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Budget2016 Tax - read breaking and trending Budget2016 news, stories, headlines. Business insider India is providing latest, handpicked stories related to the Tax category.

Budget2016 Tax - read latest and trending Budget2016 news and headlines

<ul><li>The ITR forms now require additional details </li><li>There are changes in the LTCG tax, surcharge on total income, tax on income from house property and tax slabs </li><li> The deadline to file the returns is 31 July. </li></ul> The 2017 <a href="https://www.indiabudget.gov.in/">Budget</a> made a lot of changes in the filing of Income Tax Returns. It is important to take care of these <a href="https://www.moneycontrol.com/news/business/personal-finance/here-are-some-important-changes-in-itr-filing-process-that-you-should-not-ignore-as-you-file-your-returns-2764231-7.html">changes </a>so that you can save yourself the effort and time of filing a revised return in case you commit any errors. The deadline to file the returns is 31 July. Tax slab decreases Income is categorised into different groups based on its amount and each such group is known as tax slab. Tax is charged at different rates for different slabs. The income tax slab rates have changed for the Annual Year 2019. For individuals with taxable income between ₹2.5 - 5 lakh, the tax has been reduced from 10% to 5%. The tax slab for individuals earning ₹5 - 10 lakh, and for those with income above ₹ 10 lakh, remain 20% and 30% respectively. Modification in tax on income from house property Section 24B allows you, as an individual, to make certain deductions from the net annual value of your house property. In the previous year, the entire amount was allowed to be deducted under Section 24B on the interest paid on home loan. However, it has now been restrict to ₹2 lakh. Furthermore, earlier a complete loss set-off from your house property was allowed. There was no ceiling on the amount. However, now the loss has been restricted to ₹2 lakh in one financial year. The remaining loss can get carried forward for the next eight years. Amendments in LTCG tax Earlier, long-term capital gains (LTCG) tax was claimed on an immovable property with the holding period of three years. It has now been reduced to two years, from AY19. Furthermore, the base year for tax indexing for determining the LTCG tax has been revised from <a href="https://economictimes.indiatimes.com/wealth/tax/budget-2017-shifted-indexation-calculation-base-to-2001-who-gains/articleshow/57034487.cms">1981 </a>to 2001. This means that the purchase price of an asset bought before 1 April 1981 could be calculated on the basis of the fair market value of 1981, however, from now onwards, the purchase price will be calculated based on the fair market value of 2001. New surcharge on total income Earlier the surcharge was 15% of income tax, only if the total income exceeds ₹1 crore. From AY19 a 10% surcharge will be applicable if the total income is between ₹50 lakh and ₹1 crore. If the income exceeds ₹1 crore, a surcharge of 15% would be required. Also, Section 87A earlier provided a rebate up to ₹5,000, but the same has been lowered down to half the amount, that is, upto ₹2,500. Need of additional details in ITR forms Sahaj or ITR-1 form, used by most of the salaried class, will now require additional details related to the break-up of your salary, such as details of perquisites, allowances etc. It would also require detail of income from your property including rental income, tax given to local authority, etc. Also, in the new ITR form, details of the exemption of capital under section 54 of the Income Tax Act need to be mentioned separately in relevant columns. Furthermore, the old ITR-4S tax form, mostly for businesses, has been renamed ITR-4 and would now need additional details such as secured/unsecured loan details, fixed assets, capital account, etc. Turnover details and GST declaration Taxpayers have to specify the exact turnover details while filing Goods &amp; Services Tax (GST) and would further need to mention the GST detail while filing their ITR. General advice <ul><li>You should keep all important documents in one place before you begin to file your returns. It will save time and reduce errors. </li></ul><ul><li>You must also claim all tax benefits and deductions properly, even if you forgot to mention them in your tax declaration. </li></ul><ul><li>You must note whether the interest you earn from your recurring deposits (RD) and fixed deposits (FD) are fully taxable at the applicable slab rates or not. Interest earned up to ₹10,000 from savings bank account is exempt under Section 80TTA.</li></ul>

Keep these changes in mind while filing your ITR to prevent errors

In his budget speech on Monday, 29th February, Arun Jaitley had proposed to tax 60% of the EPF corpus that were created after April 1, 2016. However this proposal didn’t get down too well with the salaried class of the country. 
 
