Finance Minister Arun Jaitley unveiled his third Union Budget on 29 February,2016, walking a tightrope between fanning economic growth and sticking to fiscal deficit targets. The budget clearly spelled out its focus on the rural economy. It has introduced several measures to boost agriculture and infrastructure to alleviate rural distress.
The budget is an important event not just for companies and industries, but also for you as a common man. Important schemes and tax proposals have also been announced in the budget which would affect your wallet and savings.
Let us have a look at them below:
Your health and the budget: At 1.3% of the Gross Domestic Product (GDP), India has one of the lowest public spending on health in world, according to World Bank data. Budget 2016 sees no major change in government health spending. However, the budget has announced a new health insurance scheme under which every family will get a health cover of Rs 1 lakh.
Also, senior citizens (60 years and above)may receive an additional top-up package up to Rs 30,000. This health protection will be extremely useful for families who incur sudden out-of-the-pocket hospitalization expenditure for treating illness of their family members.
Besides this, 3000 stores supplying affordable generic drugs will be opened under the Jan Aushadhi Yojana. A ‘National Dialysis Services Programme’ is proposed to provide affordable dialysis services in all district hospitals.
EPF changes: Employee Provident Fund (EPF) scheme is one of the most important retirement savings instrument in India. The fund is built using contributions from both, the employee and the employer. 12% of the employee’s basic salary goes towards his EPF. The employer contribution of 12% is split between EPF (3.67%) and Pension fund (8.33%). Starting this financial year, the government may likely pay 8.33% contribution for all new employees enrolling in EPFO for the first three years of their employment. A sum of Rs 1000 crore is allocated for this scheme.
Two new cesses: In his previous budget, the finance minister announced the levying of 2% Swachh Bharat Cess on all taxable services. This budget, the government has announced a 0.5% Krishi Kalyan Cess, w.e.f. 1 June 2016. Proceeds from the cess would be used for “modernisation of agriculture and welfare of farmers,” according to the budget document. In addition, infrastructure cess at the rate of 1% has been imposed on small petrol, LPG, CNG cars, 2.5% on diesel cars of certain capacity and 4% on other higher engine capacity vehicles and SUVs. This would make buying cars costlier for you.
Digital storage of certificates: Is maintaining your important education related-documents like school leaving certificates, mark sheets physically becoming tedious and cumbersome? In a move that could help students and budding professionals, a Digital Depository will be set-up for storage and upkeep of Leaving Certificates, College Degrees, Academic Awards and others.
Cheer for home buyers: House prices have shot up exorbitantly in the recent years. If you are a first time home buyer, the budget could bring some cheer to you.Even home buyer in India can claim tax benefits on principal as well as interest on his home loan repayments. The budget has introduced an additional deduction of Rs 50,000 per annum on interest component of the EMI for first time home buyers. However, this deduction is subject to certain limits—the loan amount should be up to Rs 35 lakh and the house cost should not exceed Rs 50 lakh.
Provision for rented houses: In a relief for people living in rented accommodations, the budget stated that the tax deduction under section 80GG for HRA will be increased from Rs 24,000 to Rs 60,000. The move is likely to bring in relief to the common man.