While presenting the General Budget 2016-17 in Lok Sabha here today, the Union Finance Minister Shri Arun Jaitley said that the taxation is a major tool available to Government for removing poverty and inequality and this has to be cautiously exercised. But, he would like to give relief to small tax payers, the Finance Minister added.

Thus the ceiling of tax rebate under Section 87A of IT Act has been proposed to be raised to ₹ 5,000 from ₹ 2,000 for individuals with income less than ₹ 5 lakhs. He said that above 2 crore tax payers would get a relief of ₹ 3,000. The limit of deduction of house rent paid under section 80GG has also been raised to ₹ 60,000 from the existing ₹ 24,000 per annum to give relief to employees who live in rented houses.

Under the presumptive taxation scheme under Section 44AD of the Income tax Act, the limit of turnover or gross receipts has been raised to two crore rupees from the exiting one crore rupees to benefit about 33 lakh small business people. It frees a large number of such assesses in the MSME category from the burden of maintaining detailed books of account and getting audit done.

The presumptive taxation scheme is to be now extended to professionals with gross receipts up to ₹ 50 lakh with the presumption of profit being 50% of the gross receipts.

Presumptive taxation expansion extends simplified profit presumptions to more small businesses and professionals, reducing compliance burdens. Increase in the tax rebate under Section 87A and the deduction limit under Section 80GG provides targeted relief to lower income individuals and taxpayers living in rented accommodation. The presumptive taxation regime is broadened by raising the turnover threshold under Section 44AD to relieve many small businesses in the MSME sector from detailed bookkeeping and audit, and by extending presumptive taxation to eligible professionals with a prescribed profit presumption.