Indian Budget 2016, What matters most…

There were many an expectation from the Narendra Modi Govt ! The govt won on promises such as minimum government maximum governance but has been unable to change anything much on ground other than reducing corruption and improving administration in bits and pieces , and the fault lies squarely at its door as much as it does at the doors of the Opposition. .  the opposition parties with their obstruction tactics are no better as are the state Govts which want to pursue their own agendas don’t pretty much care about the economic interests of the nation. Thanks to the Pay commission and OROP hikes, which time will tell if the govt can afford..the fiscal situation even after big drop in oil prices is very tight

The Economic climate world over is bad as Govts push for negative rates as they lack cannon fodder to boost or pump up their economies , while there has been back to back droughts in India. Watch the govt expenses and fiscal and monetary deficit figures.

Lets see what this budget brings to us !

The Good

NO CHANGE IN FISCAL DEFICIT @ 3.5%

NO CHANGE IN LTCG TAX

Gains on a listed security attract no income tax if it is held for the long term i.e. at least a year. But if it is sold within a year of purchase, the transaction attracts 15 per cent tax.

Multiple changes / reforms in tax mechanism to reduce litigation and discretion to tax officers.

U/S 87 Rebate of Rs 5000

  • For individuals having total income upto Rs 5 lakh (Up from Rs 2000)

U/S 80GG  Rebate of Rs 60000 for house rent paid.

(big lollipop that hardly benefits anyone considering conditions set)

  • Deduction is available to Individual Assessee only. (Up from 24000)
  • He has not received HRA(house rent allownace ) from his employer if he is a salaried person otherwise he should be self employed.
  • He has paid house rent for his own residence.
  • He or his spouse or his minor child or HUF(of which he has a member) should not have a residential house where he ordinarily resides or performs duties of his office or employment or carries on his business or profession;
  • He should not have a house owned by him, which is under his occupation and value of that is not being taken as nil under section 23(2)(a) or 23(4).
  • A declaration on Form 10BA should be submitted .

First time home buyers to get additional deduction of Rs 50,000 on interest for loan upto Rs 35 lakh

Withdrawal from NPS on maturity made tax-free upto 40%

A New Health Protection Scheme to provide health cover up to Rs.1 lakh per family announced National Dialysis Services Programme to be launched 3000 Stores to be opened under Prime Ministers Jan Aushadhi Yojana during 2016-17

The Bad 

NO CHANGES IN TAX SLABS !

EET ON EPF withdrawals

  • Lower amt set for Bank recapitalization at 25000 Crores
  • Vague on funding Pay commission and OROP.
  • Increase in tax on Cigarettes but not Biddis which is lopsided and helps politicians and cronys who own biddi factories.
  • The securities transaction tax (STT) on cash transactions has been maintained at 0.12 per cent. But STT on options trading has been increased to 0.05 per cent from 0.017 per cent earlier.
  • The Union Budget introduced a surcharge rise to 15% for incomes over Rs 1 crore
  •  The Budget proposed that in addition to the DDT paid by companies, tax at the rate of 10 per cent of gross amount of dividend will be payable by big recipients, such as individuals, HUFs and firms receiving dividend income in excess of Rs 10 lakh per annum.
  • 1% additional tax will be charged on luxury cars above Rs 10 lakh
  • The FM has proposed to cess of 1% on small petrol and CNG cars, 2.5% on diesel cars and 4% on SUVs and other high-end cars.

The Ugly

In a major upset to the middle class dependent on its pension funds for retirement as there is no Social Security net in this Nation is the EET Bomb on Pension funds.

This includes EPF , NPS and PPF ? wherein 60% of your deposit from April 1 2016 is to be taxed on withdrawal

This is a good budget for agri and farm sector if only money reaches them.

This is a bad or so so budget for middle class as the OROP and Pay commission hike will be inflationary for all and increase of tax free income for common man up to 3 lakhs and 4 lakh for seniors  was anticipated badly.

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