Impact of Union Budget on Individual investors.

1. Budget & Your Money
Ventura Securities Ltd.1

2. Union Budget Impact on Individual
No change in Tax Slabs. Surcharge increased
from 12% to 15% for income above Rs. 1 crore
No change in 80C limit
10% tax on individuals receiving dividend
exceeding Rs. 10 lacs.
Withdrawal of 40% corpus in NPS now made
tax-free
March 08, 2016 1

3. Union Budget Impact on Individual
Individuals to pay advance tax installment from
15 June onwards previously was from 15
September
Service Tax to increase to 15% due toService Tax to increase to 15% due to
introduction of 0.5% additional tax called Krishi
Kalyan Cess
Tax-free bonds of Rs. 31,300 crores will be
raised during FY 2016-17.
March 08, 2016 2

4. EPF withdrawal rules w.e.f 10th Feb 2016
Particulars Existing rule
EPF withdrawal rules w.e.f 10th Feb
2016
EPF Withdrawal
The EPF members (employees)
can withdraw the full EPF
balance after 60 days of
unemployment.
Full EPF balance cannot be withdrawn. Employee
can withdraw his/her contributions + interest
portion only on cessation of employment.
Employer’s portion can be withdrawn only at
age of retirement(58 years).
Retirement Age 55 years 58 years
Provisions related to
Taxation/ TDS
Withdrawal before 5 years,
employee contribution is
taxable.
TDS is also applicable if the
amount is greater than Rs.
30,000/-
TDS applicable limit is being raised from
Rs.30,000 to Rs.50,000/-
TDS Rate
PAN submitted - @10%
PAN not submitted – @ 34.6%
Along with PAN 15G/15H
Submitted – NIL
No change
March 08, 2016 3

5. NPS: Current Features & changes proposed in budget 2016-17
Particulars Tier I Account
Changes Proposed in
Budget 2016-17
Deduction for
Employee
Contribution
Employee contribution up to 10% of
Salary is eligible for deduction under
Section 80C within the Rs 1.5 lakh limit
No Change
Deduction for
Employer
Contribution
The employer's contribution up to 10%
of Salary is eligible for deduction under
Section 80CCD(2) without any limit
No Change
Taxation on
Withdrawal
Post attaining 60 years – Maximum
60% of the corpus can be withdrawn.
Taxable
Maximum 60% of the
corpus can be withdrawn.
Up to 40% of the corpus
made tax exempt.
Taxation on
Annuity
Taxable No Change
March 08, 2016 4

6. Example : Contribution upto Rs. 25,000 p.m. (Rs. 3 lakhs p.a.) each
(Employee and Employer)
Particulars Current (Rs.) Proposed (Rs.)
Assumed Contribution (per month)
(Employee + Employer)
50,000 50,000
Contribution (per annum)
(Employee + Employer) (Rs. In lakhs)
6.00 6.00
Contribution in 20 years
(Employee + Employer) (Rs. In lakhs)
120.00 120.00
Capital Gains@10.25% p.a.*(Rs. In lakhs) 183.21 183.21
Tax @30.9% on Withdrawable corpus(Rs. In lakhs) 56.22 18.74
Net Corpus in hand(Rs. In lakhs) 246.99 284.47
Yield 7.03% p.a. 8.31% p.a.
*Note: Allocation to Equity (50%), Corporate debt (25%) and Government bonds (25%). Assumed rate of
return for Equity @12% p.a., Corporate debt@9% p.a. and Government bonds@8% p.a.
March 08, 2016 5

7. Key Highlights
Tax on Dividends:
Current : Entire amount was tax-free.
Proposed: Additional tax at the rate of 10% of gross amount
of dividend will be payable by the recipients receiving dividend
from domestic companies exceeding Rs.10 lakh per annum
with effect from 01st April 2016.
For example, if the dividend amount is Rs 11 lakhs, earlier theFor example, if the dividend amount is Rs 11 lakhs, earlier the
entire amount was tax free. Now, there will be tax of 10% on
the entire amount Rs 11 lakhs which comes to Rs. 1.1 lakhs.
March 08, 2016 6

