Finance Minister Arun Jaitley has completed the task of presenting Union Budget 2016 for FY 2016-17 today. Everyone has expected that budget 2016 will bring a big smile to the common man. However, the finance minister has failed in fulfilling any expectations of common man. Budget 2016 is like bitter capsule for the common man. Let’s take a look at good bad and ugly of budget 2016 to find out how it will impact on common man budget and spending.
Union Budget 2016 Review Impact on a Common man
No major relief on Tax
No tax slab change and no major relief on tax this year. It seems a common man who is paying tax honestly is an idiot 🙁 He keeps on paying tax to the government and government is not ready to listen to him.
- In budget 2016 tax benefit of Rs 3000 is given to 2 Cr taxpayers as a tax rebate.
- In nutshell benefit is passed on to only 1.6% of the population (2 Cr people out of 125 Cr population).
- You might be surprised to note that in India we have only 4 Cr taxpayers so ultimately this benefit is given to 50% of tax payer.
- If we divide Rs 3000 into 12 equal parts Rs 250 benefit per month is given to few tax payers.
Income Tax Slab Rates for FY 2016-17 or AY 2017 -18 is given below.
The second tax benefit is given under section 80GG for the rented house, where existing limit of Rs.24000 per annum is increased to Rs. 60000.
- The limit under 80GG was applied long back and was overdue for enhancement.
- Another point to ponder is majority of people today live in own house and does not take any benefit under section 80GG.
In short no major tax benefits to taxpayer, taxpayers will continue to pay tax and tax evaders will continue to enjoy.
Service Tax increased from 14.5% to 15%
A new proposal is made to impose additional 0.5% Krishi Kalyan Cess on all taxable services. This means now onwards we need to pay 15% service tax instead of 14.5%. In last year budget service tax rate was increased from 12.36% to 14% and additional 0.5% Swachh Bharat Cess was applied.
It seems bad days are back household expense is about to increase due to hike in the service tax. Let’s check how this rise in service tax affects your budget.
So, your household spending is expected to increase and you are likely to spend more money.
You need to pay more money for?
- You need to pay more money to purchase car. 1% tax will be deducted on source for purchase of any luxurious car exceeding value 10 Lac.
- 1% Cess is proposed on small petrol and CNG cars. 2.5% Cess is proposed on diesel car and 4% Cess on SUVs.
- All cigarette products will be costlier as excise duty is increased from 10% to 15%.
- Gold, jewelry, readymade branded cloths, diamond, coal etc will become costlier.
- As service tax rate is enhanced services like a wedding planner, catering, banking, IT, Entertainment, traveling etc. will become costlier.
Positive and Negative of Budget 2016
Like every year this year also finance minister has done his work of making a budget of 2016 keeping worry of common man aside.
What is your take on budget 2016?
Do share your views on Union budget 2016-17
Check out more Budget details here.