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.
There is 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.
While there are many tax benefits to the middle class and employees, the rich has to bear more tax burden. I will discuss all these new tax decisions. Along with this, you would also learn the new income tax slab rate of 2016. You would also learn the tax calculation as well. [toc]
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 remains 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.
Download from below link the Automatic Income Tax Form 16 Part B for F.Y.2016-17 [ This Excel Utility can prepare at a time 50 employees and 100 employees Form 16 Part B ]
1) Click here to Download Master of Form 16 Part B for 50 employees for F.Y.2016-17
2) Click here to Download Master of Form 16 Part B for 100 employees for F.Y.2016-17
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.
In FY 2014-15, The government has given similar tax benefit on the home loan interest.
Surcharge Rate Increased For Individuals
The income tax surcharge is levied on the taxpayers who earns more than Rs one crore in a year. For individuals, this surcharge was 12%. But budget 2016 has increased the burden of surcharge for them. Now the surcharge on income tax has become 15%. The surcharge for all other categories of the taxpayers would remain same.
The Income Tax Slab For FY 2016-17 and AY 2017-18
Now I am giving you the tax slab and rates of the financial year 2016-17. These tax rates are applicable on the income earned during 1 April 2016-31 march 2017. You should take account of this income tax slab rate. The assessment of income tax according to this slab rate will be done in the year 2017-18. It means you have to apply these rates while filing the income tax return in 2017.
Besides the income tax rates, the surcharge is also charged if total taxable income exceeds Rs 1 Crore. Since the budget 2016, the income tax surcharge on individuals is increased to 15%. Two years back it was mere 10%. However, marginal relief is given in such cases.
Income Tax Slab for
2016 – 17
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Tax Rate
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Below 2.5 Lakh
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NIL
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2.5 Lakh to 5 Lakh
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10% of the amount above and over 2,50,000.
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5 Lakh to 10 Lakh
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Rs. 25,000 + 20% of the amount by which the taxable income exceeds Rs. 5,00,000
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Above 10 Lakh
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Rs. 1,25,000 + 30% of the amount by which the taxable income exceeds Rs. 10,00,000
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