Latest Income Tax Slab Rates for FY 2016-17

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The income tax slabs & rates are categorized as below;

• Individual resident aged below 60 years.
• Senior Citizen (Individual resident who is of the age of 60 years or more but below the age of 80 years at any time during the previous year).
•  Super Senior Citizen (Individual resident who is of the age of 80 years or more at any time during the previous year).

Budget 2016-17 & Important Tax Proposals

• Deduction amount under 80GG increased from Rs 24,000 per annum to Rs 60,000 per annum. Section 80GG is applicable for all the individuals who do not own a residential house & do not get HRA (House Rent Allowance).
• Section 87A Rebate : Benefit of Rs 5,000 upto the income of Rs 5,00,000. If you are earning below Rs 5 lakh, you can save an additional Rs 3,000 in taxes. Tax rebate under Section 87A has been raised from Rs 2,000 to Rs 5,000. Effectively, this means now the basic exemption is of Rs 3 lakh.
• 15 % Surcharge on income of more than 1 crore rupees yearly has been proposed, earlier it was 10 %.
• National Pension System : 40% of corpus withdrawal at the time of retirement will be tax exempted.
• As per the Budget 2016 proposal, at the time of retirement, 40% of the EPF (Employees Provident Fund) lump sum withdrawal is tax-exempted, 60% of the corpus is taxable as per the applicable Income Tax Slab. To avoid this, the EPF member has to invest this 60% balance in an Annuity life insurance product. The Annuity income will be Tax-free. (Read :Latest EPF withdrawal rules 2016)
• Section 80EE – First time Home Buyers can claim an additional Tax deduction of up to Rs 50,000 on home loan interest payments u/s 80EE.
  • The home loan should have been sanctioned in FY 2016-17
  • Loan amount should be less than Rs 35 Lakh
  • The value of house should not be more than Rs 50 Lakh
• Budget 2016 proposes to levy 10% Dividend Distribution Tax (DDT) in the hands of the investor who receives dividend of Rs 10 Lakh or more in a financial year.
• Cash purchases of goods & services which are worth more than Rs 2 Lakh & purchases of car worth more than Rs 10 Lakh will be subject to TCS (Tax collection at Source). Tax at source of 1% on purchase of luxury cars would be levied.
• Budget 2016 has proposed to provide a limited period ‘Tax Compliance Window‘ for domestic taxpayers. This will be created between 1 June to 30th September to declare undisclosed income or income. To clear up their past tax transgressions,  the taxpayers will have to pay tax at 30%, and surcharge at 7.5% and penalty at 7.5%. So, the total applicable tax would be at 45% of the undisclosed income. They will have to pay up the taxes within two months of declaration.
• Levy of Infrastructure Cess on purchase of SUVs & Diesel cars.
• Krishi Kalyan cess at 0.5% on all taxable services effective from  1st June, 2016.
• Income tax department will expand e-sahyog project to assist small taxpayers.