Finance Minister Arun Jaitley did not change income tax slabs in his third Budget, but he did tweak some deductions and announced multiple new cesses, which will impact tax liability for the common man.www.taxxcel.com
Here is a complete list of new tax measures announced in Budget 2016:
1) Deduction limit under Section 87A of the Income Tax Act has been raised from Rs. 2,000 to Rs. 5,000 per annum. This will help over 2 crore taxpayers save more.
2) Taxpayers who live in rented houses and don’t get house rent allowance (HRA) can deduct Rs. 60,000 per annum from their income from the current Rs. 24,000.
3) An additional deduction of Rs. 50,000 on interest paid by first-time home buyers on home loans of up to Rs. 35 lakh, provided the house value doesn’t exceed Rs. 50 lakh, has been announced.
4) Super-rich, or those with an income of over Rs. 1 crore, will have to pay more taxes as surcharge has been raised from 12 per cent to 15 per cent.
5) Individuals who receive dividends in excess of Rs. 10 lakh per annum will now have to pay 10 per cent tax on gross amount of dividend.
6) Cars priced Rs. 10 lakh and above will attract 1 per cent tax. Purchase of goods and services in cash exceeding Rs. 2 lakh will also attract 1 per cent tax. An infrastructure cess of 1 per cent on small petrol, LPG and CNG cars, 2.5 per cent on diesel cars of certain capacity, and 4 per cent on SUVs will make buying all cars costlier.
7) Eating out in restaurants, buying property and insurance, and making mobile phone calls will become more expensive from June 1, 2016 because of a “Krishi Kalyan” cess of 0.5 per cent, which will be levied on all services.
8) Cigarette prices will go from next financial year as excise duty on tobacco products (other than beedi) has been hiked from 10 per cent to 15 per cent.
9) Single-premium insurance premiums will get cheaper as service tax on policy premiums has been cut from 3.5 per cent to 1.4 per cent.
10) Branded retail garments will become costlier as Budget 2016 has proposed a 6 per cent excise on branded retail garments priced more than Rs. 1,000. 10) Imitation jewellery is also set to cost more as basic customs duty has been increased from 10 per cent to 15 per cent.