However, the people who have just entered the EPF will be the worst affected because of this proposal. Even if the government plans to tweak the rule and tax not the entire principal but only the interest portion, even then a major portion of the EPF savings would be gone to the government as tax. 
 
On the other hand, subscribers who believe in invest and forget don’t have anything to worry about since the new rule will not apply to PF balance accumulated till April 2016 and the interest it earns thereafter. 
 
The fact that this budget is so ambiguous has made the salaried class angry and frustrated with the direct attack on their life savings. Even though last year's Budget had talked about the need to allow EPF subscribers to migrate to the NPS, but no steps were taken to facilitate that migration last year or in this budget. 
 
<a href="http://static.abplive.in/wp-content/uploads/2015/12/17160500/Arun-Jaitley-PTI.jpg">Image source</a>

Budget 2016 leaves young EPF subscribers helpless

Possibly, all of the budget summaries floating around the print and digital media, talked about how adverse it (budget recommendations) is to the working class, the employees of an organization, citizens like me and probably you. While I partially agree with some of the statements made, one of the (highly) argumentative benefit that I see is from the initial call-out to tax the lump sum withdrawal of one’s Provident Fund over and above 40% of the corpus. 
 
Pensions is a topic close to my heart. Part of my work while with Invest India Micro Pensions was trying to get the underprivileged into a habit of contributing towards their retirement. The organization’s top ranks, individuals who contributed towards architecture of the New Pension Scheme imparted a lot of knowledge too. Owing to these learnings, this school of thought believes that there needs to be a fundamental shift in behavioural patterns, among Indians, towards retirement savings. 
 
Let’s first try and understand what the new recommendation is – Mr. Jaitley, the Finance Minister, very clearly mentioned that he is taking measures towards moving to a pensioned society. He deliberated that the Provident Fund withdrawals as a lump sum above 40% of the corpus (includes both employees and employers contribution and a fixed compounded interest set by the EPFO --Employer Provident Fund Organization) will be taxed. 
 
Let’s try and get to bed with this idea, why would the finance ministry of a soon-to-be-aging country want to tax the savings of a hard working employee over-and-above all the income tax he/she has already paid? Now read the above recommendation again. The Ministry’s real intention is to only tax the lump sum withdrawals, and NOT the entire savings. It is quite simply the stick approach being used to cultivate a behavior, an attitude towards financial independence in the non-income years and a point of view to use the saving for the purpose it was saved. 
 
Pensions as a subject in India is more often than not, disregarded. We tend to cozy up with the idea of cosmic karma, where a working class hero (read parents) spent on their kids till they start earning, kids in turn indebted to spend on the parents when they stops earning. While all the emotion in this is absolutely spot on, the practicality isn’t. India as a nation has to move towards saving for their retired years, the government would rather take the blame of forcing good behavior over having thousands of aged financial-dependents with no one to depend on. 
 
While an incentive to annuitize, than a fine to withdraw lump sum, would have been a populist recommendation, we should not fret the tax to improve our behavior, it should be welcomed as a strategy for a better tomorrow, for the government and for us. 
 
(The article is authored by Aashim Joy, who is an Employee Benefits Actuarial consulting with a private company) 
 
(Image: Indiatimes)

Jaitley is right about taxing the lump sum withdrawal
from your PF

With the Union Budget 2016 just around the corner, India Inc and tax experts across the country are pinning their hopes on the NaMo government to give better clarity on the much deferred Goods and Services Tax (GST). While the corporate are hoping to see this new tax structure in place by April 2016, here’s a little reality check. 
 
