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

Budget2016 Income 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

Finance Minister Arun Jaitley’s decision to tax the interest earned on 60% of your Employee Provident Fund (EPF), when withdrawing before maturity, will burn a hole in both your heart and pocket. While his intention was to earn more revenues for the government’s big ticket social schemes, it hasn’t really gone down well with the salaried class, who have traditionally seen the EPF as a safe source of investing their hard earned money, for a very stable interest-earned regime. 
	 
	Currently, a company can contribute up to 12% of the basic component of someone’s salary as EPF. 
	 
	Still scratching your heads to figure how this new announcement will hit your safe savings? Allow us to explain! 
	 
	Let’s say you earn Rs 2.5 lakh as salary annually, it would mean your in-hand-monthly income would be roughly around Rs 20,000, which would include components such as Basic, HRA, Transport and Special Allowance. Assuming that your basic salary is Rs 11,000, basis how you’ve negotiated your salary structure with your employee, the EPF contribution then would amount to Rs 1,320. As per the new policy, interest earned on 60% of this amount, which is roughly around 8.8% interest on their EPF contribution. It means that the the government will levy tax on the interest levied on Rs792 . So, in the case you have quit the company and want to withdraw your EPF, the government will now tax the interest received on the contribution, 
	 
	Similarly, for an employee with an annual package Rs 5 lakh, the monthly salary is a little over Rs 41,000. If we assume that the basic salary is Rs 15,000, the monthly EPF contribution would be Rs 1800. The monthly interest received on 60% of the Rs1,080 amounts to Rs 95 at 8.8% rate of interest. 
	 
	For an individual earning Rs 10 lakh, the monthly salary is Rs 83,000. The basic component is assumed to be Rs 30,000 and the EPF contribution amounts to Rs3,600. The interest received on 60% of this saving i.e. Rs 2,160, is taxable. 
	 
	Well, it seems the government will be able to churn out huge revenues in FY17 by taxing the EPF. Won’t be surprised if the NaMo government once again meets its revenue target in 2016 as well. But we feel your pain!

Withdrawing your EPF? We tell
you how your savings will take a hit

The budget provides an indication of government’s intent. This was the 85th annual budget, and judging by the reaction of the market, one must certainly underline that it was a growth-oriented one.
 

	It is a welcome relief that the budget steered clear of populism and had a clear focus on fiscal consolidation, infrastructure and the depressed rural economy. Allocations for MGNREGA have been received well because it has demonstrated that the government is willing to support effective schemes, even if they were launched by the previous government.
 

	The government with its proposals showed its intent to stick to the roadmap for fiscal consolidation with next year’s fiscal deficit target at 3.5 per cent of the GDP. This is excellent from the point of view of how the world views India.
 

	Looking to the demand for fiscal reforms on one side and the challenge of global headwinds on the other, the government’s decision to adhere to fiscal consolidation makes the budget pragmatic and prudent.
 

	Steps the government takes to boost growth would impact how India is perceived. Here the clear focus needs to be on the ease of doing business, providing a predictable tax regime, clarity on retroactive taxation, disinvestment and curbing corruption. Naturally, passing the GST bill would be the game changer.
 

	Also, being associated with a management school, I am happy to applaud the need to spread digital literacy in rural areas. Of the 16.8 crore rural households, as many as 12 crore households do not have computers and are unlikely to have digitally literate people. The budget has also announced the setting up of a higher education financing agency, with a fund of Rs 1,000 crore, and we need to wait a while to know what this means.
 

	In a budget, one must understand is that it is impossible to satisfy everyone but one has to look to the basics, whether the budget is going to help the economy. However, a criticism could be that one did not see new schemes that could boost economic growth and attract much-needed investment. The budget offered the government an excellent platform to take advantage of the global economic slowdown. However, we don’t see any incentive for NRIs who are the natural resource base of the country.

	 
	 
	(The article is authored by Amit Dasgupta, Campus Head, Mumbai- SP Jain School of Global Management) 
	 
	Image credits: indiatimes

Steps the government takes to boost growth would impact how India is perceived

The Union Budget for 2016 has been presented, and amidst a lot of other things, the common man has been cheered with an increased relief in tax to make up for the rent. 
 
Finance Minister Arun Jaitley announced a bigger tax relief on House Rent Allowance (HRA), from 24,000 per annum to Rs 60,000 per annum if the taxpayer is not having a home of his own and doesn’t get HRA from the employer. 
 
Also, people earning up to Rs 5 lakh a year will now get a tax relief of Rs 5,000, as compared to Rs 2,000 previously. 
 
