Key Highlights of Union Budget 2016-2017

Income Tax Slabs Remain Unchanged

There are no changes in the existing income tax slabs, under the Union Budget 2016 – 2017.

What about first time home buyers?

You avail a home loan to buy your home. You get a tax deduction on the interest you pay on the home loan, up to a maximum amount of INR 2 Lakhs, if your home is self occupied. You get this deduction under Section 24(b) under the head ‘Income from House Property’.

If you are a first time home buyer, this Union Budget gives you reason to cheer. You get an additional deduction of INR 50,000 on interest for home loan, if you avail a home loan up to INR 35 Lakhs. To avail this deduction, the cost of your home, must not exceed INR 50 Lakhs.

Simple: To get this deduction, you need to avail a home loan up to INR 35 Lakhs. The cost of your home must not exceed INR 50 Lakhs.

What about the tax rebate?

If you are a resident individual who earns an income up to or equal to INR 5 Lakhs, you are eligible for a tax rebate. The tax rebate under Section 87 A, has been increased from INR 2,000 to INR 5,000. As per latest rules, if you earn an income up to or equal to INR 5 Lakhs, you get a tax rebate equal to 100% of the income tax payable or INR 5,000, whichever is lesser.

This move is expected to provide tax relief to over 2 Crore taxpayers.

Taxing the super rich

The Finance Minister in the Union Budget 2016 – 2017, has increased the surcharge on income tax, if you earn an income of INR 1 Crore or more, from  12% to 15%.

What about the New Pension Scheme?

You invest in the New Pension Scheme. As per the new rules of the Union Budget 2016 – 2017, if you withdraw from the NPS at the time of retirement (60 years), you get a tax exemption, on 40% of the corpus you withdraw.

SEE ALSO: Prepayment Of Home Loan

What if you stay in a rented house?

You stay in a rented house. You have the Section 80 GG of the income tax act, for deductions on house rent paid, if you are salaried or self employed. You get this deduction, if you do not claim house rent, under any other Section of the income tax act.

If you are a salaried employee getting house rent allowance from your employer as part of your salary package, you cannot avail tax deduction under Section 80 GG for payment of rent. You or your spouse or minor child, should not own any accommodation at the place where you are employed or carry out a business.

Under Section 80 GG you get the least of the following:

• INR 2000 a month (INR 24,000 per annum)

• Rent paid minus 10% of the total income.

• 25% of your total income for the year.

As per new rules under Union Budget 2016-2017

Under Section 80 GG you get the least of the following:

• INR 5000 a month (INR 60,000 per annum)

• Rent paid minus 10% of the total income.

• 25% of your total income for the year.