Union Budget 2016: Income tax slabs remain unchanged; how budget will impact taxpayers

By: | Updated: February 29, 2016 5:58 PM

Union Budget 2016 highlights: While tax slabs have remained unchanged, there has been disappointment on the amount set aside for bank re-capitalisation.

Arun Jaitley - union budget 2016 highlightsUnion Budget 2016-17: While tax slabs have remained unchanged, there has been disappointment on the amount set aside for bank re-capitalisation.

The Union Budget 2016 presented by Finance Minister Arun Jaitley on Monday has belied expectations on several fronts. While tax slabs have remained unchanged, there has been disappointment on the amount set aside for bank re-capitalisation. However, there are a lot of positives also to draw from the Budget.

Suraj Partner, Nangia and Co, outlines how Arun Jaitley’s proposal would impact tax payers and investors. We take a look at Budget highlights that excite and disappoints.

WHAT EXCITES:

-Good to see rationalisation of TDS. While we await the fine-print, but will really help individuals having low taxable income? It was a severe hit on their cash flows.

-Removing powers from the Assessing officer for penalty under sections 271(1) (c) from the range of 100 to 300 percent. The same has been reduced to 50 percent for under disclosure of income and 200 % for misrepresentaton of facts

-It is a positive move that persons who do not get HRA from employers can claim deduction under section 80GG. the limit has been increased from Rs 24000 to Rs 60,000.

-Presumptive tax limit increased from Rs 1 crore to Rs 2 crores is good for companies having limited turnover

-Huge relief that no Long-term Capital Gains for listed securities as was being speculated.

-Also a relief that there is no increase in the rate of service tax since individuals cannot claim input credit of the same.

–Welcome that GAAR and POEM deferred for one year.

-Stem to reduce black money by getting an amnesty scheme is in the right direction. This is similar to the one introduced last year for black money held abroad.

WHAT DISAPPOINTS

-Disappointing to see Minimum Alternate Tax being levied to Startups. It totally does away the advantages which were supposed to be provided to startups (There was no corporate tax to be levied for a period of 3 years). This is disappointment considering MAT is payable at 20%.

–Disappointed that there is no credible plan for strengthening banks. Only Rs 25,000 crores set out for recapitalisation.
–A three-fold increase of Securities Transaction Tax (STT) on option is a huge disappointment for trader

–It will be disappointment for corporates who were expecting tax rate to be reduced to 29% for all. however same has been reduced to 29% for cos having Turn over of less than 5 crores. huge disappointment.

–High net-worth individuals will be hit hard on increase in surcharge to 15%. Also introduction of Dividend Distribution Tax of 10% in case dividend over 10 lakhs will be a negative.

–Long term capital gain period reduced from 3 to 2 years for unlisted cos will be a positive

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