The question most of us want answered on Budget Day is how our taxes will change and how our incomes will be affected. However, in Budget 2016, Finance Minister Arun Jaitley did not have the regular change in tax slabs and exemptions. But does that mean there is not going to be any change in your tax structure the coming fiscal?
Suraj Nangia, partner at Nangia & Co, says while there is no serious change in tax slabs, the government has for the first time in a couple of decades changed the house rent allowance for the lower income groups from Rs 24,000 to Rs 60,000.
Video: The expert explains
This applies primarily to individuals who do not get HRA from their employers. Also, the exemption under Section 87A has been increased from Rs 2,000 to Rs 5,000. Nangia says the fact there is no change in service tax will be good for many taxpayers in the coming year.
However, in keeping with this government’s policy of taxing the rich more, the surcharge on those with income over Rs 1 crore has been increased from 12 per cent to 15 per cent. Moreover, individuals who receive dividends over Rs 10 lakh will now have to pay Rs 1 lakh in tax, this was earlier borne by the company paying the amount.
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Finance Minister Arun Jaitley said people with salaries up to Rs 5 lakh will get Rs 3,000 relief per year, which will benefit 2 crore tax payers. Here is how that will work out.