax Act, which was made public last week, has made many suggestions to simplify the taxation process for the common income tax payer. It has suggested amendments for raising the threshold for the tax deducted at source (TDS) and halving the TDS rate to 5 per cent. We take a look at the top 7 recommendations and their impact: (PTI)

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    5. Budget 2016: “For most Indian players, product differentiation does not come into play as much as the discount factor does. Though highly competitive, this approach does not help in establishing a loyal customer base as the audience is most likely to go where they see better discounts. In order to ensure the sustainability of the e-commerce sector, it is important for the players to work on product differentiation. There needs to be long-term clarity on the future of FDI in retail. Tax irregularities bundled with lack of clarity on FDI can seriously hamper the e-commerce boom,” Mohanty elaborated.

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    "Total income of political parties from unknown sources (income specified in the IT Returns whose sources are unknown), for the FY 2014-15 is Rs 685.36 crore, which is 54 per cent of the total income of the parties," ADR said.

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    Budget 2016: The government had moved to the negative list approach for taxing services — which means all services except a select few are taxed — in July, 2012. With the tax being comprehensive and the rate hiked, it has budgeted for a 25% increase in service tax collections this fiscal to Rs 2.1 lakh crore and this target seems about to be achieved.

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    4. Budget 2016: The committee has recommended clearance of refunds within three months from the end of the month in which the order is passed, or else payment of additional interest on delayed refund at 0.5 per cent per annum. The panel’s suggestion to move towards electronic tax processes to minimise human interface will empower the common taxpayer to follow his or her tax processes in a simple and convenient manner, tax experts said. The committee has suggested that processes such as filing of tax returns, rectification of mistakes, appeal, refunds and all communication for notices, questions and documents sought should be done electronically. (PTI)

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    5. Budget 2016: To help small businesses and sole proprietorships, the committee has recommended changes in the presumptive scheme, wherein turnover threshold for mandatory audit of the books has been proposed to raise from Rs 1 crore to Rs 2 crore for businesses and Rs 25 lakh to Rs 1 crore for professionals. Under the presumptive income scheme, it is proposed that businesses will not be required to maintain a book of accounts. The presumptive tax is levied on presumptive income calculations. (PTI)

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    Budget 2016: The enhanced opportunities for availing credit for the taxes paid on input services would help a whole range of industries including construction and professional services firms and taxi operators, analysts said, as these businesses are now suffering from an accumulation of input tax expenses. Budget 2016 would also take forward the policy of integrating the tax on goods and services and extending credit of service tax and excise duty across goods and services, outlined in Budget 2004 by then finance minister P Chidambaram.

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    7. Budget 2016: In a recommendation which is expected to increase retail participation in stock markets, the committee has also proposed that stock trading gains of up to Rs. 5,00,000 should be treated as capital gains and not business income, provided the shares were not held as stock-in-trade. The committee has accordingly recommended taxing the gains at 15 per cent for listed companies, though the gains will be taxed as long-term capital gains if held for more than one year and shown as capital assets. (PTI)

  1. H
    Hemen Parekh
    Feb 1, 2016 at 4:53 am
    STRUCTURAL REFORMS ? Speaking at the Global Business Summit yesterday , Shri Arun Jaitley said : " We will introduce Structural Reforms in the forthcoming Union Budget " What is the current structure of Union Budget ? # SOURCES of REVENUE * Taxes ( Direct Indirect ) * Borrowings ( Domestic Foreign ) * / Leasing of ets ( PSUs Natural National Resources ) # DEPLOYMENT of REVENUE * Administrative Expenses ( ries / Pensions / Maintenance / Subsidies , etc ) * Interest ( Prinl Amount ) on borrowings * Developmental Expenses ( Creation of new ets / Infrastructure ) * Lending Broadly speaking , this is the current structure Most of the time , all that the successive Finance Ministers have done is to slightly " Increase / Decrease " the " Sources and / or Deployment " of the funds , here and there Once in a while , some Finance Minister , even introduced altogether NEW source or a NEW way to spend the revenue ! But so far , no one has attempted to change the FUNDAMENTAL STRUCTURE ! I wonder whether Shri Jaitleyji's BUDGETARY REFORMS would incorporate the following Structural Changes for which , I have sent to him ( and to most of his cabinet colleagues ), dozens of emails ? : * Total abolition of Personal Income Tax ( Revenue Loss of approx Rs 2.5 lakh*crores ) * Introduction of 2% Bank Transaction Tax - BTT ( Revenue Gain of Rs 15 lakh*crores ) * Decreasing Corporate tax slab-rates based on No of permanent employees ( to encourage job creation ) * Perpetual Amnesty Scheme ( no questions asked as to the source for CASH deposits in Jan Dhan Accounts , if funds from these Accounts are invested in Govt approved INFRASTRUCTURE SPVs ) So far , Rs 30,000 Crores have been deposited in Jan Dhan Accounts . With introduction of this REFORM , that figure will rise a thousand times to Rs 30,000,000 Crores , within one year ! These investments will generate 10 million jobs each year and raise our GDP to 10 % in 2016-17 ! * Transferring 10% of GST ( ie 1.8 % out of 18 % ) to PPF accounts of the buyers ( increase Domestic Savings ) * Embedding of RFID chips in Currency Note ( read Kurzweilai ) to solve twin problems of BLACK MONEY and CORRUPTION * Introducing " Budgeting By Objectives " ( instead of Monetary Allocations, setting Physical Targets for Ministers ) * Quarterly Performance Review of " Targets vs Actual Achievements " to be published on Govt web sites * Thru an Online Opinion Poll , involving citizens in framing of the Ministry-wise Physical Targets before the budget After second World War , German Economy was in shambles 68 years later , Germans are still thanking their then finance minister , Ludwig Erhard , for the miracle ("Wirtschaftswunder," German for "economic miracle") he brought through his " Out of the Box " reforms to revive the German Economy I hope Shri Jaitley displays similar courage on 29 Feb 2016 - even if he is not bothered being remembered or not ! ------------------------------------------------------------------------------------------------------------------------------- hemenparekh / blogs 31 Jan 2016
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