According to tax experts, looking at the current scenario of this impending bill, it doesn’t seem that the government will be able to introduce the bill on April 1, 2016. This is simply because the future of 122nd Constitution Amendment Bill, which was introduced by the government and passed in the Lok Sabha in May last year, is still in doldrums. 
 
The Constitution Amendment Bill 2014, which was introduced after extensive discussions between the Central government and the state governments, aimed at bringing parity in the revenue sharing and autonomy that will be given to the state governments under the GST. However, the Bill which was passed with a thumping majority in the Lok Sabha, failed to clear the tables in the Rajya Sabha. 
 
Following dissent notes by the Opposition and the complete washout of the Monsoon Session in 2015, the bill was not passed in the Winter Session as well. And unless, this bill is not cleared, GST will not be able to see the light of the day. 
 
Currently, tax experts are divided on the expected time of implementation of GST. While some say it is expected to come into exercise by October 1, 2016, many others are of the view that it will only be implemented by April 2017. Until then, it seems India Inc will have to follow the complex tax structure that currently mars the ease of doing business in the country.

Budget 2016:
This is why GST will not be implemented by April 1, 2016!

With GDP growth of 7.3%, in 2014-15, India’s economy is firmly on the path of economic revival. India is the brightest spot on the global map, with GDP Growth expected to rise to 7.9% in 2017-18. India is well positioned to withstand near-term global headwinds and the high volatility in global financial markets due to reduced external vulnerabilities, a strengthening domestic business and investment cycle, and a supportive policy environment. Most recently, even the IMF has maintained its GDP growth projection of 7.3% in 2015-16 and 7.5% in 2016-17, even as it cut projections for overall global output. 
	 
	The transition from a state of crisis of confidence in 2013 to a bright spot in 2015 is not by chance but by design. The past few months in particular, have seen even renewed energy from the Government to enforce key reforms, and revive industrial sentiment. Going forward, the upcoming Budget Session of Parliament will be very important in the current scheme of things, to create short &amp; medium term wins. 
	 
	Boosting Savings in India 
	 
	Most importantly, there is a need to boost savings in the economy to enhance the inherent economic strength of the financial sector. It will be worthwhile to adopt of the structural GEAR (Growth, Efficiency, Attractiveness, Reach) approach, as elaborated below, to augment the savings rate in the economy: 
	 
	Enhance economic growth to increase per capita incomes: Towards this end, it will be important to increase disposable incomes by relaxing personal income tax slabs to INR 5 lakh from the current level of INR 2.5 lakh – this could be a one-time correction and this could thereafter be linked to inflation and reviewed every three years. This will provide an immediate thrust to household incomes, part of which will be diverted to financial savings. 
	 
	Focus on efficiency in financial transactions: Use of plastic currency and e-transactions (via internet/mobile) will not only improve ease of transactions but also enhance saving propensity among citizens. Every 1% reduction in currency in circulation is likely to add 0.4% to the savings rate. More importantly, this could also help in curbing the flow of black money. 
	 
	Make financial savings attractive: Financial savings must be promoted by improving tax incentives. One of the enabling measures for this will be to enhance 80C limits to INR 3,00,000 from current level of INR 1,50,000 – this will also deepen the mutual fund and equity markets. Secondly there is a need to increase inflation adjusted post tax returns for bank deposits, by reducing lock in period eligible for tax rebate to 1 year from 5 years; and enhancing the threshold for mandatory TDS on interest income to INR 50,000 a year from the current level of INR 10,000. It will also be useful to roll back TDS on Recurring Deposits to encourage wider adoption, as this is a product that promotes the habit of regular saving. Further, pension products like EPF and PPF continue to enjoy ‘EEE’ tax status whereas the National Pension Scheme (NPS) are subject to ‘EET’, which involves tax obligation at the withdrawal stage. To create a level playing field and prevent cannibalization, NPS needs to get ‘EEE’ tax status to make it more attractive. 
	 
