Feb 012017

Take Home of Budget F.Y. 2017-2018

  1. Income tax rates:

The long awaited expectation of lowering tax bill for honest tax payer comes to true. With the announcement of budget, the income of financial year 2017-18 (being taxed in assessment year 2018-19), will be charged at the rate of 5% instead of existing rate of 10%. Hence, the proposed slab rate will be as below:

Slab No Income slab Tax rate
(1) Up to Rs 250,000 Nil
(2) Up to Rs 500,000 5%
(3) Up to Rs 10,00,000 20%
(4) Above Rs 10,00,000 30%

With the proposed amendment, individual taxpayer having taxable income upto Rs 300,000 wouldn’t require to pay any tax or tax with lower rate. This can be understood with following table:

 Income Tax Rate Tax bill
Up to income Rs 250,000 Income will fall under slab (1) above and tax rate will be Zero Rs 0
For next Rs 50,000 Income will fall under slab (2) and taxed @ 5%, i.e, tax Rs 2500 (being 5% of Rs 50000).Since, upper cap limit of rebate u/s 87A is also revised adversely to Rs 350,000 from existing Rs 500,000. Hence, taxable income of Rs 300,000 will get rebate under section 87A and thus making net tax liability as NIL Rs 0
For any amount more than Rs 300,000 Income will be charged at 5% if fall under slab (2) above and benefit of sec 80C will be given if appropriate investment is made.Rebate to resident individuals u/s 87A having taxable income upto Rs 350,000 will continue to apply. Taxed @ 5%
  1. In order to lower the compliance burden of the above assessee it is proposed to introduce simplified one page return with online filing facility for person earning up to Rs 5 lakh from sources other than business income.
  1. Further, it is assured that there will not be any scrutiny in very first year of filling of return for individual falling under income group up to Rs 500,000 unless there is any information with department.
  1. Taxation on higher income group:

Under the existing system of taxation, surcharge subject to marginal relief is charged on income over and above Rs 1 crores. There is no change in this provision and thus, such tax payer will continue to pay surcharge @ 15%.

The provision of additional surcharge is proposed @ 10% on the individual having income between Rs 50 lakhs and Rs 1 crore.

  1. It is proposed to levy dividend distribution tax under sec 115BBDA @ 10% on dividend income exceeding Rs 10,00,000 on all resident persons unless registered under sec 12AA & 10(23C).
  1. Now gift of any movable and immovable property with consideration or inadequate consideration exceeding Rs 50,000/- will be taxable under sec 56.
  1. Now, it is proposed to apply provisions of TDS being application to individuals and HUFs not required to be audited to deduct TDS on rent paid in excess of Rs 50,000 per month.
  1. Set off of current year loss from House Property can be made in current year only up to Rs 200,000.
  1. It is proposed to levy fee in case return is filed late. This is in contrast with the existing penalty provisions. As for levy of penalty, proceeding needs to be initiated and sufficient opportunity of being heard needs to be given before recovery. Recovery of such fee will be automatic.
  1. Penalty will be levy on chartered accountant or merchant banker or registered valuer if they furnished incorrect information. Such penalty shall be Rs 10,000/- for each of such defaults.
  2. No person shall received payment of an amount Rs 3,00,000/- or more in cash from other person in a day or in respect of single transaction or in respect of one event or occasion. Such restriction shall not apply to following:
  • Government
  • Bank
  • Such other person or class of person as notify by central government
  • Such receipts as notify by central government
  1. TCS shall be collected at the higher rate in case collectee fails to furnish his PAN no to collected.
  1. Self employed individual and employee may get deduction upto 20% of gross total income if they contribute to national pension scheme.