Budget 2016: Here's the tax impact on individuals

For individual tax payers the budget 2016 has proposed three major tax changes: increase in surcharge from 12% to 15% on income tax payable by individuals with total income over Rs 1 crore; tax rebate for those with income up to Rs 5 lakh has been hiked by Rs 3000; and extended the tax deduction available to those taking housing loans for FY16-17 with some changes in the conditions required to be met to avail the deduction.

Taxable income is the amount of income that is used to calculate income tax payable. Taxable income is generally described as gross total income minus any deductions, exemptions or other adjustments that are allowable.


Click here to calculate the impact of Budget 2016 on your personal taxes

Two changes by the finance minister are as follows:

1. U/S 87A, approximately 2 crore tax payers to get additional relief of uptoRs 3,000 in case of income under Rs 5 lakh. At present for the FY'16 the relief is Rs. 2000, which has been increased to Rs. 5000 for the FY'17.

2. Surcharge rate increased from 12% to 15% for income level above Rs. 1 cr.

The impact of above two changes on the resident Individual with Age below 60 years on extra savings/taxes under the different taxable income levels is given below.



In addition to the above two changes the finance minister has also proposed the following benefits to the individual tax payers in terms of additional deductions/exemptions.
3. A deduction of uptoRs. 50,000 has been proposed for an individual on account of interest paid for the loan taken to purchase a residential house, where the home loan amount doesn't exceedRs 35 lakh and the value of the property doesn't exceed Rs. 50 Lakhs. Further FM mentioned that this deduction will be available only to the assessee purchasing home for the first time.

4. Amount of deduction under section 80GG has been increased from 24,000 p.a. to Rs. 60,000 p.a.