	Expand financial reach: The Government could consider converting India Post into Postal Bank of India, a full-fledged Payments and SAVINGS bank, to leverage its rural penetration for greater financial inclusion. Internationally, there are a few countries which have tapped the postal institution for extending financial inclusion. 
	 
	Next Generation of Reforms 
	 
	For 2016, I believe India’s top priorities should include passage of GST, rationalizing direct taxes further, tax sops for Start Ups and introducing key structural reforms in terms of real estate, labor and MSMEs. The farm sector too needs significant focus on irrigation and technological support. 
	 
	With the global economy expected to remain mired in volatility in 2016, strengthening the domestic economy will also help to ring-fence India against global headwinds. While micro measures will help, the Banking &amp; Finance sector also needs the next generation of reforms. I am hopeful that economic clairvoyance will triumph over political myopia in 2016 and GST will see the light of the day. The Bankruptcy Bill will also turn out to be a game changer for spurring economic activity and confidence. This Budget presents a Golden Chance to usher in Fiscal Measures to make 2016 India’s Year. 
	 
	The article has been authored by Rana Kapoor, managing director and CEO of YES Bank and chairman of YES Institute.

Here’s what one of the largest private bank, YES Bank has to say about Budget 2016

Prime Minister Narendra Modi’s pet project, Housing For All By 2022, has pumped the housing finance sector, which otherwise has been going through a lean phase for the past couple of years. And with a set deadline for the initiative, the industry is expecting the government to further support the policy reforms that were announced in the previous budget. BI India lists down the expectations of the industry from Budget 2016. 
	 
	REITs 
	 
	The Housing finance sector is expecting the government to make REITs more attractive, which in turn would help boost the sale in the realty market, thus helping the housing finance sector. Since, projects under REITs are already completed and ready for sale, an average home buyer would prefer to buy via this option. The industry player in this sector, thus hope that further clarity in REITs would help the housing finance sector in clocking in better sales. 
	 
	Simplify procedures 
	 
	The lengthy procedures and the apparent delays in approvals is one major setback for the housing sector and thus the industry expects the Modi government to simplify the approval procedures. In fact, our conversations with the industry players revealed that they have suggested single window clearances for new projects. 
	 
	Boost investments in realty sector 
	 
	The growth of housing finance (HF) sector relies completely on the growth real estate sector. Hence, investments in the realty sector will automatically boost the HF sector. “We recommend exploring PPPs as an alternative additional source of funding to infuse higher funding in urban housing. It will also facilitate introduction of private sector technology and innovation in providing better public services through improved operational efficiency,” said Harshil Mehta, CEO of DFHL. 
	 
	Refine Priority Sector Lending 
	 
	Currently, the government allows only housing loans below Rs 25 lakh as PSL, which the industry players feel needs to be redefined. “DHFL is of the view that limit of the PSL should be increased to Rs 35 lakh and the annual increase be automatically pegged to the WPI will empower customers and incentivize HFCs to lend to affordable housing projects thereby giving boost to the real estate sector,” he added. 
	 
	
		Regulatory reforms 
		 
		"Modification in FSI / FAR / density norms especially from EWS / LIG housing perspective has been hanging fire for long time. Optimal FSI / FAR / density norms will help in reducing costs per unit and increase the economic viability of Affordable Housing. FSI can also serve as a cashless subsidy, the benefits of which can then be passed on to end users/customers. Rental housing should also be promoted to meet the grand vision of Housing for All by 2022," noted Mehta

Know what the housing finance sector wants from Union Budget 2016

As many as 74 drugs, including life saving ones used for treating cancer and HIV, will see sharp rise in prices as the government has withdrawn customs duty exemption on their imports.
 

	The Central Board of Excise and Customs (CBEC) last week issued a notification withdrawing exemption of levy of basic customs duty on as many as 74 drugs.
 