While starting his speech, Jaitley stressed that despite slow global economy, the Indian economy had held its ground, because of which World Economic Forum (WEF) and International Monetary Fund (IMF) had hailed India as a bright spot.

Budget 2016: No home or HRA? It’s time to take some tax relief on rent

While presenting his third budget, Finance Minister Arun Jaitley did not change the tax slabs to bring more and more people under the tax net. 
 
Jaitley said the role of tax payers was important in nation building and each rupee contributed to sectors such as infrastructure, rural and social well being. 
 
The net revenue gain of Rs 19,610 crore was due to surplus from indirect taxes. 
 
He also announced a little relief for professionals and people staying in rented accommodations. 
 
He categorised taxation under 9 disciplines 
 
1. Tax relief to small tax payers: 
 
Jaitley announced relied for people staying in rented accommodation. The compensation in rent increased from Rs 24, 000 to Rs 60, 000 per anuum 
Presumptive income tax scheme to be extended to all professionals with income of Rs 50 lakh with presumption of 50% profit 
2.Boost employment and growth: 
 
Deduction in taxes under Skill Development by 2020 
10% extra DDT on dividend recipients earning above Rs 10 lakh per annum, says FM in Budget 2016 
100% tax deductions for new startups for first 3 years 
More asset reconstruction companies 
Residency of foreign companies deferred by one year 
Exempt service tax on general insurance service under Nirmaya scheme 
Basic custom duty hiked 5%-6% 
3.Incentivise domestic value and make in India: 
 
4. Pension society: 
EPF: 40% corpus to be tax free 
Annuity income will be non-taxable 
Monetary limit 1.5 lakh per annum 
Government to introduce bill to amend Companies Act for ease of doing business; to enable registration of companies in a day 
 
Affordable housing: PM Awas Yojana to be strengthened 
100% deduction for undertaking flat of 30 sq metre, however, MAT will apply 
First home buyers: deduction for add 50,000 per annum to 35 lakh loans during next fiscal under Rs 50 lakh 
Investment in real estate: 
Exempt service tax on affordable housing 60 sq meet 
 
Add resource to more on farm, clean: 
 
Tax 10% at gross amount of dividend will be apd 10lkh/annum 
Raise surcharge 12% to 15% 
Purchase of luxury cars 
Levy infrastructure cess 1% LPG 2.5 diesel, 4% on high engine capacity and SUVs 
Branded excise duty above Rs 1, 000 goes up 6%-12.5% 
Hike in excise duty by 10-15% tobacco other than bidis 
Krishi Kalyan Cess of 0.5% on all taxable services: FM 
Clean Energy Cess to renamed as Clean Environment Cess 
 
Reducing litigation 
Tax evasion to be strengthened 
Jaitley came down heavily on black money 
3 lakh tax cases pending amounting to Rs 5.5 lakh crore. New dispute resolution scheme to settle case by paying disputed case interest. 
Levy of heavy penalty for non payment of tax has led to high litigation. Proposal to modify scheme for penalties 
 
Simplified taxation 
 
To reduce multiplicity of taxes and cascading - 13 taxes with collection less than Rs. 50 Crores a year abolished. 
Use of technology for accountability 
Income tax dept. will expand e-sahyog to assist small taxpayers 
Plan to use technology in Taxation department in a big way

Great news for the common man, no change in tax slabs but cess and excise duty hiked on several products

The Economic Survey 2016 has set the tone of the economy and has also given us clues how the Budget 2016 is going to be on February 29. 
 
One of the major lookouts of the Budget 2016 will be the tax slabs and the Economic Survey 2016 suggested that tax exemption thresholds should not be raised. 
The Economic Survey 2016 called for expanding the base of tax payers. 
 
Despite the number of tax returns filed picking up from mid-1980 onwards, nearly 85 percent of the economy remains outside the tax net. Pointing out that just 5.5 percent of earning individuals are in the tax net, translating to a ratio of about 4 percent of tax payers to voters, the survey says this ratio should be raised to a desirable estimate of about 23 percent. It says that taxpaying and political participation are the two important accountability mechanisms wielded by citizens. 
 
Making a study of the data since Independence, the survey pointed out that the exemption thresholds have been raised much more rapidly than underlying income growth resulting in a widening of the wedge between average income and threshold limit. 
 
Bringing more and more people into the tax net via some form of direct taxation will help in realizing the promise of Indian democracy, the Economic Survey stated. 
 
Currently, for a resident individual below 60 years of age, income up to Rs 2,50,000 is exempt from tax, income from Rs 250,001 to Rs 500,000 is taxed at 10%, from Rs 5,00,001 to Rs 10,00,000 at 20% and above Rs 10 lakh at 30%. 
 
