Sandeep Ahuja & Co.

Established in the year 1986, we are a leading chartered accountancy firm based in Delhi & NCR rendering comprehensive professional services which include statutory audit, internal audit, direct tax, transfer pricing, GST, bank audit, propriety audit, cost accounting, internal financial controls and risk advisory.

Monday, February 6, 2017

BUDGET HIGHLIGHTS FINANCIAL YEAR 2017-18

Personal Taxation

·         The rates of income tax applicable are proposed to be as follows:

For individual/HUF/BOI/AOP/AJP taxpayers

Income Tax Slabs
Present Rate
Proposed Rate
Up to Rs. 2,50,000
No Tax
No Tax
Rs. 2,50,000 – Rs. 5,00,000
10%
5%
Rs. 5,00,000 – Rs. 10,00,000
20%
20%
Over Rs. 10,00,000
30%
30%

For taxpayers over the age of 60 but under the age of 80

Income Tax Slabs
Present Rate
Proposed Rate
Up to Rs. 3,00,000
No Tax
No Tax
Rs. 3,00,000 – Rs. 5,00,000
10%
5%
Rs. 5,00,000 – Rs. 10,00,000
20%
20%
Over Rs. 10,00,000
30%
30%

For taxpayers over the age of 80

Income Tax Slabs
Present Rate
Proposed Rate
Up to Rs. 5,00,000
No Tax

No change
Rs. 5,00,000 – Rs. 10,00,000
20%
Over Rs. 10,00,000
30%

·         The rebate of Rs. 5,000 currently available u/s 87A in case of an individual whose total income does not exceed Rs. 5 lakhs is proposed to be reduced to Rs. 2,500 where the total income does not exceed Rs. 3.5 lakhs.

·         Surcharge of 10% of tax payable is proposed to be levied on individuals whose annual taxable income is between Rs. 50 lakhs and Rs. 1 crore. Thereafter, surcharge of 15% would continue to be applicable on annual income exceeding Rs. 1 crore.

·         The income by way of gross dividend in excess of Rs. 10 lakhs in case of a resident individual/HUF/firm in India is proposed to be taxable in the hands of the recipient @ 10%.

Income Tax Returns

Return Form:
·      Simple one page form proposed to be filed as Income Tax Return for the category of individuals having taxable income upto Rs. 5 lakhs other than business income.

I Tax Return Revision and assessment in Scrutiny
·         The time period for revising a tax return is proposed to be reduced to 12 months from completion of financial year. The time for completion of scrutiny assessments is also proposed to be reduced from the present 21 months to 18 months for AY 2018-19 and thereafter to 12 months from 18 months for AY 2019-20.

Penalty for late filing of Income Tax Return
·         It is proposed to charge late fee of Rs. 5,000 u/s 234F for delay in filing of return as per section 139(1) up to 31st December and Rs. 10,000 thereafter.

Housing Sector Taxation

·         It is proposed that 100% deduction of the profits would be allowed to an assessee developing and building affordable housing projects approved by the competent authority before 31st March, 2019 and completed within 3 years of such approval.

·         It is proposed to restrict carpet area to 30 and 60 sq. mtr. as opposed to the restriction of built up area to 30 and 60 sq.mtr. Such 30 sq. mtr. limit will apply only in case of municipal limits of 4 metropolitan cities, wheras the limit of 60 sq. mtr. will apply for the rest of the country including the peripheral areas of metropolitans u/s 80IBA. The eligibility criterion is also proposed to be changed where the project can be completed in 5 years from commencement as opposed to 3 years.

Loss from house property on account of interest set off limited to 2 lacs in the same year

·         Set off loss under the head house property is restricted to Rs. 2 lakhs against other head of income in the same year and residual loss can be carried forward to subsequent 8 years.

Capital Gain Taxation

·         Base year for indexation for capital gain is proposed to be shifted to 01.04.2001 for all classes of assets from 01.04.1981.

·         The period of holding of immovable property for computing gain, being land or building or both to be long term is proposed to be reduced from 3 years to 2 years.

·         Fair value of unlisted shares is proposed to be taken as deemed sale value u/s 50CA for the purpose of calculation of Capital Gain tax.

·         LTCG exemption u/s 10(38) is available only in case STT is paid at the time of purchase (on and after 1.10.2004) and at the time of sale of equity shares.

·         For joint development agreement, the liability to pay capital gain tax will arise in the year in which project is completed.

·         In order to widen the scope u/s 54EC, the said section is proposed to be amended so as to provide that investment in any bond redeemable after 3 years which has been notified by the Central Government in this behalf shall also be eligible for exemption as opposed to exemption eligible only for investment in NHAI or RECL bonds presently.

Funding for Political Parties
·         No deduction to be allowed under section 80G in respect of donation by any mode other than cash, if such amount of donation exceeds Rs. 2,000 as opposed to the present limit of Rs, 10,000. Political parties will be entitled to receive donations by cheque or digital mode from donors.

Restrictions on Cash Transactions

·         No person would be permitted to receive an amount of Rs. 3 lakhs or more in cash from a person in a day or in respect of a single transaction or in respect of transaction relating to one event or occasion. Any such transaction would attract a penalty of an amount equal to the cash transaction unless there is sufficient reason for contravention of the said provision.

·         It is proposed to disallow cash payment exceeding Rs. 10,000 from the present Rs. 20,000 u/s 40A(3).

Business Taxation

·         The rate of income-tax for domestic companies is proposed to be reduced to 25% of the total income if the total turnover or gross receipts of the previous year does not exceed Rs. 25 crore, and shall be 30% of the total income in all other cases.

·         It is proposed to reduce the existing presumptive taxation rate u/s 44AD of 8% to 6%, in respect of the amount of such total turnover or gross receipts received by an account payee cheque or bank draft or bank clearing system. However, the existing rate of deemed profit of 8% shall continue to apply in respect of total turnover or gross receipts received in any other mode.

·         Threshold limit for audit of business entities that opt for presumptive income scheme is proposed to be increased from Rs. 1 crore to Rs. 2 crores.

·         The threshold limit for maintenance of books for individuals and HUF proposed to be increased from turnover of Rs. 10 lakhs to Rs. 25 lakhs or income from Rs. 1.2 lakhs to Rs. 2.5 lakhs. 

·         The time for completion of scrutiny assessments is proposed to be reduced from 21 months to 18 months for Assessment Year 2018-19 and further to 12 months for Assessment Year 2019-20 and thereafter.

·         Advance Tax can be paid in 1 instalment as opposed to 4 for professionals with annual receipts upto Rs. 50 lakhs under presumptive taxation scheme.

·         MAT credit u/s 115JAA is proposed to be carried forward for a period of 15 years instead of 10 years. Similar amendment is proposed in section Alternate Minimum Tax (AMT) u/s 115JD is also allowed to be carried forward up to 15 years.  

Tax Deducted at Source

·         TDS rate u/s 194J for person engaged only in the business of operation of call centre is proposed to be reduced to 2% from the present 10%.

·         It is proposed that Individual and HUFs responsible for making payments of rent exceeding Rs. 50,000 per month or part of a month would be required to deduct TDS of 5% of such income u/s 194IB.


Compiled by : Kashika  at Sandeep Ahuja & Co.

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