Poll: How good is Budget 2016 for the common man?
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Taxes seem to be increasing each year. Last year, the government urged citizens to give up their LPG subsidy and imposed the Swacch Bharat cess of 0.5% on all taxable services. In Budget 2016-17, the finance minister announced infrastructure cess on cars, and a Krishi Kalyan cess of 0.5% on all taxable services.
On the income-tax front, while the HRA deduction under Section 80GG was increased to Rs.60,000 per year from Rs.24,000, the tax slabs were kept unchanged.
While there were expectations that home loan interest will become eligible for 100% tax deduction, the budget instead offered first-time homebuyers will get additional deduction of Rs.50,000 on interest for loan up to Rs.35 lakh, if the cost of the house is not more than Rs.50 lakh. Currently, homeowners are eligible for deduction of up to Rs.2 lakh under section 80C. The budget also exempts service tax for construction of houses with an area less than 60 sq. metres.
The budget announced that withdrawal from the National Pension System (NPS) of up to 40% will be made tax-free at the time of retirement. The structure of NPS till now made it less attractive as compared to other investment avenues, as it did not allow tax-free withdrawal. Government will also pay 8.33% towards EPF for new employees joining the scheme.