Changes in Income Tax Return Forms AY 2017-18, Deduction limits & TDS rates

CA Manish Kankani

Changes in Income Tax Return Forms AY 2017-18

• Introduction of new SINGLE PAGE ITR Form-1 (Sahaj). This initiative will benefit more than two crore tax-payers who will be eligible to file their return of income in this simplified Form.
• The number of Income Tax Return Forms AY 2017-18 (FY 2016-17) has been reduced from the existing nine to seven forms.
• The existing ITR Forms ITR-2, ITR-2A and ITR-3 have been rationalized and a single ITR-2.
• ITR-4 and ITR-4S (Sugam) have been renumbered as ITR-3 and ITR-4 (Sugam) respectively
• Return is furnished in ITR- 1 (Sahaj) or ITR-4 (Sugam), the following persons have an option to file return in paper form:-

(i) An individual of the age of 80 years or more at any time during the previous year

(ii) An individual or HUF whose income does not exceed five lakh rupees and who has not claimed any refund in the return of income.

• Quoting of Aadhaar or the Enrollment ID of Aadhaar application form has been made mandatory for filling tax return from 1st July 2017. Those who have data mismatch of Aadhaar versus the Permanent Account Number would have to correct the same.
• A new column introduced in all ITR Forms to report on cash deposited of Rs.2 lakh or more by taxpayers in their bank accounts during the demonetization period, i.e., from 9th November 2016 to 30th December 2016.
• A new field has been provided in new ITR Forms under Schedule VI-A deductions to claim home loan interest under Section 80EE (Section 80EE allows deduction on home loan interest for first time home buyers. This deduction is over and above the Rs 2 lakhs limit covered under Section 24(b)).
• Those having an income up to Rs 50 lakh from salary, one house property and bank deposits can use ITR 1, while those individuals and HUFs having income from selling real estate, stocks, mutual fund units, gold etc or EPF/PPF withdrawals would have to use ITR 2 (non-business income).
• The tax computation and tax deduction portions have been reduced in the new forms. Hence, one needs to carefully find the tax deduction sections as only Section 80C, 80D, 80G & 80TTA have been specified and the rest need to be mentioned in the “others” box.
• Mandatory disclosures introduced last year, namely foreign trips and dormant bank accounts, have been removed.
• Last year the income tax department had introduced new section to declare the values of assets and liabilities of individuals with income of more than Rs 50 lakhs. This year the ITR form asks for more detailed information like address of immovable property.
• As per the presumptive taxation scheme u/s 44AD, 8% of gross turnover is considered as income. Budget 2017 made further classification in the same. Now 6% of gross turnover is considered as income if the payment is accepted in digital form including Cheque, Wallets, etc. The ITR 4 has made separate columns to list Digital vs Cash receipts.
• Budget 2016 had introduced presumptive taxation scheme for professionals such as doctors, Chartered accountants, lawyers, etc who can declare minimum 50% of gross receipts as income. ITR 4 has introduced new fields accordingly.

The new Income Tax Return Forms AY 2017-18 (FY 2016-17).

ITR 1 (Sahaj) Form for Assessment Year 2017-18

• Your Income is from Salary or Pension.
• If you have income from One House Property (excluding cases where loss is brought forward from previous years).
• If your income from Other Sources (excluding winning from lottery and income from Race Horses, Income taxable under section 115BBDA (As per Section 115BBDA the dividend received from domestic company is taxable at rate of 10% if aggregate amount of such dividend exceeds Rs. 10 lakh) or Income of the nature referred to in section 115BBE (As per Section 115BBE any unexplained credit or investment attracts tax at 60% (plus surcharge and cess, as applicable), irrespective of the slab of income.)
• In a case where the income of another person like spouse, minor child, etc. is to be clubbed with the income of the assessee, this Return Form can be used only if the income being clubbed falls into the above income categories.

ITR 1 (Sahaj) Form for Assessment Year 2017-18 (Contd.)

• You can’t use this form in case :-
• If your total income for the assessment year 2017-18 exceeds Rs.50 lakh.
• Income from more than one house property.
• Income from winnings from lottery or income from Race horses.
• Income taxable under section 115BBDA.
• Income of the nature referred to in section 115BBE.
• Income under the head “Capital Gains”.
• Agricultural income in excess of 5,000.
• Income from Business or Profession.
• Loss under the head ‘Income from other sources.
• Person claiming relief under section 90 and/or 91.
• Any resident having any asset (including financial interest in any entity) located outside India or signing authority in any account located outside India.
• Any resident having income from any source outside India.
• Can be used by an individual or a Hindu Undivided Family (HUF).
• Income from Salary / Pension.
• Income from multiple House Property.
• Income from Capital Gains.
• Income from Other Sources (including winnings from lottery and income from race horses)
• An asset in foreign country or income from a source outside India.
• Agricultural income of more than Rs 5,000.