	The medicines on which customs duty will now be imposed include the ones used for treating kidney stones, cancer chemotherapy and radiotherapy, life-threatening heart rhythm disorders, diabetes, Parkinson's disease, bone diseases, antibiotic to treat infections.
 

	Besides, drugs used for bacterial infections, leukemia, anesthetic medication, human immunodeficiency virus (HIV) or hepatitis B virus cells, allergies, arthritis, lupus and ulcerative colitis might also see spurt in prices.
 

	Also drugs used in blood dilating medicine or for treating menopause, glaucoma, anogenital warts, poisoning by a chemical or pesticide, growth failure in children and adults who lack natural growth hormone would also attract customs duty.
 

	"The withdrawal of exemption from basic customs duty for certain drugs and medicines including life-saving drugs is intended to provide protection to the domestic manufacturing industry and enhance the attractiveness of make in India initiative," KPMG India Partner and Head of Indirect Tax Sachin Menon said.
 

	"An increase has also been made in the customs duty rates of certain life saving drugs such as abciximab, anti-rabies immunoglobin, FSH, procarbazine and saquinavir to 35 per cent," Deloitte in India Senior Director MS Mani said.
 

	These changes signify the intention of the government to promote domestic manufacture of these items as imports would now become more expensive, Mani said.
 

	Menon said the move seems to be in line with the government's objective to rationalise the duty exemptions. 
	 
	(Image credit: PTI)

Indirect Tax: Govt eases duty on imported goods for exhibition

Ahead of Union Budget 2016, Finance Minister Arun Jaitley hinted at major banking reforms in the forthcoming Budget and assured foreign investors that retrospective taxation will be a thing of the past. 

	With the Budget is scheduled for February 29, he did not elaborate on what the shape of the banking reforms will be.<o:p></o:p>

	“We have two tax disputes with large corporates. This we are working to settle amicably,” he said while speaking at the Asia Business Forum 2016 as part of ‘Make in India’ week in Mumbai on Sunday.<o:p></o:p>

	He guaranteed that legacy issues in the tax system will be sorted out.<o:p></o:p>

	The government, according to Jaitley, would maintain an arm’s length in the functioning of banks but will not divest completely from public sector banks.<o:p></o:p>

	“The country has not reached a stage where the government can completely exit its holding in the 27 public sector banks,” he said. <o:p></o:p>

	To professionalise the operations of state-run banks, which control over 70 per cent of the industry, he said that the government has already committed to bringing down its holding up to 51 per cent, he said.<o:p></o:p>

	While talking about the passage of the Goods and Services Tax in the Rajya Sabha, Jaitley said he hopes to “negotiate through” in the coming days. 
	 
	On divestment, the Finance Minister blamed the choppy market for not being able to meet the target.<o:p></o:p>

	The windfall gains from declining oil prices have been used to create infrastructure, he said. However, there is a need to focus on investing in rural roads, electrification and irrigation to push up rural demand, which has been hit by two successive droughts, he added.<o:p></o:p>

	Advising States to reconsider the issue of higher taxes in the tourism sector, Jaitley said the Centre has offered visa-on-arrival facility to 125 countries and this has already resulted in a quantum jump of foreign visitors. 
	 
	Image credit: Indiatimes<o:p></o:p>

Budget 2016: Arun Jaitley hints at big banking reforms, but no full divestment from PSBs

Indirect tax collection is likely to exceed by about Rs 40,000 crore this fiscal that will help the government meet the budgetary target of revenue collection for the first time in five years
 

	This will also make up for the expected shortfall in the direct tax collections, Revenue Secretary Hasmukh Adhia said on Wednesday
 

	Of the Rs 14.49 lakh crore budgeted tax revenue target for 2015-16, Rs 7.97 lakh crore was estimated to come from direct taxes (corporate and income tax) and another Rs 6.47 lakh crore from indirect taxes (customs, excise and service tax)
 

	"We are likely to exceed the collection in indirect tax by about Rs 40,000 crore in the current year. On the whole, we are very optimistic about achieving annual tax revenue target for the year," Adhia said
 

