CA Pratik H Shah
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Following are the highlights of changes proposed in Finance Bill 2017 by our respected FM, Shri Arun Jaitley which will affect a common man.
- Rate of tax for all assessee Individual reduced from 10% to 5% in slab of Rs. 2,50,000 to Rs. 5,00,000.
- Introduction of Surcharge at 10% for assessee having income between Rs. 50 lacs to Rs. 1 Crore.
- Simplified form for filing income tax return to be announced which will be a one-page form only.
- In the case of transfer of Land and Building, period of holding is reduced from 3 years to 2 years in order to decide whether such asset sold is Long term capital asset or not.
- Partial withdrawal from NPS is now exempt up to 25% of such withdrawal amount.
- LTCG arises on equity shares is exempt where STT is paid on such transaction. Now it is mandatory to have paid STT on such shares at the time of its acquisition in order to claim exemption u/s 10(38).
- No books of accounts are required to be maintained in the case where total gross receipts or total income from business or profession exceeds the certain specified monetary limit. Said limits are increased from 10 lacs to Rs 25 lacs (for gross receipts) and Rs 1.2 lacs to 2.5 lacs (for total income).
- In case of assessee having business or profession income which does not exceed 2 crores in a year, the existing rate of deemed total income of eight percent is reduced to six per cent in respect of the amount of total gross receipts received by a cheque or bank draft or through use of electronic clearing system through a bank account.
- With a view to minimise the genuine hardship which the owner of land may face in paying capital gains tax in the year of transfer of land or building or both for re-development of a project of real estate, the capital gains shall be chargeable to income-tax as income of the previous year in which the certificate of completion for the project is issued by the competent authority. Any payment received (other than in-kind) towards re-development agreement attracts withholding tax at 10%.
- Increase in scope of bonds which can be invested in order to save Long Term Capital Gain tax. Further new type of bonds will be notified by CG which can be invested to save LTCG tax.
- The base year of Indexation is changed from 01.04.1981 to 01.04.2001 for LTCG.
- Deduction of Interest on borrowed capital for acquisition or construction of House which are considered as deemed let-out is restricted to Rs. 2,00,000 for set off against the income earned and taxable under other head of income such as “salary” or “Business Income” or “Interest income” etc.
- Individual who willing to contribute to NPS can now make a higher contribution to the extent of 20% of gross total income. Earlier said restriction was up to 10% of gross total income.
- No longer deduction is available for investment in equity linked saving scheme u/s 80CCG except where the assessee has already made an investment in AY on or before 01.04.17 can claim deduction till AY 2019-2020.
- No donation in cash exceeding Rs. 2,000 eligible for deduction u/s 80G. Earlier limit was Rs. 10,000.
- 87A relief, assessee having income below Rs. 3.5 lacs can only claim relief granted u/s 87A by way of tax reduction to the extent of Rs. 2,500. Earlier, said benefit was available for a person having income below Rs. 5 lacs and benefit of tax reduction by way of Rs. 5,000.
- Extended time limit of 1 year from the end of assessment year to file Revised Income Tax return is now done away with. Assessee can now file revised return only before the end of the relevant assessment year or before completion of assessment whichever is earlier.
- Introduction of withholding of tax by every individual and HUF on payment of rent of Rs. 50,000 or more at the rate of 5% of total rent for the year. One time deduction in last month of the financial If no PAN obtained by the payee, a higher rate of 20% will attract.
- No withholding of tax on furnishing of Form 15G for Small Insurance Commissionaire on their commission income when such income does not exceed maximum amount not chargeable to tax (i.e Rs. 2,50,000 for the individual having less than 60 years of age).
- No longer TCS applicable on the transaction of purchase of jewellery in cash. However, in order to reduce cash transaction and as a move to the digital economy, It is also proposed to discourage cash transaction in excess of Rs 3 lacs. Any such transaction would attract a penalty for an amount equal to cash transaction under Income Tax Act. However, such penalty is not levied in the case where there is sufficient reason for contravention of above provision.
- Single instalment for payment of advance tax for professionals who declares their income on presumptive basis u/s 44ADA. (15th March)
- Levy of late filing fees in a case where a tax return is filed after the due Rs 5,000 if return filed before 31st December and Rs. 10,000 if filed after 31st December.
- If the case of the assessee is selected for scrutiny assessment, the discretionary power is given to AO to withhold refund with prior approval of PCIT or CIT till the date of assessment.