The income tax slab of 2016 -17 is same as earlier. However, the middle class will get the tax benefit of Rs 3000. Almost 1 crore people will enjoy this tax benefit. The budget 2016 did not change the income tax slab. The tax relief is given through the rebate.
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There are few more opportunity to save tax. The first time home buyer would get extra tax saving on the home loan interest. Those who lives in the rented house, also have a reason to cheer.
The budget 2016 has also fulfilled the long time demand of Tax exemption on NPS withdrawal. This demand has been partially met. The companies which employ the fresher would get some financial benefit due to the new EPF rules. The TDS rules of EPF is also relaxed.
Budget 2016 – Main Points Related to Tax
No Change in Income Tax Slab
The income tax slab for individuals, females, senior citizen remains same in the FY 2016-17. There is no change. The basic exemption remain at 2.5 lacs.There is no extra concession for females.
Income Tax Rebate Increased
The income tax rebate is increased by Rs 3000. In the FY 2015-16, it was Rs 2000, now the tax rebate is Rs 5000. This rebate is available to those whose taxable income is below 5 lacs. It means, that the tax liability of such people would come down by Rs 5000. Because of this provision, those who earns up to Rs 3 lacs are not required to pay any tax. Rather, if a person uses the all available deductions, the income up to Rs 5 lacs can become tax-free.
Rent Deduction Increased
The tax deduction for the rent payment (section 80GG) is increased from 24,000 to 60,000. This deduction is available to those who lives in rented house and do not get House Rent Allowance from the employer.
More Deduction On Home Loan Interest
The home buyer would have the opportunity to claim more tax deduction. The budget 2016 has increased the tax deduction for home loan interest by 50 thousand. This extra deduction of 50,000 would be available over and above the 80C limit of Rs 1.5 lac. It means, your total tax deduction under section 80C can go up to Rs 2 lacs provided you are paying at least 50,000 as home loan interest. This extra tax deduction is available to those homebuyers who buy a home in the financial year 2016 – 2017. The cost of the house should be more than 50 lacs and home loan amount should not be more than 35 lacs.