Tax Planning tips post Budget 2016

1. Think before opting for an EPF

If you got a new job, then think twice when you are opting an employee provident fund or EPF. From April 1, 2016, when you withdraw the EPF, you have to pay tax on 60% portion of amount. Rest 40% will be tax free. Anyway, you have no way out because EPF is compulsory. Similarly, new pension scheme or NPS will also taxed just like EPF. Given a choice, NPS will be better which has an equity component and may generate higher return.

2. Your builder has delayed…don't worry for tax exemption

Currently, most of the home buyers make payment to the builder but do not get possession within stipulated three years' period. Since the buyer does not get possession within three years, he is entitled to get only Rs 30,000 tax deduction. Now, finance minister has raised this time limit up to five years.

3. Now agreement date will be considered for tax

Budget 2016 proposed that tax will be levied only on the property price on the agreement date not on the date of registry. Usually when you sell the house property the buyer gives some advance but not registered that property immediately. Buyers say that he will register later on. He may take time to arrange money to pay for the property.

4. More options for long-term capital gain

Budget has indicated that government will open new option for long term capital gain. If you sell a house after three years, it is considered as long term capital gain. This gain must be invested in either residential house or capital gain account. There is very limited option. Now, government will notify certain funds, where seller can invest long term capital gain in to these funds. But he can only invest up to Rs 50 lakhs.

5. No need to maintain books of account if you are professional

If you are professional like doctor, advocate, architect or engineer, currently you have to maintain books of accounts and follow the auditing procedures. Now, government has come out with a presumptive scheme with rider of Rs 50 lakhs. Under the new scheme, professionals have to pay 50 per cent tax on his gross income receipts. It means 50 per cent would be treated as expenditure and rest 50 per cent would be as their income. Hence, now no need to maintain books of accounts and audit procedure.

6. No tax on legal heir of pensioners

Currently, under new pension scheme when you get the payment whether in installment or lump sum it is taxable. Now, government said in this budget if the pension is received by a legal heir, then, it would not be taxable.

7. Now, belated return can be rectified

Presently one cannot rectify belated income tax return. In this budget, there is a big relief for tax payers who want to rectify their returns after due date of submission.

8. Return file became mandatory

In Budget 2016, even your income before claiming any exemption of long-term capital gain exceeds Rs 2.50 lakh you will have to file income tax returns. You have to file income tax return if your income exceeds 2.5 lakh. Suppose your income is Rs 3 lakh and you have invested Rs one lakh in provident fund, even though, your income become Rs 2 lakh, you have to file the returns. But earlier if you availed long-term capital gains from share market there was no need to file income tax returns because long-term income was exempted.


Courtesy: DNA Money

Last modified on Tuesday, 01 March 2016 07:28

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.


  • pooja shinde

    posted by pooja shinde

    Saturday, 19 March 2016 06:50

    can i contact you to do tax planning..?

  • smruti

    posted by smruti

    Saturday, 19 March 2016 06:49

    tnx to share..very well explained

  • ashok

    posted by ashok

    Wednesday, 02 March 2016 06:39

    very informative

  • jigar

    posted by jigar

    Wednesday, 02 March 2016 06:37

    gr8 article..posted on right time

  • eshwar

    posted by eshwar

    Wednesday, 02 March 2016 06:34

    this tips can surely save ur tax..

  • siya

    posted by siya

    Wednesday, 02 March 2016 06:30

    this are basic things which actually many people dont know..tnx tom share

  • siddharth

    posted by siddharth

    Tuesday, 01 March 2016 09:42

    very imp info regarding tax..everyone need to read


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