Key Features of Budget 2016-2017


arun jetliDear All,

 

I have just giving Highlights of Budget -2016-17 on Taxation part which is relevant to common men of India.

Individual, Hindu undivided family, association of persons, body of individuals, artificial juridical person.

Paragraph A of Part-III of First Schedule to the Bill provides following rates of income-tax:-

(i) The rates of income-tax in the case of every individual (other than those mentioned in (ii) and (iii) below) or Hindu undivided

family or every association of persons or body of individuals, whether incorporated or not, or every artificial juridical person

referred to in sub-clause (vii) of clause (31) of section 2 of the Act (not being a case to which any other Paragraph of Part

III applies) are as under:-

Slab for A.Y.2017-18

Upto Rs. 2,50,000 Nil.

Rs. 2,50,001 to Rs. 5,00,000 10 per cent.

Rs. 5,00,001 to Rs. 10,00,000 20 per cent.

Above Rs. 10,00,000 30 per cent.

(ii) In the case of every individual, being a resident in India, who is of the age of sixty years or more but less than eighty years

at any time during the previous year,-

Upto Rs.3,00,000 Nil.

Rs. 3,00,001 to Rs. 5,00,000 10 per cent.

Rs. 5,00,001 to Rs. 10,00,000 20 per cent.

Above Rs. 10,00,000 30 per cent.

(iii) in the case of every individual, being a resident in India, who is of the age of eighty years or more at anytime during the

previous year,-

Upto Rs. 5,00,000 Nil.

Rs. 5,00,001 to Rs. 10,00,000 20 per cent.

Above Rs. 10,00,000 30 per cent.

The amount of income-tax computed in accordance with the preceding provisions of this Paragraph shall be increased by a

surcharge at the rate of fifteen percent. of such income-tax in case of a person having a total income exceeding one crore rupees.

However, the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed

the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds

one crore rupees.

RELIEF TO SMALL TAX PAYERS

  • Raise the ceiling of tax rebate under section 87A from `2000 to `5000

to lessen tax burden on individuals with income upto `5 laks.

  • Increase the limit of deduction of rent paid under section 80GG from

`24000 per annum to `60000, to provide relief to those who live in

rented houses.

BOOST EMPLOYMENT AND GROWTH

  • Increase the turnover limit under Presumptive taxation scheme under

section 44AD of the Income Tax Act to ` 2 crores to bring big relief to a

large number of assessees in the MSME category.

  • Extend the presumptive taxation scheme with profit deemed to be 50%,

to professionals with gross receipts up to `50 lakh.

  • Phasing out deduction under Income Tax:
  • Accelerated depreciation wherever provided in IT Act will be

limited to maximum 40% from 1.4.2017

  • Benefit of deductions for Research would be limited to 150% from

1.4.2017 and 100% from 1.4.2020

  • Benefit of section 10AA to new SEZ units will be available to those

units which commence activity before 31.3.2020.

  • The weighted deduction under section 35CCD for skill development

will continue up to 1.4.2020

  • Corporate Tax rate proposals:
  • New manufacturing companies incorporated on or after 1.3.2016

to be given an option to be taxed at 25% + surcharge and cess

provided they do not claim profit linked or investment linked

deductions and do not avail of investment allowance and

accelerated depreciation.

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  • Lower the corporate tax rate for the next financial year for

relatively small enterprises i.e companies with turnover not

exceeding ` 5 crore (in the financial year ending March 2015), to

29% plus surcharge and cess.

  • 100% deduction of profits for 3 out of 5 years for startups setup during

April, 2016 to March, 2019. MAT will apply in such cases.

  • 10% rate of tax on income from worldwide exploitation of patents

developed and registered in India by a resident.

  • Complete pass through of income-tax to securitization trusts including

trusts of ARCs. Securitisation trusts required to deduct tax at source.

  • Period for getting benefit of long term capital gain regime in case of

unlisted companies is proposed to be reduced from three to two years.

