#UnionBudget2016: What All Jaitley's Budget Has For The Common Man

The Union Budget 2016-17, presented by Finance Minister Arun Jaitley today (February 29) in Parliament, focussed on rural economy.

PropGuide lists the changes announced in the Union Budget 2016-17 that will affect the common man in the fiscal beginning April 1, 2016.

No change in income-tax slab

One of the key areas of impact for the common man is the income tax. Jaitley, in this Union Budget, made no changes in the income-tax slab.

Changed tax exemptions

A salaried employee with an income of up to Rs 5 lakh will get an additional relief of Rs 3,000 per year. This move will benefit about 20 million taxpayers. Earlier, the benefit was Rs 2,000.

On the other hand, the tax exemption for House Rent Allowance (HRA) has also been increased from Rs 24,000 to Rs 60,000. So, for those who do not get HRA from their employers, can avail this tax exemption under section 80 GG.

No change in service tax

The government has made no changes in the service tax rates. The service tax will be levied at the same rate — 14.5 per cent (14 per cent service tax + 0.5 per cent Swaccha Bharat Cess).

National Pension Scheme

For the ones investing in the National Pension Scheme, they will now be able to withdraw up to 40 per cent of the amount at the time of retirement.

Cars set to become expensive

The common man will now have to shell out more when buying a new car. Jaitley has levied a tax of one per cent on small, petrol, and compressed natural gas (CNG) cars. A 2.5 per cent and four per cent of tax will be levied on diesel cars, and sport utility vehicles (SUVs) and other high-end cars, respectively.

Hike in Employees' Provident Fund (EPF)

The government has proposed to pay an interest of 8.33 per cent for all the new employees for the first three years of their employment.

Tobacco will become dearer

Tobacco products will become expensive. The excise duty on all the tobacco products, except beedi, has been increased by 10-15 per cent.

Other goods that will become costlier

On purchase of goods and services in cash exceeding Rs 2 lakh, there will be a deduction at source at the rate of one per cent. Excise duty of one per cent without input tax credit or 12.5 per cent with input tax credit on jewellery articles (which exclude silver jewellery, other than studded with diamond or other stones) will have higher exemption of Rs 6 crore and Rs 12 crore, respectively.  

Dividends to be taxed

Those who receive dividends of more than Rs 10 lakh, will now have to pay tax on the same.