Announced on Monday, the Budget 2016-17 has been reported by the Union Finance Minister Arun Jaitley who spoke about the various income tax proposals for small tax payers, corporate tax, pension, tax exemptions and rationalisation of taxes. It has been said that one of the chief purposes behind this altered tax regime is to boost up the employment generation.
Furthermore, he added, the government’s “Make In India” programme for the startups is another objective to promote cost-effective housing and step ahead towards a pensioned society.
On a similar note, Jaitley’s second budget proposed a distinctive patent system with 10% rate of tax on income from the global misuse of patents introduced and registered in the country. This has been proposed for the sake of innovation.
There will be a deduction up to the extent of 5 percent by Non-banking financial companies (NBFCs) regarding the provision for bad and doubtful debts.
The corporate income tax is settled down to 29% with an additional surcharge and cess for the companies having less turnover, say not beyond Rs. 5 crore in the fiscal year ending March 2015.
The manufacturing companies, which will make their inception after March 2016, are going to have an alternative to get taxed at 25% with additional surcharge and cess. Though, there won’t claim any investment-linked or profit linked removals and don’t have a benefit of investment allowance and accelerated depreciation.
Moreover, there’s also a proposal for exemption for the tax charged on the services provided under Deen Dayal Upadhyay Grameen Kaushalya Yojana and the services provided by the determining bodies chosen by the Ministry of skill development and entrepreneurship.
FM proposed a whole pass through income-tax to securitisation trusts, including the asset reconstruction companies (ARC’s) trusts, which aids in resolving bad debts, to acquire an extra investment in ARC’s. Instead of the trust, the income will be taxed in the investor’s hands.
Coming towards the corporates, there are several ideas for terminating exemptions, which are permitted to the corporates. Over a period, the corporate tax is offered to get a reduction from 30% to 25%, incorporating the ones listed below.
- There is going to be a limitation on the accelerated depreciation provided under the IT Act, to maximum 40% from April 2017 onwards.
- Deductions for research will now be having a limit of 150% from April 2017 while from April 2020, the limit will get reduced to 100%.
- Those units which initiate activity before March 31, 2020, can avail the benefit of section 10AA to new units.
- The weighted deduction under section 35CCD will be on continuation up to April 2020.
A few of other declarations made by him for the tax regime include: Extra resource mobilisation for agriculture, rural economy and clean environment, technology usage for producing accountability, rationalization and ease of taxation and for providing surety in income tax there will be a reduction in litigation.
Recommended: Income Tax Relaxation Rs. 3000 for Less or Equal to Rs. 5 lakh Salaried Persons