ITR 2 Form For Assessment Year 2017-18 (Contd.)

• You can’t use this form in case :-
• If your income for the year includes income from Business or Profession.
• Note:- In a case where the income of another person like spouse, minor child, etc., is to be clubbed with the income of the taxpayer, this Return Form can be used if income to be clubbed falls in any of the above categories.

ITR 3 Form For Assessment Year 2017-18

• The old ITR 4 now renamed as ITR 3.
• This ITR3 can be used by individuals and HUFs.
• You can use this form if you have income source from proprietary business, profession or having income as a partner in a Partnership firm.
• You can report the incomes like income from salary, multiple house properties, lottery winnings, capital gains, speculative income i.e. horse race along with your business or professional income.

ITR 4S Sugam Form for Assessment Year 2017-18

• It can be used by an individual/ HUF/ Partnership Firm.
• Business income where such income is computed in accordance with special provisions referred to in sections 44AD and 44AE of the Act for computation of business income.
• Income from Profession where such income is computed in accordance with special provisions referred to in sections 44ADA.
• Salary/ Pension.
• Income from One House Property (excluding cases where loss is brought forward from previous years).
• Income from Other Sources (excluding Winning from Lottery and Income from Race Horses).
• You can’t use this form in case :-
• Income from more than one house property.
• Income from Winnings from lottery or income from Race horses.
• Income under the head “Capital Gains”, e.g. Short-term capital gains or long-term capital gains from sale of house, plot, shares etc.
• Income taxable under section 115BBDA.
• Income of the nature referred to in section 115BBE.
• Agricultural income in excess of Rs.5,000.
• Income from Speculative Business and other special incomes.
• Income from an agency business or income in the nature of commission or brokerage.
• Any resident having any asset (including financial interest in any entity) located outside India or signing authority in any account located outside India.
• Any resident having income from any source outside India.

ITR 5 Form For Assessment Year 2017-18

• For persons other than,-

(i) individual,

(ii) HUF,

(iii) company and

.(iv) person filing ITR-7.

ITR 6 Form For Assessment Year 2017-18

• Income of Companies except companies which have property for charitable or religious purpose.

ITR 7 Form For Assessment Year 2017-18

• Return under section 139(4A) is required to be filed by every person in receipt of income derived from property held under trust or other legal obligation wholly for charitable or religious purposes or in part only for such purposes.
• Return under section 139(4B) is required to be filed by a political party if the total income without giving effect to the provisions of section 139A exceeds the maximum amount which is not chargeable to income-tax.
• Return under section 139(4C) is required to be filed by every :-
• scientific research association
• news agency
• association or institution referred to in section 10(23A)
•  institution referred to in section 10(23B)
• fund or institution or university or other educational institution or any hospital or other medical institution
• Return under section 139(4D) is required to be filed by every university, college or other institution, which is not required to furnish return of income or loss under any other provision of this section.

Income Tax Slabs & Rates for AY 2017-18.

♦ Individual resident aged below 60 years (i.e. born on or after 1st April 1957)

Income SLABS	TAX RATE
Where the taxable income does not exceed Rs. 2,50,000/-	NIL
Where the taxable income exceeds Rs. 2,50,000/- but does not exceed Rs. 5,00,000/-	10% of amount by which the taxable income exceeds Rs. 2,50,000/-. Tax Relief u/s 87A – In case of tax payers, having total income not increasing Rs. 5,00,000/-, income tax chargeable on the income or Rs. 5,000/-, whichever is less.
Where the taxable income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-	Rs. 25,000/- + 20% of the amount by which the taxable income exceeds Rs. 5,00,000/-
Where the taxable income exceeds Rs. 10,00,000/-.	Rs. 125,000/- + 30% of the amount by which the taxable income exceeds Rs. 10,00,000/-

• Surcharge: 12% of the Income Tax, where taxable income is more than Rs. 1 crore. (Marginal Relief in Surcharge, if applicable)
• Education Cess : 3% of the total of Income Tax and Surcharge.