  • Non-banking financial companies shall be eligible for deduction to the

extent of 5% of its income in respect of provision for bad and doubtful

debts.

  • Determination of residency of foreign company on the basis of Place of

Effective Management (POEM) is proposed to be deferred by one year.

  • Commitment to implement General Anti Avoidance Rules (GAAR) from

1.4.2017.

  • Exemption of service tax on services provided under Deen Dayal

Upadhyay Grameen Kaushalya Yojana and services provided by

Assessing Bodies empanelled by Ministry of Skill Development &

Entrepreneurship.

  • Exemption of Service tax on general insurance services provided under

‘Niramaya’ Health Insurance Scheme launched by National Trust for the

Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and

Multiple Disability.

  • Basic custom and excise duty on refrigerated containers reduced to 5%

and 6%.

MAKE IN INDIA

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  • Changes in customs and excise duty rates on certain inputs to reduce

costs and improve competitiveness of domestic industry in sectors like

Information technology hardware, capital goods, defence production,

textiles, mineral fuels & mineral oils, chemicals & petrochemicals,

paper, paperboard & newsprint, Maintenance repair and overhauling

[MRO] of aircrafts and ship repair.

MOVING TOWARDS A PENSIONED SOCIETY

  • Withdrawal up to 40% of the corpus at the time of retirement to be tax

exempt in the case of National Pension Scheme (NPS). Annuity fund

which goes to legal heir will not be taxable.

  • In case of superannuation funds and recognized provident funds,

including EPF, the same norm of 40% of corpus to be tax free will apply

in respect of corpus created out of contributions made on or from

1.4.2016.

  • Limit for contribution of employer in recognized Provident and

Superannuation Fund of ` 1.5 lakh per annum for taking tax benefit.

Exemption from service tax for Annuity services provided by NPS and

Services provided by EPFO to employees.

  • Reduce service tax on Single premium Annuity (Insurance) Policies from

3.5% to 1.4% of the premium paid in certain cases.

PROMOTING AFFORDABLE HOUSING

  • 100% deduction for profits to an undertaking in housing project for flats

upto 30 sq. metres in four metro cities and 60 sq. metres in other cities,

approved during June 2016 to March 2019 and completed in three

years. MAT to apply.

  • Deduction for additional interest of `50,000 per annum for loans up to

`35 lakh sanctioned in 2016-17 for first time home buyers, where

house cost does not exceed ` 50 lakh.

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  • Distribution made out of income of SPV to the REITs and INVITs having

specified shareholding will not be subjected to Dividend Distribution

Tax, in respect of dividend distributed after the specified date.

  • Exemption from service tax on construction of affordable houses up to

60 square metres under any scheme of the Central or State

Government including PPP Schemes.

  • Extend excise duty exemption, presently available to Concrete Mix

manufactured at site for use in construction work to Ready Mix

Concrete.

RESOURCE MOBILIZATION FOR AGRICULTURE, RURAL ECONOMY AND

CLEAN ENVIRONMENT

  • Additional tax at the rate of 10% of gross amount of dividend will be

payable by the recipients receiving dividend in excess of ` 10 lakh per

annum.

  • Surcharge to be raised from 12% to 15% on persons, other than

companies, firms and cooperative societies having income above ` 1

crore.

  • Tax to be deducted at source at the rate of 1 % on purchase of luxury

cars exceeding value of ` ten lakh and purchase of goods and services in

cash exceeding ` two lakh.

  • Securities Transaction tax in case of ‘Options’ is proposed to be

increased from .017% to .05%.

  • Equalization levy of 6% of gross amount for payment made to nonresidents

exceeding ` 1 lakh a year in case of B2B transactions.

  • Krishi Kalyan Cess, @ 0.5% on all taxable services, w.e.f. 1 June 2016.

Proceeds would be exclusively used for financing initiatives for

improvement of agriculture and welfare of farmers. Input tax credit of

this cess will be available for payment of this cess.