	The government invariably falls short of tax collection target and had last time exceeded the budgeted target in 2011 fiscal
 

	In the first 10 months of the current fiscal, indirect tax mop up of Rs 5.44 lakh crore was 88 per cent of the full year target. Besides, direct tax collection of Rs 5.22 lakh crore was 65 per cent of target for 2015-16
 

	"Looking at the trend, it appears that as far as indirect tax collections are concerned, the government may get more than Rs 40,000 crore over and above the BE (budget estimate) target for indirect taxes for 2015-16 while there might be an equal amount of shortfall in direct tax collections
 

	"However, both direct and indirect tax collections put together, we expect to meet the annual BE target of Revenue collections for the current year without any shortfall," Adhia said in a statement
 

	The tax revenue trends, he said, supports the latest figures of GDP growth rate
 

	The CSO has projected Indian economy to grow by 7.6 per cent in the current fiscal, the fastest pace in five year.

Spurt in indirect tax mop up to help govt meet FY16 target

Every month you sulk when substantial amount of tax is credited from your account, but like sheep in a herd, you continue paying without having any proper knowledge of where every single penny of your hard-earned money is going. What's bizarre is you don't even seek any information! Is it getting utilised or wasted? Is it going to light up houses in our villages, get toilets in schools, change the face of Indian roads or is it just filling the pockets of the corrupt?

MUST WATCH: Do you know where the money you pay for tax is being used?

Members of the consultative committee attached to the Union Finance Ministry have put forward a suggestion that would cheer millions of middle-class Indians. 
 

	They want Arun Jaitley to raise the income tax exemption limit for individuals to Rs 4 lakh per annum from the current Rs 2.5 lakh.<o:p></o:p>

	According to an official release, the suggestion came during the first meeting of the committee on Friday in New Delhi.<o:p></o:p>

	Additionally, they also suggested the finance minister to raise the limit for mandatorily quoting permanent card number (PAN) for transactions to Rs 5 lakh from Rs 2 lakh. <o:p></o:p>

	Presently, there are about <a href="http://articles.economictimes.indiatimes.com/2015-05-12/news/62082668_1_tax-base-tax-evaders-tax-assessees" target="_blank">2.5 crore individual tax payers</a> in India.<o:p></o:p>

	 

	In his address, Finance Minister Arun Jaitley spoke about fiscal deficit being kept under control, despite a rise in government spending and the need for higher allocation in FY2017 owing to the implementation of the proposals of the 7th Central Pay Commission and One Rank One Pension scheme for ex-servicemen.<o:p></o:p>

	The members of the committee also asked Jaitley to consider raising the service tax exemption limit to Rs 25 lakh from the current Rs 10 lakh.<o:p></o:p>

	Those who participated in the meeting included Arun Jaitley, Finance Minister; Jayant Sinha, Minister of State for Finance; members of the committee comprising Dilip Kumar Mansukhlal Gandhi, J. Jayasingh Thyagraj Natterjee, P.P. Chaudhary, Poonam Mahajan, Shri Ram Charitra Nishad, Sharad Kumar Maruti Bansode, Subhash Chandra, Supriya Sadanand Sule, Udit Raj (Lok Sabha members), Anil Desai, K.P. Ramalingam and Rajkumar Doot (Rajya Sabha members). 
	 
	Image credit: Indiatimes

Budget 2016: MPs want income tax exemption limit for individuals to be raised to 4 lakh

RBI Governor Raghuram Rajan spelled out his reasons for not slashing the repo rate and CRR. However, he kept the ball rolling in Finance Minister Arun Jaitley’s court, saying the Union budget will have to do the real reformatory easing. 
 
While announcing the bi-monthly policy, Rajan sounded off alarm bells, hinting that the growth trajectory will not see much momentum before FY17. As we have just begun with the year, this means that momentum in growth will be seen only by the end of two years. 
 