Individual resident aged above 60 years but below 80 Years also known as Senior Citizen (i.e. born on or after 1st April 1937 but before 1st April 1957)

INCOME SLABS	TAX RATE
Where the taxable income does not exceed Rs. 3,00,000/-	NIL
Where the taxable income exceeds Rs. 3,00,000/- but does not exceed Rs. 5,00,000/-	10% of amount by which the taxable income exceeds Rs. 3,00,000/-. Tax Relief u/s 87A – In case of tax payers, having total income not increasing Rs. 5,00,000/-, income tax chargeable on the income or Rs. 5,000/-, whichever is less.
Where the taxable income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-	Rs. 20,000/- + 20% of the amount by which the taxable income exceeds Rs. 5,00,000/-
Where the taxable income exceeds Rs. 10,00,000/-.	Rs. 120,000/- + 30% of the amount by which the taxable income exceeds Rs. 10,00,000/-

• Surcharge: 15% of the Income Tax, where taxable income is more than Rs. 1 crore. (Marginal Relief in Surcharge, if applicable)
• Education Cess : 3% of the total of Income Tax and Surcharge.

Individual resident aged above 80 years (i.e. born on or before 1st April 1937)

INCOME SLABS	TAX RATE
Where the taxable income does not exceed Rs. 5,00,000/-	NIL
Where the taxable income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-	20% of the amount by which the taxable income exceeds Rs. 5,00,000/-
Where the taxable income exceeds Rs. 10,00,000/-.	Rs. 1,00,000/- + 30% of the amount by which the taxable income exceeds Rs. 10,00,000/-

• Surcharge: 15% of the Income Tax, where taxable income is more than Rs. 1 crore. (Marginal Relief in Surcharge, if applicable)
• Education Cess : 3% of the total of Income Tax and Surcharge.

Any Non Resident Individual(NRI) OR Hindu Undivided Family(HUF) OR Body Of Individual(BOI) OR Artificial Judicial Person(AJP)

INCOME SLABS	TAX RATE
Where the taxable income does not exceed Rs. 2,50,000/-	NIL
Where the taxable income exceeds Rs. 2,50,000/- but does not exceed Rs. 5,00,000/-	10% of amount by which the taxable income exceeds Rs. 2,50,000/-. Tax Relief u/s 87A – In case of tax payers, having total income not increasing Rs. 5,00,000/-, income tax chargeable on the income or Rs. 5,000/-, whichever is less.
Where the taxable income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-	Rs. 25,000/- + 20% of the amount by which the taxable income exceeds Rs. 5,00,000/-
Where the taxable income exceeds Rs. 10,00,000/-	Rs. 125,000/- + 30% of the amount by which the taxable income exceeds Rs. 10,00,000/-

• Surcharge: 15% of the Income Tax, where taxable income is more than Rs. 1 crore. (Marginal Relief in Surcharge, if applicable)
• Education Cess : 3% of the total of Income Tax and Surcharge.

INCOME SLABS	TAX RATE
Where the taxable income does not exceed Rs. 10,000/-	10% of the income.
Where the taxable income exceeds Rs. 10,000/- but does not exceed Rs. 20,000/-	1,000/- +20% of the amount by which the taxable income exceeds Rs. 10,000/-
Where the taxable income exceeds Rs. 20,000/-.	Rs. 3,000/- + 30% of the amount by which the taxable income exceeds Rs. 20,000/-

• Surcharge: 12% of the Income Tax, where taxable income is more than Rs. 1 crore. (Marginal Relief in Surcharge, if applicable)
• Education Cess : 3% of the total of Income Tax and Surcharge.

FIRM

Income Tax: 30% of Taxable Income

Surcharge: 12% of the Income Tax, where taxable income is more than Rs. 1 crore. (Marginal Relief in Surcharge, if
applicable)

Education Cess : 3% of the total of Income Tax and Surcharge.

LOCAL AUTHORITY

• Income Tax: 30% of Taxable Income
• Surcharge: 12% of the Income Tax, where taxable income is more than Rs. 1 crore. (Marginal Relief in Surcharge, if applicable)
• Education Cess : 3% of the total of Income Tax and Surcharge.

DOMESTIC COMPANY – TURNOVER UPTO Rs. 5 CRORES

• Income Tax: 29% of Taxable Income
• Surcharge: The amount of income tax as computed in accordance with above rates, and after being reduced by the amount of tax rebate shall be increased by a surcharge as follows :
  • At the rate of 7% of such income tax, provided that the taxable income exceeds Rs. 1 crore. However, the amount of Income Tax and Surcharge shall not increase the amount of income tax payable on a taxable income of Rs. 1 crore by more than the amount of increase in taxable income.
  • At the rate of 12% of such income tax, provided that the taxable income exceeds Rs. 10 crores. However, the amount of Income Tax and Surcharge shall not increase the amount of income tax payable on a taxable income of Rs. 10 crores by more than the amount of increase in taxable income
• Education Cess : 3% of the total of Income Tax and Surcharge.

