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BUDGET HIGHLIGHTS 2016-2017
Honourable Finance Minister, Sh. Arun Jaitley presented his third consecutive budget
today, the highlights of the budget are summarised here in under:
1. Increase in Surcharge on Individuals or HUFs or every association of
persons or body of individuals, whether incorporated or not, or every
artificial juridical person whose income exceed Rs.1 Crore from 12% to
2. Increase in Deduction from income tax due to Rs.5000/- from the existing
deduction available amounting to Rs.2000/- under section 87A to
Individuals having taxable income of Rs.5 Lacs or less.
3. Newly setup domestic companies engaged solely in the business of
manufacture or production of article or thing, shall have an option to pay
income tax as per provisions of new section 115BA i.e. @ 25% subject to
certain conditions or at normal rates.
4. Lower corporate for next financial year for companies upto Rs 5 crore
turnover to 29 per cent for 2015.
5. Any income by way of dividend in excess of Rs. 10 lakh shall be
chargeable to tax in the case of an individual, Hindu undivided family
(HUF) or a firm who is resident in India, at the rate of ten percent (10%).
The taxation of dividend income in excess of ten lakh rupees shall be on
6. An equalisation levy of 6 % of the amount of consideration for specified
services received or receivable by a non-resident not having permanent
establishment ('PE') in India, from a resident in India who carries out
business or profession, or from a non-resident having permanent
establishment in India. Further, in order to reduce burden of small players
in the digital domain, it is also provided that no such levy shall be made if
the aggregate amount of consideration for specified services received or
receivable by a non-resident from a person resident in India or from a
non-resident having a permanent establishment in India does not exceed
one lakh rupees in any previous year.
7. A tax collected at source (TCS) @ 1% on purchase value of motor vehicle
exceeding Rs.10 Lacs and above.
8. A tax collected at source (TCS) @ 1% on purchase of any goods (except
gold and jewellery) value exceeding Rs.2 Lacs.
9. Profit linked, investment linked and area based deductions will be phased
out for both corporate and non-corporate tax payers.
10. The provisions having a sunset date will not be modified to advance the
sunset date. Similarly the sunset dates provided in the Act will not be
11. In case of tax incentives with no terminal date, a sunset date of 31.3.2017
will be provided either for commencement of the activity or for claim of
benefit depending upon the structure of the relevant provisions of the
12. There will be no weighted deduction with effect from 01. 04.2021.
13. A deduction of one hundred percent of the profits and gains derived by
an eligible start-up from a business involving innovation development,
deployment or commercialization of new products, processes or services
driven by technology or intellectual property. The benefit of hundred
percent deductions of the profits derived from such business shall be
available to an eligible start-up which is setup before 01.04.2019.
14. To incentivise first-home buyers availing home loans, by providing
additional deduction in respect of interest on loan taken for residential
house property from any financial institution up to Rs. 50,000. This
incentive is proposed to be extended to a house property of a value less
than fifty lakhs rupees in respect of which a loan of an amount not
exceeding thirty five lakh rupees.
15. An assessee engaged in the business of transmission of power shall also
be allowed additional depreciation at the rate of 20% of actual cost of
new machinery or plant acquired and installed in a previous year.
16. Where the total income of the eligible assessee income includes any
income by way of royalty in respect of a patent developed and registered
in India, then such royalty shall be taxable at the rate of ten per cent (plus
applicable surcharge and cess) on the gross amount of royalty.
17. A weighted deduction of 130% shall be provided under section 80JJA in
respect of cost incurred on any employee whose total emoluments are
less than or equal to twenty five thousand rupees per month. No
deduction, however, shall be allowed in respect of cost incurred on those
employees, for whom the entire contribution under Employees' Pension
Scheme notified in accordance with Employees' Provident Fund and
Miscellaneous Provisions Act, 1952, is paid by the Government.
18. To claim the weighted deduction referred in Para above further
relaxations in the norms for minimum number of days of employment in
a financial year from 300 days to 240days and also the condition of ten
per cent increase in number of employees every year is withdrawn now
any increase in the number of employees will be eligible for deduction
under the provision.
19. Under section 80GG an assessee who does not own a house and does not
get HRA shall be entitled to get deduction of rent paid subject to Rs.
5000/- p.m. the limit is increased from Rs.2000/- p.m.
