The salaried class in India had a lot of expectation from the budget 2016 in respect of IT exemption limit. But no changes have been made to existing tax slabs. However, a small relief is provided by increasing maximum tax relief from Rs.2000/- to maximum Rs.5000/-under section 87(a) to individuals whose income is less than Rs.500000/- .The highlights of the budget announcement for individuals are as under.
- No changes have been made to existing income tax slabs.
- Relief u/s 87(a) is increased from Rs.2000/- to maximum of Rs.5000/- to individuals whose income is less than Rs.500000/-
- Individuals who donot get HRA from the employers were eligible for maximum deduction of Rs.24000/- per annum on rent (Rs.2000/- rent per month) paid by them u/s.80GG. This limit is increased to Rs.60000/- for the FY 2016-17.
- 40% of withdrawal under New Pension Scheme (NPS) to be tax exempt.
- Additional exemption of Rs.50000/- interest paid by first time house buyers on housing loan up to Rs.35 lacs (Value of the property should be below Rs.50 lacs).
- No service tax for house built below 60 square meters.
- Government contributes 8.33% for 3 years to EPF/NPS to all new employees who draw salary up to Rs.15000/-
- Surcharge on income of super rich who earn above rupees one crore is increased to 15% from 12%.
- Dividend Distribution Tax (DDT) levied on those who earn above Rs.10 lacs.