Rajan said the current pace of growth did not meet expectations over the medium term, adding the RBI was being ‘accommodative’. 
 
Here are few factors that RBI hinted at: 
 
1. Rajan said the Union Budget, which will be announced on February 29, should announce structural reforms and keep a tight control on spending. He added that the government will have to announce measures to ensure that the inflation remains on the set path of 5% by the end of 2016-17. 
 
2. Don’t expect any further cuts in tax slabs and more subsidies from the Budget 2016. One of the primary ways in which the government can control its expenditures is by being wise about the pay panel recommendations. “How the government implements a planned 24 percent pay hike in salaries and pensions for some 10 million current and former government employees will also be key in determining the path of inflation,” said Rajan. 
 
3. The RBI is also hoping for good monsoons this year as this is also one of the key factors for strengthening growth. After two consecutive years of bad monsoons, Rajan said if the country receives good monsoon, it will increase trade and household incomes. However, an El Nino effect may be seen. 
 
4. While there are rounds of liquidity crunch in the banking system, Rajan said the central bank will use all methods possible to pump in money in the bank. Rajan ditched the perception of a liquidity crunch. The RBI governor has been pushing banks to clear their bad debts in order to have more money to loan, which will lead to propel investments and lead to clearing of stalled infrastructure projects. 
 
5. There has to be a revival in private investment for a higher growth trajectory and it is needed for the government to pay heed to the fiscal deficit. 
 
(Image: Indiatimes)

RBI’s Rajan is sounding off alarm bells for the economy asking the govt to announce a path-changing Budget 2016

The National Association for Software and Services Companies (NASSCOM) says direct and indirect taxes hurt startups and the industry body has asked for tax exemptions for startups. 
 
NASSCOM, in pre-budget recommendations, has asked the finance ministry to weed out taxes, including minimum alternative tax, angel tax as these hurt startups. 
 
"Policy regulations like ease of compliance, reliance on self-certification instead of audits, tax exemptions for startups will allow entrepreneurs to devote their time, energy and resources to build upon their innovative ideas," said R Chandrashekhar, president of NASSCOM. 
 
The industry body also wants exemption from capital gain tax on income from sales of startups. 
 
(Image: Thinkstock)

NASSCOM wants entrepreneurs to build upon ideas, seeks tax exemptions for startups

Chances are high that the budget 2016-17 would not bring relief in income tax due to lack of fiscal space, senior officials have said. 
 
Discussions on the crucial budget, which will be unveiled in February, are under way and the numbers are being worked on. "The room on the fiscal front is very limited. Therefore, it is unlikely that there will be any major concessions on the personal income tax side," a government official, who did not wish to be identified, told TOI, adding that some relief may be in store for taxpayers. 
 
The government is faced with a very challenging fiscal situation in the current financial year as well as in 2016-17. Several factors have narrowed the fiscal space. The first is the impact from the rollout of the 7th Pay Commission recommendations. In November, the Pay panel had recommended an increase in pay and allowances of 23.6%, a 24% rise in pensions and onerank-one-pension for central government employees and paramilitary personnel. 
 
These changes are estimated to cost over Rs 1lakh crore to the government in 2016-17, according to finance ministry estimates. The government is examining the proposals and they are likely to be implemented soon. While low global crude oil prices have provided much needed breathing space, the possibility of an increase in prices next year will prompt the government to be cautious. 
In his 2015-16 budget finance minister Arun Jaitley had extended a string of benefits to middle class taxpayers, including raising the limit of deduction on health insurance premium from Rs 15,000 to Rs 25,000 and for senior citizens the limit was hiked to Rs 30,000 from the existing Rs 20,000. Jaitley had promised to do more for individual taxpayers. "As and when my fiscal capacity improves, individual taxpayers will have a lot to look forward to," he had said in his budget speech. 
 
(Image credits: indiatimes)

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Keep these changes in mind while filing your ITR to prevent errors

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Jaitley is right about taxing the lump sum withdrawal from y…

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