5 New Tax changes and its impact on your pocket

tax change

The government has made 5 New Tax changes. These new changes are applicable from 1st June,2016. These new tax changes will make positive and negative impact on your pocket. In this post we will discuss about 5 New Tax Changes and its impact on common man.

5 New Tax changes and its impact on your pocket

Krishi Kalyan Tax

In budget 2016 finance minister has introduced new tax namely Krishi Kalyan Cess. This cess is introduced in order to extend help to the farmers. The Krishi Kalyan Tax shall be applicable from 1st June 2016. This tax is applied on the top of service tax. The tax rate of Krishi Kalyan Tax will be 0.5%. So, now onwards effective service tax shall be 15%.

The Krishi Kalyan Tax will adversely impact on your pocket. Now onwards you need to pay more money for availing following services.

  • All banking services will be costlier. You need to pay more money for bank demand draft, fund transfer, IMPS and SMS alert services.
  • You need to pay more money towards entertainment, as movie ticket will be costlier.
  • If you have a regular habit of taking dinner or lunch in the restaurant you need to be ready to pay more taxes.
  • All utility bill, train, travel ticket will also attract Krishi Kalyan Tax.
  • Event management, IT services, catering and renewal of health and life insurance policy will also attract this tax.

Tax on purchase of Gold Jewelry

In budget 2016 provision was made to collect 1% tax on cash purchase of gold jewelry costing 2 lacs and above. The government has rolled back this decision and now you need to pay 1% tax on cash purchase of gold jewelry costing 5 lacs and above. The roll back move will help gold investors and buyer as they need not pay additional 1% tax. This new rule will be applicable from 1st June 2016.

No TDS for PF withdrawal up to Rs 50,000

No TDS shall be applied on PF withdrawal up to Rs. 50,000 from 1st June 2016. The earlier threshold for TDS Rs. 30,000 is enhanced to Rs. 50,000. The new proposal will give major relief to EPFO subscriber.

TDS will be deducted at 10% rate provided you submit the PAN card. If you submit form 15G or 15H TDS is not deducted. This form needs to be submitted provided your income is less than taxable limit. Also, note that if you withdraw EPF after 5 years of service no TDS is applicable.

Infrastructure Tax on Car

A new tax called as Infrastructure tax will be applicable on car and utility vehicles. The amount collected from this tax shall be used for the creation of new infrastructure.

  • 1% infrastructure cess is applicable on petrol/LPG/CNG-driven motor vehicles of length not exceeding 4 meters and engine capacity not exceeding 1200cc.
  • 5% cess on diesel motor vehicles of length not exceeding 4 meters and engine capacity not exceeding 1500cc
  • 4% cess is applicable on big sedans and SUVs.

This new tax will adversely impact on your pocket and make car costlier.

Google Tax

A new equalization levy or Google Tax shall be applicable to all digital services from 1st June 2016. As per this new rule, equalization levy is applied to a foreign company like google and facebook for the online advertisement.

The Indian company has to withhold 6% as a tax amount, for any payment made to a foreign company that exceeds Rs.1 lakh a year for providing online advertisement services.

Tax changes

In nutshell –

Inflation is already killing a common man and an addition of these taxes will further drill down pocket of common man.

What is your take on these tax changes?  Do share your views in the comment section.

Article by Raviraj

Hi, I am Raviraj. I am passionate about money matters and finance. I have 10 years of rich experience in the field of financial planning, Investments & Insurance. I have written 850+ article on this blog. If you like my efforts kindly subscribe to this blog and also let your friends know about this website by sharing.

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