Deduction limit raised for income up to Rs5 lakh
29 February 2016
While leaving the tax slabs largely unchanged in the Union Budget 2016-17, finance minister Arun Jaitley has raised the deduction limit for those with total income of less than Rs5 lakh per annum from Rs2,000 to Rs5,000. He has also announced relief for tax payers who do not own a house and don't get house rent allowance from employers.
Announcing relief to small tax payers, Jaitley proposed to raise the ceiling of tax rebate U/s 87A from Rs2,000 to Rs5,000. With this, individuals having income up to Rs5 lakh will get a relief of Rs3,000 in their tax liability.
He also proposed to increase the limit of deduction of rent paid U/s 80 GG from Rs24,000 per annum to Rs60,000 to provide relief to those who live in rented houses.
Jaitley proposed to increase the turnover limit under presumptive taxation scheme U/s 44 AD of the Income Tax Act to Rs2 crore from the existing limit of Rs1 crore which will benefit more than 30 lakh small business people. He also proposed to extend the presumptive taxation scheme with profit deemed to be 50 per cent to professionals with gross receipts up to Rs50 lakh.
Measures to rationalize tax deducted at source (TDS) provisions for Income Tax have been proposed to improve cash flow position of small tax payers who get their funds blocked due to current TDS provisions. Also, non-residents without PAN are currently subjected to a higher rate of TDS, however with amendment to relevant provision will allow that on furnishing of alternative documents, such higher rate will not apply.
The facility for revision of return hitherto available to service tax assesses only will be extended to Central Excise assesses also.