For residents aged 60 years or more but less than 80 years, income up to Rs 3 lakh is exempt from income tax and income from Rs 3,00,001 to Rs 5 lakh is taxed at 10% plus cess. Rest of the tax slabs, rates and cess are the same as for residents below 60 years.

No change in tax slabs in Budget 2016!

The Black Money Act (the Act) had been promulgated with the intention to pursue black money stashed overseas. The Act levies tax at the rate of 30% on any undisclosed foreign income and assets held abroad by a person who is ordinarily resident in India. Additionally, the act provides for a penalty equivalent to three times the value of tax. Therefore, the total tax exposure can be as high as 120%. Further, the incumbent may be subject to imprisonment for a maximum term of 10 years. 
	 
	With a view to provide relief to the taxpayer and to encourage him/her to disclose their undeclared foreign income and assets, the Act provided for a one-time compliance window for declaration of undisclosed foreign income and assets by the taxpayer. Upon declaration, the taxpayer was liable to tax at the rate of 30% of the fair market value of the assets and a penalty of 100% of the tax, bringing the tax rate to 60% of the value of the assets. It was also clarified that the contents of the declaration will be used as evidence against the taxpayer under the Income Tax Act, 1961, the Wealth Act, 1957, or Foreign Exchange Management Act, 1999 and the value of the assets will not be chargeable to wealth tax. The time period for declaration expired on 30 September 2015. 
	 
	Black money: The current scenario 
	 
	However, the one-time relief received a tepid response and as per the government announcement, it received details of undisclosed foreign assets worth Rs3,770 crore from 638 declarants which translates into an average of INR6 crore per declarant. However the Revenue Secretary Hasmukh Adhia in a press conference on October 6, revised the figure from INR3,770 crores to INR 4147 crores. The miserly value of declaration further strengthened the belief that many of the big evaders have chosen not to avail the benefit of the compliance window. 
	 
	There are many reasons for the defeated response to this one-time opportunity. Lack of trust that the information provided may not remain confidential has been cited as the major reason for people not opting for this route. The government laid down stringent penal provisions and achieved its objective of creating fear in the minds of people, thereby acting as a deterrent for future creation of black money. But the existing evaders were also fearful that the declarations made by them may be used against them under some other law. 
	 
	Another major reason for people to back out was the possibility of a probe into interrelated transactions, with some of the people involved in a transaction willing to make a declaration, while the others may choose not to declare. Further, there also exists the possibility of routing money into India through the stock market. 
	 
	In addition to the above, many other reasons such as insufficient time provided to make the declaration, a steep tax rate of 60 per cent (including penalty) and above all a lack of clarity on the interpretation of certain provisions of the Act, have led to people not opting for the one-time option. 
	 
	There are numerous estimates of the amount of black money stashed abroad, ranging from 10 to 100 per cent of India's GDP. As per CBI estimates, Indian black money amounts to $500 billion. 
	 
	Therefore a problem this large, cannot be resolved through a single Act. An effective all round strategy is required to be formulated and struck from all directions. 
	 
	What can the Govt do? 
	 
	One of the biggest factors for creation of black money has always been high rates of taxation. The Finance Minister is his last full-budget made a commitment to bring down the corporate tax rate to 25% over the next four years. A reasonable tax rate can serve as a big incentive for people to pay tax and, thereby automatically curbing black money creation. 
	 
	Further, the government has entered into several bilateral and multi-lateral agreements with several countries for automatic exchange of information about Indian account holders in their banks. As a consequence of these agreements, banks are adopting a cautious approach while opening back accounts of Indian residents. Some are even going to the extent of seeking an undertaking/CA certificate certifying that the money proposed to be deposited is in compliance with Indian laws. 
	 
	Another constructive measure which may act as a deterrent for creation of black money is the requirement of quoting PAN for cash transactions beyond a certain threshold. 
	 
	Apart from the measures being taken by the government, some trends emerging on account of a change in life style of the urban population, such as increased use of plastic money, opening of a large number of payment gateways, internet banking and e-commerce are expected to bring about more transparency in transactions. 
	 
	Further, black money creation and corruption at various levels go hand in hand. One cannot think of curbing black money creation without curbing corruption. Therefore, the government in its effort to control foreign based and domestic black money should take effective punitive action reduce corruption and curb black money creation. 
	 
	Finally, it is only through a combination of events and actions on the part of the government and people at large, can India’s dream of achieving a black money free and prosperous economy. It is a transition in which the gestation period is expected to be very long. 
	 
	The article has been authored by Prashant Kapoor, partner, M&amp;A Tax, and Suvira Agarwal, technical director, KPMG in India. The views and opinions expressed herein are those of the author and do not necessarily represent the views and opinions of the organisation.

