Relief to small tax payers
(a) Rebate under Sec 87A: With the objective of providing relief to resident individuals in the lower income slab i.e. total income not exceeding R5,00,000, section 87A is proposed to be amended so as to increase the maximum amount of rebate available from existing limit of R 2,000 to R5,000.(check income tax calculator for fy 2016-17)
(b) Maximum limit of deduction under section 80GG increased: The maximum limit of deduction under section 80GG, in respect of rent paid by individuals who do not get any house rent allowance from the employer and who do not own any house, proposed to be increased from R 2,000 p.m to R5,000 p.m.
(c) Increase in threshold limit for persons other than companies /LLP havingincome from business opting presumptive taxation under Section 44AD: In order to reduce the compliance burden of the small tax payers and facilitate the ease of doing business, the threshold limit for availing the benefit of presumptive taxation scheme proposed to be increased from R1 crore to R2 crore, in respect of eligible businesses. The threshold limit proposed to be increased to bring relief to large number of assesses in the Micro Small and Medium Enterprises (MSME) category.
(d) Presumptive taxation scheme extended to professionals: In order to rationalize the presumptive taxation scheme and to reduce the compliance burden of the small tax payers having income from profession and to facilitate the ease of doing business, the presumptive taxation regime proposed to be extended to professionals having gross receipts not exceeding R50 lakhs in the previous year at a sum equal to 50% of such gross receipts.
(e) Threshold limit increased for tax audit for persons having professional Income: The threshold limit for tax audit under section 44AB, for getting accounts audited proposed to be increased from R25 lakhs to R50 lakhs, in case of persons carrying on profession.
(f) :Rationalization of tax deduction at Source (TDS) provisions: In order to rationalise the rates and base for TDS provisions, the existing threshold limit for deduction of tax at source and the rates of deduction of tax at source are proposed to be revised in the case of Winnings from Horse Race, Payments to Contractors, Insurance commission, Commission on sale of lottery tickets etc. This would improve cash flow of small tax payers.(Read more here)
(g) Tax exemption on withdrawal of National Pension System: It is also proposed to provide any payment from National Pension System Trust to an employee on account of closure or his opting out of the pension scheme referred to in Section 80CCD, to the extent it does not exceed 40% of the total amount payable to him at the time of closure or his opting out of the scheme, to be exempt from the tax. Also annuity fund which goes to the legal heir after the death of pensioner will not be taxable.
(h) Additional deduction of interest to “first home buyers”: In furtherance of the Budget Highlights - Direct Taxes 10 The Institute of Chartered Accountants of India goal of the Government of providing ‘housing for all, it is proposed to incentivise first-home buyers availing home loans, by providing additional deduction of R50,000 in respect of interest on loan taken for residential house property from any financial institution. This incentive is proposed to be available to a house property of a value less than R50 lakhs in respect of which a loan of an amount not exceeding R35 lakh has been sanctioned during the Financial Year 2016-17. Further, this benefit proposed to be extended till the repayment of loan continues
(i) E-sahyog project to be expanded: Income-tax Department (ITD) will fully expand the pilot initiative of ‘e-Sahyog’ with a view to reduce compliance cost, especially for small tax payers. The e-Sahyog’ pilot project is to provide an online mechanism to resolve mismatches in income-tax returns without requiring taxpayers to attend the Income-tax office.