Expectations From Budget 2016
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Union finance minister Arun Jaitley is all set to present the Union Budget for the financial year 2016-17 on 29 February 2016. Being presented at a time when the global financial markets are facing stiff times with a sharp fall witnessed in the crude oil prices and global economic slowdown, Budget for 2016 comes with multiple expectations, some of the most crucial ones have been listed below:
1. Interest on home loans
Presently, an interest of Rs. 200,000 is deducted on a self-occupied house. Paying heed to the rising inflation, home buyers are anticipating that the finance minister should increase the tax deduction limits on home loan interests from the current limit of Rs. 200,000 to at least Rs. 300,000. Additionally, the minister is expected to come up with a separate provision for the principal loan amount which is presently included in 80C.
2. Excise duty on large cars
The Automobile industry body SIAM (Society of Indian Automobile Manufacturers) is eyeing the reduction of excise duty on large cars and SUVs to 20 per cent from the current rates of up to 30 per cent. Beside, SIAM has also demanded an incentive scheme for scrapping of old vehicles in 2016 Budget.
3. TDS (Tax Deducted at Source) Limit
With the NDA government's second full-fledged Budget rolling out on 29 February, small income tax payers are watching out the threshold limits for TDS (Tax deducted at source). A panel of experts dealing with simplification of income tax laws have recommended enhancement and rationalisation of threshold limits along with impressive reduction of rates of TDS.
4. Laddered Service Tax pertaining to start-ups
Even though the startups have been freed from Income tax for a span of three years, the issue of Service tax paying by them has still not been addressed. It is being hoped that this year's Budget would bring out a laddering (like the Income Tax slabs) for the startups. This initiative would help the startups in investing a considerable part of their revenues to business and reduce their dependency on VC (Venture Capital) funds. Also, once the startups are successful in reaching a specific stature, they can indeed pay the service tax that is at par with other renowned companies.
5. Widening of tax base
In India, among the population of 120 crore+, only a 4 crore+ pay their income tax. This narrow base of tax payers leads to a higher rate of income tax on all the compliant taxpayers who further develop a sense of injustice. Budget 2016 is expected to bring new and more concrete measures that can help getting more people on-board the group of taxpayers. This will eventually help in even distribution of the tax collected from the people of India.
6. A 10-year Tax holiday for 'Make in India' Campaign
The telecom ministry of India has proposed a 10-year tax holiday for mega projects that would be implemented in the telecom sector as part of the 'Make In India' programme. The ministry is also expecting excise duty exemption for a wide range of electronic equipments that would be utilized for creation of utmost-required manufacturing ecosystem in India. Extension of differential excise duty levied on mobile phones and electronic gadgets like routers, network switches and modems has also been proposed for the Union Budget 2016.
7. A benign tax regime for the country's diamond sector
In an attempt to make India a hub of international trading of Diamond, the government might come up with a unique tax regime for the diamond sector in special notified zone (SBZ). A whopping 90 per cent of global diamonds are polished in India, but they go back to countries like Belgium due to lack of proper trading facilities in the country. Hopefully, 2016 Budget would bring a simplified and competitive taxation regime for diamonds and that the turnover tax on diamond trade in the special notified zone should not be more than 0.25 per cent.
Like every other year, 2016 Budget also has a good count of expectations attached to it. The ones listed above are reasonable and fall within the scope of Arun Jaitley's agenda. So, it remains to be seen what lies in store for the common man, enterprises and startups.
Last Updated on: February 16, 2016
Presently, an interest of Rs. 200,000 is deducted on a self-occupied house. Paying heed to the rising inflation, home buyers are anticipating that the finance minister should increase the tax deduction limits on home loan interests from the current limit of Rs. 200,000 to at least Rs. 300,000. Additionally, the minister is expected to come up with a separate provision for the principal loan amount which is presently included in 80C.
2. Excise duty on large cars
The Automobile industry body SIAM (Society of Indian Automobile Manufacturers) is eyeing the reduction of excise duty on large cars and SUVs to 20 per cent from the current rates of up to 30 per cent. Beside, SIAM has also demanded an incentive scheme for scrapping of old vehicles in 2016 Budget.
3. TDS (Tax Deducted at Source) Limit
With the NDA government's second full-fledged Budget rolling out on 29 February, small income tax payers are watching out the threshold limits for TDS (Tax deducted at source). A panel of experts dealing with simplification of income tax laws have recommended enhancement and rationalisation of threshold limits along with impressive reduction of rates of TDS.
4. Laddered Service Tax pertaining to start-ups
Even though the startups have been freed from Income tax for a span of three years, the issue of Service tax paying by them has still not been addressed. It is being hoped that this year's Budget would bring out a laddering (like the Income Tax slabs) for the startups. This initiative would help the startups in investing a considerable part of their revenues to business and reduce their dependency on VC (Venture Capital) funds. Also, once the startups are successful in reaching a specific stature, they can indeed pay the service tax that is at par with other renowned companies.
5. Widening of tax base
In India, among the population of 120 crore+, only a 4 crore+ pay their income tax. This narrow base of tax payers leads to a higher rate of income tax on all the compliant taxpayers who further develop a sense of injustice. Budget 2016 is expected to bring new and more concrete measures that can help getting more people on-board the group of taxpayers. This will eventually help in even distribution of the tax collected from the people of India.
6. A 10-year Tax holiday for 'Make in India' Campaign
The telecom ministry of India has proposed a 10-year tax holiday for mega projects that would be implemented in the telecom sector as part of the 'Make In India' programme. The ministry is also expecting excise duty exemption for a wide range of electronic equipments that would be utilized for creation of utmost-required manufacturing ecosystem in India. Extension of differential excise duty levied on mobile phones and electronic gadgets like routers, network switches and modems has also been proposed for the Union Budget 2016.
7. A benign tax regime for the country's diamond sector
In an attempt to make India a hub of international trading of Diamond, the government might come up with a unique tax regime for the diamond sector in special notified zone (SBZ). A whopping 90 per cent of global diamonds are polished in India, but they go back to countries like Belgium due to lack of proper trading facilities in the country. Hopefully, 2016 Budget would bring a simplified and competitive taxation regime for diamonds and that the turnover tax on diamond trade in the special notified zone should not be more than 0.25 per cent.
Like every other year, 2016 Budget also has a good count of expectations attached to it. The ones listed above are reasonable and fall within the scope of Arun Jaitley's agenda. So, it remains to be seen what lies in store for the common man, enterprises and startups.
Last Updated on: February 16, 2016
