Finance bill, 2016 has been passed by Parliament.  There are some significant changes in income tax act as follows:-

  • There is no change in income tax slabs.
  • In case of Individual, HUF, AOP and BOI, Surcharge on Income Tax is being increased to 15% if income exceeds Rs. 1 crore.
  • Tax rebate under section 87A for resident individuals having income up to Rs. 5 Lakh, is increased to Rs.5000/=.
  • Deduction under section 80GG for house rent, is increased to Rs.5000/= .
  • Interest on housing loan taken during 01.04.16 to 31.03.17, for first residential house to be deductible up to a maximum of Rs.50000/= under section 80EE.
  • Rent arrears to be taxable on receipt basis.
  • Unrealized rent to be taxable on realisation after allowing 30% deduction.
  • Long term capital gains invested in units of notified fund for financing start-ups to be exempt under section 54EE.
  • Long term capital gains from residential house arising up to 31.03.19, to be exempt under section 54GB if invested in an eligible start-up.
  • Limit for tax audit under section 44AB is increased to Rs. 50 Lakh in case of professionals.
  • Estimated Income Scheme under section 44AD has been extended to cover business having turnover up to Rs.2 Crore.
  • Income of small professional with gross receipts up to Rs. 50 Lakh, to be estimated at 50 % of gross receipts, without any requirement as to account books and audit under section 44ADA.
  • Advance tax shall be paid by all assessees in 4  installments i.e. 15% by 15th June, 30% by 15th September, 30% by 15th December and 25% by 15th March.
  • Notice for scrutiny assessment under section 143(2) is to be issued electronically.
  • Additional tax will be charged on dividend received exceeding Rs.10 Lakh in aggregate from a company or companies, received by an individual or HUF.
  • A new Income Declaration Scheme,2016 to be open from 01.06.16 (for 4 months), requiring payment of tax, surcharge and penalty  at consolidated rate of 45% of declared income against immunity from any scrutiny or prosecution.