8. Personal Tax - Individuals
Tax slabs (Rs.) Tax rate (%) Effective Tax rate (%)
Up to 2,50,000 Nil Nil
2,50,001-5,00,000 10 10.32,50,001-5,00,000 10 10.3
5,00,001-10,00,000 20 20.6
Above 10,00,000 30 30.9
Above Rs. 1 crore 30 35.54*
*Increased from 34.61% due to additional surcharge of 15% (increased from 12%) for
individual earning more than Rs. 1 crore p.a.
March 08, 2016 7

9. Personal Tax Slab - Senior citizens
Tax slabs (Rs.)
Tax rate (%) for
Senior Citizens
(Age 60 years or
more but less than
80 years)
Tax slabs (Rs.)
Tax rate (%)For
Very Senior
Citizens (Age 80
years or more)
Up to
Nil
Up to
3,00,000
Nil
Upto Rs. 5,00,000 Nil3,00,001-
5,00,000
10.3
5,00,001-
10,00,000
20.6
5,00,001-
10,00,000 20.6
Above 10,00,000 30.9
Above Rs.
10,00,000 30.9
March 08, 2016 8

10. Section Particulars
Current
Post Budget
Fourth
schedule
to IT act
in Part A
Contribution of
employer to
provident fund
Upto 12% of the
Salary exempt from
tax
No Change
Post attaining 60
Post attaining 60 years –
Deductions
9
80CCD
Contribution to
National Pension
System (NPS)
Post attaining 60
years – 60% can be
withdrawn which is
fully taxable. Also,
annuity fund which
goes to legal heir is
fully taxable.
Post attaining 60 years –
60% can be withdrawn of
which upto 40% amount is
exempt from tax.
Annuity fund which goes to
legal heir is fully taxable
87A
Tax Rebate for
individual with
income upto Rs. 5
lakhs
Tax rebate of Rs
2,000
Tax rebate limit raised to Rs
5,000
March 08, 2016

11. Tax impact on your
investments
Investment
Tax incentive
when investing
Tax implication of
Dividend
Tax implication on
Sale
Equity
Shares
None
Additional tax at the rate of
10% of gross amount of
dividend will be payable by
the recipients receiving
dividend from domestic
companies exceeding Rs.10
LTCG – Nil after 1 yr
STCG – taxable @15.45% if
sold within 1 yr
companies exceeding Rs.10
lakh p.a.
Mutual
Funds
Investment in ELSS
funds is eligible for
tax deduction
within the overall
cap of Rs. 1.5 lacs
available under
Sec. 80C
Dividend from non-equity
oriented funds would
attract DDT.
Equity-oriented :
LTCG – Nil after 1 yr
STCG – taxable @15.45% if
sold before 1 yr
Debt-oriented:
LTCG – taxable @20.6%
(with indexation) if sold after
3 yrs
STCG – taxable as per tax
slab – if sold before 3 yrs
LTCG - Long term capital gain
STCG - Short term capital gain
March 08, 2016 10

12. Investment
Tax incentive
when investing
Tax implication of
Interest
Tax implication on Sale
Tax-Free
Bonds
No tax exemption at
the time of
investment
Interest from notified
tax-free bonds is exempt
from tax
LTCG – taxable @10%
(without indexation)
[if held more than 1 yr]
STCG – taxable as per tax
slab (if sold before 1 yr)
Debentures
Interest income from
debentures is taxable.
However, no TDS if held
Tax impact on your
investments
slab (if sold before 1 yr)
Debentures
However, no TDS if held
in demat
Bank/
Company
Fixed Deposits
Investment in 5
year tax saving
bank deposit is
eligible for
deduction within the
overall cap of Rs.
1.5 lacs available
under Sec 80C
Interest income will be
taxable as per the tax
slab of the individual.
TDS would be deducted
as applicable
Not Applicable
March 08, 2016 11

13. Disclaimer
Ventura Securities Limited.
Corporate Office: C-112/116, Bldg No. 1, Kailash Industrial Complex, Park
Site, Vikhroli (W), Mumbai – 400079
This report is neither an offer nor a solicitation to purchase or sell
securities. The information and views expressed herein are believed to be
reliable, but no responsibility (or liability) is accepted for errors of fact orreliable, but no responsibility (or liability) is accepted for errors of fact or
opinion. Writers and contributors may be trading in or have positions in
the securities mentioned in their articles. Neither Ventura Securities
Limited nor any of the contributors accepts any liability arising out of the
above information/articles. Reproduction in whole or in part without
written permission is prohibited. This report is for private circulation.
March 08, 2016 12