  • Infrastructure cess, of 1% on small petrol, LPG, CNG cars, 2.5% on diesel

cars of certain capacity and 4% on other higher engine capacity vehicles

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and SUVs. No credit of this cess will be available nor credit of any other

tax or duty be utilized for paying this cess.

  • Excise duty of ‘1% without input tax credit or 12.5% with input tax

credit’ on articles of jewellery [excluding silver jewellery, other than

studded with diamonds and some other precious stones], with a higher

exemption and eligibility limits of ` 6 crores and ` 12 crores

respectively.

  • Excise on readymade garments with retail price of ` 1000 or more

raised to 2% without input tax credit or 12.5% with input tax credit.

  • ‘Clean Energy Cess’ levied on coal, lignite and peat renamed to ‘Clean

Environment Cess’ and rate increased from `200 per tonne to `400 per

tonne.

  • Excise duties on various tobacco products other than beedi raised by

about 10 to 15%.

  • Assignment of right to use the spectrum and its transfers has been

deducted as a service leviable to service tax and not sale of intangible

goods.

PROVIDING CERTAINITY IN TAXATION

  • Committed to providing a stable and predictable taxation regime and

reduce black money.

  • Domestic taxpayers can declare undisclosed income or such income

represented in the form of any asset by paying tax at 30%, and

surcharge at 7.5% and penalty at 7.5%, which is a total of 45% of the

undisclosed income. Declarants will have immunity from prosecution.

  • Surcharge levied at 7.5% of undisclosed income will be called Krishi

Kalyan surcharge to be used for agriculture and rural economy.

  • New Dispute Resolution Scheme to be introduced. No penalty in

respect of cases with disputed tax up to ` 10 lakh. Cases with disputed

tax exceeding ` 10 lakh to be subjected to 25% of the minimum of the

imposable penalty. Any pending appeal against a penalty order can also

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be settled by paying 25% of the minimum of the imposable penalty and

tax interest on quantum addition.

  • High Level Committee chaired by Revenue Secretary to oversee fresh

cases where assessing officer applies the retrospective amendment.

  • One-time scheme of Dispute Resolution for ongoing cases under

retrospective amendment.

  • Penalty rates to be 50% of tax in case of underreporting of income and

200% of tax where there is misreporting of facts.

  • Disallowance will be limited to 1% of the average monthly value of

investments yielding exempt income, but not exceeding the actual

expenditure claimed under rule 8D of Section 14A of Income Tax Act.

  • Time limit of one year for disposing petitions of the tax payers seeking

waiver of interest and penalty.

  • Mandatory for the assessing officer to grant stay of demand once the

assesse pays 15% of the disputed demand, while the appeal is pending

before Commissioner of Income-tax (Appeals).

  • Monetary limit for deciding an appeal by a single member Bench of

ITAT enhanced from ` 15 lakhs to ` 50 lakhs.

  • 11 new benches of Customs, Excise and Service Tax Appellate Tribunal

(CESTAT).

SIMPLIFICATION AND RATIONALIZATION OF TAXES

  • 13 cesses, levied by various Ministries in which revenue collection is

less than ` 50 crore in a year to be abolished.

  • For non-residents providing alternative documents to PAN card, higher

TDS not to apply.

  • Revision of return extended to Central Excise assesses.
  • Additional options to banking companies and financial institutions,

including NBFCs, for reversal of input tax credits with respect to nontaxable

services.

  • Customs Act to provide for deferred payment of customs duties for

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importers and exporters with proven track record.

  • Customs Single Window Project to be implemented at major ports and

airports starting from beginning of next financial year.

  • Increase in free baggage allowance for international passengers. Filing

of baggage only for those carrying dutiable goods.

TECHNOLOGY FOR ACCOUNTABILITY

  • Expansion in the scope of e-assessments to all assessees in 7 mega

cities in the coming years.

  • Interest at the rate of 9% p.a against normal rate of 6% p.a for delay in

giving effect to Appellate order beyond ninety days.

  • ‘e-Sahyog’ to be expanded to reduce compliance cost, especially for

small taxpayers.

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