Budget 2016: Black money haunts the NaMo Govt

Amidst the lingering uncertainty in the world involving the slowdown of China’s massive economy, default by Greece in repayment of its debt to the International Monetary Fund (IMF) and a steep fall in global oil prices, India’s growth trajectory stays intact. 
 
Against the backdrop of such a global volatile economy, the Union Budget 2016 is eagerly awaited with a host of expectations both in India and internationally. With the GDP growth projections on the rise and India being viewed as the next growth giant, the Finance Minister Arun Jaitley should focus on introducing reforms that can propel economic growth in India. 
 
Tax, one of the key components of the economic policy needs to be proactively geared towards boosting our economic growth. While the Goods and Services Tax (GST) is still in the pipeline with industry keenly awaiting its enactment, there are several other factors that warrant a closer look. 
 
Balancing it out 
 
The announcement by the FM in the last Budget to reduce the corporate tax rate from 30% to 25% over the next four years was certainly good news. According to the Central Board of Direct Taxes (CBDT), such a reduction in tax rate will be balanced by discontinuance of various kinds of prevailing deductions and exemptions latest by 31 March 2017. Such phase out of deductions and exemptions may adversely impact various industries/sectors that have long gestation periods or have recently commenced their operations in anticipation of tax benefits. 
 
Pushing it for Modi’s grand plans 
 
Further, it will be worthwhile to watch how the proposed withdrawal of exemptions/deductions shall sync with government initiatives such as Make in India, Digital India, Smart Cities and Start-Up India, Stand-Up India. Given the current economic scenario and the thrust required to achieve the underlying goals behind the aforesaid initiatives, the phasing out of the exemptions/deductions should be effectively planned and applied in a selective manner over the span of a few years considering the sensitivity of various industries. 
 
Minimum Alternate Tax (MAT), which was introduced to neutralise the impact of tax incentives, should also be reconsidered on such phase out of tax incentives. Abolition of MAT for Special Economic Zones (SEZ) developers has already been on the wish list for long. 
 
Clarity in POEM 
 
The Finance Act, 2015 included the concept of Place of Effective Management (POEM) to determine the residential status of companies. POEM is likely to have far reaching consequences on foreign companies as well as several other stakeholders. While the government has recently issued draft guiding principles for consideration and comments by the public, it is imperative that the final guidelines be carefully calibrated to help ensure that POEM is indeed an anti-avoidance rule and does not trap genuine transactions in its ambit. India is keen to adopt the Base Erosion and Profit Shifting (BEPS) guidelines along with its global players. These have to be implemented cautiously, especially the compliance requirements to determine that they do not add to the administrative burden. 
 
Push Ease of Doing of Business 
 
While the ‘Ease of Doing Business’ initiative is targeting policy-related bottlenecks, they may soon be replaced by infrastructure bottlenecks. Infrastructure development is critical for success of various policy initiatives and there is an increasing need for investment in the infrastructure sector through investment linked deductions/incentives. 
 
There has been considerable ambiguity on the taxation of consortiums formed by non-residents to execute infrastructure contracts in India. Revenue Authorities are taxing such non-residents as Association of Persons (AOP) at the withholding tax/assessment procedure stage. Further, there are various tax complexities associated with assessments of AOP, including double taxation of non-residents in India as well as their country of residence. This causes hindrances to the industry and also results in pessimism with regards to the uncertain tax environment in India. A clarity on the tax treatment in this regard is indispensable for encouraging such non-resident contractors to undertake investment in India. 
 
Reduce DDT 
 
Currently, Dividend Distribution Tax (DDT) is being levied at the rate of 15% (effective rate of 20%) on the dividend distribution by domestic companies. Such an effective rate is much higher as compared to the tax deduction rate of 10% on dividend in many Indian and international tax treaties. This has significantly reduced the tax distribution capacity of such domestic companies and has adversely impacted non-resident shareholders due to ambiguity with respect to its credit in the overseas jurisdiction. Structural reforms may be expected in the DDT regime to allow availability of credit for such taxes under the Double Tax Avoidance Agreements (DTAA). 
 
India is considered to have one of the most litigious tax regimes across the world. Though the government has been actively addressing this issue, a lot still needs to be done at the ground level to improve industry sentiment, especially in respect of international transactions. 
 
The article has been authored by Ravi Shingari, partner, Tax at KPMG India. The views and opinions expressed herein are those of the author and do not necessarily represent the views and opinions of KPMG in India.

Direct taxes: That’s a long wishlist for the Modi Govt to fulfill in Budget 2016

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

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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