BUDGET HIGHLIGHTS 2017

02
Feb

DIRECT TAXES

Amendments in Tax Rates for Individuals / HUF / AOP / BOI


  • Tax rate for Individuals changed. Tax for Income Range of Rs. 2,50,000/- to Rs. 5,00,000/- reduced to 5% from 10%. Thus Net Tax Relief of Rs. 12,500/- for all having income of above Rs. 5 Lakh.
  • New slab rate for income tax for AY 2018-19 will be as follows:

Till 2.5L

NIL

2.5L - 5L

5% (earlier 10%)

5L - 10L

20%

Over 10L

30%

  • Rebate of Sec.87A reduced to 2.5K from 5K
  • No Tax for Income upto Rs. 3 Lakh.
  • Additional Surcharge @10% will be levied for Income between Rs. 50 Lakh to Rs. 1 crore. 15% surcharge of income above 1 crore will continue to be charged.

Amendments in Tax on Capital Gains


  • Year 2001 shall be the base year for calculating the capital gains instead of existing 1981.
  • Capital gain tax under Joint Development Agreement to be levied in the year of completion
  • Holding period for immovable property is reduced to 2 years from 3 years.
  • Capital gains tax to be exempted for the land acquired for creation of Telangana
  • Deemed sale value for sale of unquoted shares introduced. To be taxed at fair value. (Sec 50CA)
  • Capital gain on shares will be exempt only if STT was paid while purchasing the shares.

Amendments in Tax on Corporates


  • Corporate Tax Rate has been reduced from 30% to 25% for companies having turnover of Rs. 50 crore or less.
  • Carry forward of MAT Credit for a period of 15 years instead of 10 years
  • MAT book profit calculation also amended

Other Announcements


  • No transaction over 3 lakes will be permitted in cash
  • Threshold limit for audit of entities opting for presumptive taxation under Section 44AD is increased to Rs. 2 crores from existing Rs. 1 Crore.
  • Increase in threshold limit for audit for persons having income from profession from Rs. 25 Lakh to Rs. 50 Lakh.
  • Tax rate for Presumptive income under Section 44AD for digital receipts is reduced to 6% from existing 8%.
  • One page ITR form to be introduced for taxpayers with taxable income of up to 5 lakhs except business income.
  • Threshold limit under Section 40A(3) for payment of expenses in cash is reduced to Rs.10,000/- from existing Rs. 20,000/-
  • Houses allotted and not occupied will be taxed on notional interest basis.
  • In absence of PAN, the rate of TCS will be twice of the extent rate or 5%, whichever is higher under Sec.206CC
  • If Return not filed as per Sec. 139 (1), concept of late fee introduced. Rs. 5000 for delay up to 31st Dec. and Rs. 10000 thereafter. Late fee to be paid before filing the Return. (Sec 234F)
  • CA issuing wrong certificate would be penalised with Rs. 10000/-
  • House Property loss can be set off against other head of income only to the extent of Rs. 2,00,000/- in same year. Balance loss can be c/f to 8 A.Ys.
  • Individuals and HUF to deduct TDS, even if unaudited, @ 5% if rent is paid 50000/- per month
  • TDS in 194J amended, now 2 % TDS instead of 10 %, in the case payee is engaged only in the business of operation of call centre
  • Domestic Transfer Pricing - only if 1 party enjoys tax benefits
  • Professionals can pay advance tax in 1 installments if below 50 lac
  • The scope of section 56 will be widened and will also cover any kind of gifts in cash or kind or for no consideration with few exemptions and exception
  • Disallowance of expenditure from income from other sources if TDS is not deducted
  • Self-employed can also claim 20% contribution to NPS as deduction.
  • Changes in Profit linked deduction for affordable housing scheme.
  • Time for revising income tax return now reduced.
  • Income tax Scrutiny cases to be complete by September as against existing date of December. (Reduced from existing 21 months to 18 months).
  • Persons filing returns for the first time will not be subject to scrutiny, unless specific information is available with the Dept.
  • Income on NPA Accounts will be recognized on receipt basis instead of accrual basis.
  • Proposal to extended facility of Concessional withholding rates on interest payable to foreign entities.
  • Cash donation limit to charitable trust reduced to ₹2000 from ₹10000