Impact of Budget 2016-17 on your personal Finance

1)  Rs 5,000 Rebate for Income upto Rs 5 Lakhs: Rebate increased from Rs.2,000 to Rs. 5,000 for an individual having annual income of up to Rs.5 lakh per annum. Now, such individuals can avail total rebate of Rs.5, 000 in an assessment year.

2) Rs 60,000/- Deduction for House Rent: Deduction amount claimed against rent paid to be increased from 24,000 pa to 60,000 pa under Sec 87A. Not many know about this. Basically this is useful to people staying on rent but do not have HRA as an income component. 

3) Rs 50,000/- add. Tax deduction for home buyers : First time home buyers to get an additional deduction of Rs.50,000 on interest component of EMI. Value of such houses should not exceed Rs50 lakhs and loan Rs35 lakhs. 

4) 15 % Surcharge on Rs1 Crore+ Income: surcharge has been raised from 12% to 15% on persons, other than companies, firms and cooperative societies having income above Rs. 1 crore.

5) 40% of NPS Withdrawal taxfree: Up to 40% of the corpus withdrawal to be tax exempt in the case of National Pension Scheme (NPS). With additional Rs 50,000/- additional tax benefit beyond 80C, NPS to become attractive for investors. The remaining 60% can be tax-free too if used for buying annuity.

6) Only 40% EPF withdrawal to be taxfree: To create a level playing field amongst retirement products, Government seems to be moving EPF from 100 % EEE regime to partial EEE regime to put it on par with NPS. This is applicable only on new investments from now on. There is still a confusion if even PPF will be treated this way, will have to wait for more clarity. 

7) 10 % Dividend Distribution Tax: Additional tax at the rate of 10% of gross amount of dividend earned will be payable by the recipients receiving dividend in excess of Rs10 lakh per annum. Kindly note that this is for income from only company stock dividends and NOT from MF dividends.

8) 0.5% Krishi Kalyan Cess: Just like Swach Bharat Cess, consumers will have to now bear introduction of Krishi Kalyan Cess of 0.5% on service tax for the welfare of farmers. So total tax will be 15% from 1st June 2016.

9) 1.5 % Service tax reduction for Annuity Policies: Service tax to be reduced from 3.5% to 1.5% on premium of single premium annuity policy from insurance companies and pension funds. 


Last modified on Wednesday, 02 March 2016 06:18

Prakash Praharaj

Shri Prakash Praharaj has a passion for excellence. He has been awarded two gold medals for securing top positions both in Graduation and Post Graduation in Commerce. He is an MBA with specialization in Finance and marketing. He has been awarded Diploma in Treasury, Investment and Risk Management besides CAIIB from the Indian Institute of Bankers. He is a Certified Financial Planner from the Financial Planning standards Board, India (FPSB), affiliated to FPSB, Denver, USA and Certified Personal Financial Adviser from NISM. He is also a SEBI registered Investment Adviser vide Reg. no. INA 000000045 dated 2nd August 2013.His book "Your Every day guide to Personal Finance and Insurance" has been published by CNBC TV 18 in August 2015.


  • Ramesh

    posted by Ramesh

    Thursday, 24 March 2016 07:12

    Good article

  • shrusti

    posted by shrusti

    Tuesday, 22 March 2016 12:04

    on correct time you updated blog..we need it..tnx

  • pooja

    posted by pooja

    Wednesday, 02 March 2016 06:27

    everyone should read dis once n think abt it..i will recommend it to my frnds n family

  • sonali

    posted by sonali

    Wednesday, 02 March 2016 06:26

    Can I contact you? want to take more info

  • lizi

    posted by lizi

    Wednesday, 02 March 2016 06:25

    eye opening article

  • Durga P.

    posted by Durga P.

    Wednesday, 02 March 2016 06:24

    Please keep it up!!!

  • niraj

    posted by niraj

    Tuesday, 01 March 2016 09:38

    very imp for everyone..good option to save..tnx sir

  • shyam

    posted by shyam

    Tuesday, 01 March 2016 09:36

    tax planning is very imp..tnx


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