20. Interest paid on capital borrowed for acquisition or construction of a self-
occupied house property shall be available if the acquisition or
construction is completed within five years from the end of the financial
year in which capital was borrowed the time has been extended from the
present three years.
21. New Section 44ADA will be inserted in the act to estimate the income of
an assessee who is engaged in any profession referred to in sub-section
(1) of section 44AA such as legal, medical, engineering or architectural
profession or the profession of accountancy or technical consultancy or
interior decoration or any other profession as is notified by the Board in
the Official Gazette and whose total gross receipts does not exceed fifty
lakh rupees in a previous year, at a sum equal to fifty per cent. of the total
gross receipts, or, as the case may be , a sum higher than the aforesaid
sum earned by the assessee. The scheme will apply to such resident
assessee who is an individual, Hindu undivided family or partnership firm
but not Limited Liability partnership firm.
22. Tax Audit for professionals shall be applicable in case of gross receipts
exceeds 50 lacs or profit is lower than the prescribed in section 44ADA.
23. Limit for presumptive taxation scheme on eligible assessee has been
increased from the present 1 Crore to 2 Crore. Under the scheme 8% of
the turnover is treated as income.
24. A Voluntary disclose scheme will be open for the assessee to declare
undisclosed income subject to tax @ 30%+7.5% Interest+7.5%
Penalty(Total of 45%) subject to certain conditions. The scheme shall be
open from 01st June, 2016 to 30Th September 2016.
25. A Direct Tax Dispute Resolution Scheme, 2016 in relation to tax arrears
and specified tax where in the assessee in dispute the pending appeal
could be against an assessment order or a penalty order. The declarant
under the scheme be required to pay tax at the applicable rate plus
interest up to the date of assessment. However, in case of disputed tax
exceeding rupees ten lakh, twenty-five percent of the minimum penalty
leviable shall also be required to be paid.
26. In case of pending appeal against a penalty order, twenty-five percent of
minimum penalty leviable shall be payable along with the tax and interest
payable on account of assessment or reassessment
27. E Assessment to 7 mega cities.
28. Rationalization of TDS provisions to benefit the Individuals.
29. Governmentt will pay interest of 9 per cent instead of 6 per cent in case
there is a delay in apellatte cases beyond 90 days. Officers to be held
30. 100% deduction for profits of undertakings from housing projects in cities
during Jun 2016 - Mar 2019 building houses upto 30 sq. mtrs.
31. Proposed to withdrawal up to 40 per cent of corpus under National
Pension scheme to be tax free. Annuity also to be tax free.
32. Tax treatment should be uniform for defined benefits and contribution of
pension scheme and plans.
33. Accelerated Depreciation limited to maximum of 40%.
34. LTCG on unlisted securities limited to 2 years.
35. Penalty for concealment of Income from 100-300% to 50-200%.
36. With a view to ensure the prompt payment of dues to Railways for use of
the Railway assets, it is proposed to amend section 43B so as to expand
its scope to include payments made to Indian Railways for use of Railway
assets within its ambit. Deduction shall be available if the payment is
made on or before the due date of income tax return.
37. A person during the previous year earns income which is exempt under
clause (38) of section 10 (Dividend Received) and income of such person
without giving effect to the said clause of section 10 exceeds the
maximum amount which is not chargeable to tax, shall also be liable to
file return of income for the previous year within the due date.
38. A belated return under section 139(4) can be filed up to before the end of
the relevant assessment year or before the completion of the
assessment, whichever is earlier.
39. The return filed without payment of due tax and interest shall not be
treated as defective merely on account of non payment of due tax.
40. Assessment under section 143 and 144 to eb completed within 21
months from the end of the assessment year from the present 24 months
from the end of the assessment year.
41. Non Corporate Assessees to pay Advance Tax in 4 installments on
15th June – 15%, 15th Sep – 45%, 15th Dec-75% & 15th Mar-100% (similar
to the Corporate)
42. The assessee eligible for presumptive tax under section 44AD now shall
be liable to pay advance tax though in a single instalment i.e on or before
15th of March every year.
43. New condition for conversion of a company into Limited Liability
Partnership (LLP). The value of the total assets in the books of accounts of
the company in any of the three previous years preceding the previous
year in which the conversion takes place, should not exceed five crore
44. Limit for contribution of employer in recognized Provident and
Superannuation Fund of 1.5 lakh per annum for taking tax benefit.
45. No higher TDS for non-residents if alternative documents to PAN card