Now a big news coming tax is going to be 16% from an effective 14.5%. The rate hike, in step with the need to align the service tax with the proposed GST rate of 18-20%, would still yield significant additional revenue to the government.
Last year, the rate went up from 12.36% to a flat 14% (in the process, eduction and higher-eduction cesses were subsumed in the rate) and 0.5% Swatch Bharat cess was levied on November 1, 2015. Now the current news hurdle to taxi operators, resultant owners & more.
The fiscal outlook for 2016-17 looks challenging, given that there will be additional outgo on account of the seventh pay commission’s recommendation of a 23.55 per cent increase in pay and allowances of government employees from January 1, 2016. This is estimated to cost an additional Rs 1.02 lakh crore.
The Centre’s fiscal deficit was projected to come down to 3.5 per cent of GDP in 2016-17 from the targeted 3.9 per cent this current financial year. In the current year, the Centre’s indirect tax mop-up has been robust, seeing 34.3 per cent growth in the first eight months on the back of excise and service tax collections.
Assocham has asked the government to increase the personal income tax exemption limit in budget to Rs 4 lakh from Rs 2.5 lakh for all individual taxpayers.
Over 87 per cent respondents in the poll said increasing the basic tax exemption limit from the present Rs 2.5 lakh to Rs 4 lakh should be the minimum that the Finance Minister should announce in the 2016-17 budget.
Besides, noting that the amount of medical expenses reimbursed by the employer on treatment of employees or their family members is exempt from tax to the extent of Rs 15,000 per annum, 88 per cent of the respondents advocated hiking the limit to Rs 50,000 per annum as the present threshold was set way back in 1998.
Similarly, deduction of Rs 15,000 under section 80D for payment of medical insurance premium was set in the year 2008. In order to encourage and bring more people under the health insurance umbrella, the deduction should be increased to Rs 50,000, said majority of the respondents.
The poll was conducted in cities like Delhi, Mumbai, Kolkata, Chennai, Ahmedabad, Hyderabad, Pune, Chandigarh, Dehradun etc. About 500 employees from different sectors were covered by the survey from each city on an average.
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