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Budget Analysis 2016
1. Income Tax rates are not change but the limit of rebate under
section 87A is change from Rs.2,000 to rs. 5,000. So now limit for
individual and HUF whose total income is below 5,00,000 lakh is
increased upto rs. 3,00,000 from 2,70,000.
2. The rate of surcharge is increased from 12% to 15% for
individual, HUF, AOP, BOI, Artificial judicial person having total
income more than of rs. 1,00,00,000.
3. When dividend is received by individual, HUF, firms and LLP in
excess of Rs. 10,00,000 then they are liable to pay dividend Tax @
4. TCS is introduced on sale of motor vehicle exceeding Rs.
10,00,000 and sale of goods at cash exceeding Rs. 2,00,000.
5. Incentive is provided to first home buyers availing home loan by
providing additional deduction in respect of home loan taken for
residential house property upto Rs. 50,000. But this is incentive
only available if value of house property is less than Rs. 50,00,000
and amount of loan taken is less than Rs. 35,00,000.
6. The limit of getting account audited under section 44 AB has been
increased from Rs. 1,00,00,000 to Rs. 2,00,00,000 and for
profession Rs. 25,00,000 to Rs. 50,00,000.
7. New section 44ADA is proposed to be introduced to extend
presumptive taxation scheme to professional also. If any Assessee
carring on profession and if gross receipt is less than Rs.
50,00,000, 50% of such gross receipt shall be presumed to be his
8. As per new Section 44AD no deduction of remuneration to partner
or interest on capital shall be allowed to partnership firm from
presumptive income. It is also proposed that once assessee is
opting for presumptive taxation and if any of the succeeding five
years, he claims his income to be less than presumptive income,
he is required to get his account audited for that year and also
upto next five years, he shall not be allowed to opt for
9. The existing provision of sec 139 requiring filling of income tax
return if total income is exceeds basic exemption limit. Now it is
Budget Analysis 2016
proposed that such total income shall be computed before
exemption under section 10(38) i.e LTCG on shares sold through
recognised stock exchange.
10. As per proposed sec 139 (5), noe belated returns are also allowed
to be revised.
11. It is proposed to extend the scope under section 143(1), (i) To
disallow loss claimed in belated return of income (ii) To disallow
expenditure indicated in audit report u/s sec 44AB (iii) To disallow
deduction claim of deduction u/s 10AA, 80-IA, 80-IAB, 80-IB, 80-
IC, 80-ID, 80IE (iv) Addition of income appearing in form 26AS or
form 16A or form 16.
12. Sec 24(b) provides that interest payable on capital borrowed for
acquisition or construction of house property shall be deducted of
RS. 2,00,000 if such acquisition or construction is completed
within three years from the end of the financial year in which
capital was borrowed. After budget three years is substituted to
13. Cost Inflation index for the Financial year 2015-16 is 1081.
14. A new levy called ‘Krishi Kalyan Cess’ will be imposed from
01/06/2016 on all the taxable services @ 0.5% of the value of
taxable services. So now effective rate of service tax is 15%.
The above points only consider main changes in income tax
and service tax.