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Key Highlights of Budget 2016-17


by Team

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- FY17 fiscal deficit target retained at 3.5%

Direct Tax for individuals

- No change in tax slabs - Click here for 2015-16 tax slabs

- Limit of deduction of rent paid under section 80GG raised to Rs 60,000 per annum from Rs 24,000

- Deduction for additional interest of Rs 50,000 per annum for loans up to Rs 35 lakh sanctioned in 2016-17 for first time home buyers, where house cost does not exceed Rs 50 lakh

- Only 40% of EPF/NPS total corpus withdrawn at the time of retirement will be tax exempt. The remaining 60% will be tax exempt only if invested in annuities. The proposal is not finalized and government has clarified that tax will be applied only on the interest earned and will not be applicable to individuals with basic income of upto 15,000 per month


Indirect/Service Tax

- Krishi Kalyan Cess, @ 0.5% on all taxable services, effective 1st June 2016


Financial Sector

- Allocation of Rs 25,000 crore towards re-capitalisation of PSBs(Public Sector Banks)

- General Insurance Companies owned by the government to be listed in the stock exchanges


Make-in-India/Start-up India

- New manufacturing companies incorporated on or after 1.3.2016 to be given an option to be taxed at 25% + surcharge and cess provided they do not claim profit linked or investment linked deductions

- 100% deduction of profits for 3 out of 5 years for startups setup during April, 2016 to March, 2019



- An infrastructure cess of 1 percent on small petrol, LPG, CNG cars, 2.5 percent on diesel cars of certain capacity and 4 percent on other higher engine capacity vehicles and SUVs has been levied.

Black Money

- Domestic taxpayers can declare undisclosed income by paying tax at 30%, and surcharge at 7.5% and penalty at 7.5%, which is a total of 45% of the undisclosed income



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- Around Rs 36,000 crore to be allotted to agriculture and farmer welfare

- Provision of Rs 15,000 crore to reduce burden of loan repayment on farmers

- Rs 5500 crore to be provided towards crop insurance scheme


Rural Sector/Villages

- Around Rs 88,000 crore to be allotted to rural sector

- Rs 38,500 crore to be allotted to rural employment guarantee scheme

- Every village in the country to have electricity by May 1, 2018



- Social sector, including healthcare and education to get Rs 1.51 lakh crore



- Total investment in the road sector, including highways and village roads to be Rs 97,000 crore


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