DOMESTIC COMPANY – TURNOVER EXCEEDING Rs. 5 CRORES

• Income Tax: 30% of Taxable Income
• Surcharge: The amount of income tax as computed in accordance with above rates, and after being reduced by the amount of tax rebate shall be increased by a surcharge as follows :
  • At the rate of 7% of such income tax, provided that the taxable income exceeds Rs. 1 crore. However, the amount of Income Tax and Surcharge shall not increase the amount of income tax payable on a taxable income of Rs. 1 crore by more than the amount of increase in taxable income.
  • At the rate of 12% of such income tax, provided that the taxable income exceeds Rs. 10 crores. However, the amount of Income Tax and Surcharge shall not increase the amount of income tax payable on a taxable income of Rs. 10 crores by more than the amount of increase in taxable income
• Education Cess : 3% of the total of Income Tax and Surcharge.

COMPANY OTHER THAN DOMESTIC COMPANY

⇒ Income Tax:

(A) @ 50% of on so much of the taxable income as consist of

• Royalties received from Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern after the 31st day of March, 1961 but before the 1st day of April, 1976.
• Fees for rendering technical services received from Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern after the 29th day of February, 1964 but before the 1st day of April, 1976, and where such agreement has, in either case, been approved by the Central Government.

(B) @ 40% of the balance

⇒ Surcharge: The amount of income tax as computed in accordance with above rates, and after being reduced by the amount of tax rebate shall be increased by a surcharge as follows :

• At the rate of 2% of such income tax, provided that the taxable income exceeds Rs. 1 crore. However, the amount of Income Tax and Surcharge shall not increase the amount of income tax payable on a taxable income of Rs. 1 crore by more than the amount of increase in taxable income.
• At the rate of 5% of such income tax, provided that the taxable income exceeds Rs. 10 crores. However, the amount of Income Tax and Surcharge shall not increase the amount of income tax payable on a taxable income of Rs. 10 crores by more than the amount of increase in taxable income

⇒ Education Cess : 3% of the total of Income 27 Tax and Surcharge.

What is Marginal Relief ?

When an assessee’s taxable income exceeds Rs. 1 crore, he is liable to pay Surcharge at prescribed rates mentioned above on Income Tax payable by him. However, the amount of Income Tax and Surcharge shall not increase the amount of income tax payable on a taxable income of Rs. 1 crore by more than the amount of increase in taxable income.

Example:-

In case of an individual assessee (< 60 years) having taxable income of Rs. 1,00,01,000/-

Income Tax Rs. 28,25,300

Surcharge Rs. 4,23,795

Income Tax on Income of 1 crore Rs. 28,25,000

Maximum Surcharge payable Rs. 700 (1000-300)

(Income over Rs. 1 crore less income tax on income over Rs. 1 crore)

Income Tax + Surcharge payable Rs. 28,26,000

Marginal Relief in Surcharge Rs. 4,23,795 (4,23,095– 700)

DEDUCTIONS

SECTION	PERMISSIBLE LIMITS (MAXIMUM)	CLAIMANTS
80C	Rs 1.5 lakh (aggregate of 80C, 80CCC and 80CCD)	Individuals/Hindu Undivided Families
80CCC	Rs 1.5 lakh (aggregate of 80C, 80CCC and 80CCD)	Individuals
80CCD	Rs 1.5 lakh (aggregate of 80C, 80CCC and 80CCD)	Individuals
80CCF	Rs 20,000	Individuals/ Hindu Undivided Families
80CCG	Rs 25,000	Resident individuals
80D	Rs 20,000	Individuals/Hindu Undivided Families
80DD	Rs 75,000 for general disability Rs 1.25 lakh for severe disability	Resident Individuals/ Hindu Undivided Families
80DDB	Rs 60,000 for senior citizens Rs 40,000 for others	Resident Individuals/ Hindu Undivided Families
80E	No limit mentioned	Individuals
80EE	Rs 3 lakh	Individuals
80G	Different limits based on donation	All assesses
80GG	Rs 2,000 per month	Individuals who do not get HRA
80GGA	Depends on quantum of donation	All assessees who do not have income from profit or gains from a business/ profession
80GGB	Depends on quantum of donation	Indian companies
80GGC	Depends on quantum of donation	All assesses apart from local/Artificial judicial authorities who are funded by the government
80IA	No maximum limit defined	All assesses
80IAB	No maximum limit defined	All assessees who are SEZ developers
80IB	No maximum limit defined	All assesses
80IC	No maximum limit defined	All assesses
80ID	No maximum limit defined	All assesses
80IE	No maximum limit defined	All assesses
80JJA	All profits earned for first 5 years	All assesses
80JJAA	30% of increased wages	Indian companies which have income from profit/ gains
80LA	Portion of their income	Scheduled banks, IFSCs, banks established outside India
80P	Portion of their income	Cooperative societies
80QQB	Rs 3 lakh	Authors – resident individuals
80RRB	Rs 3 lakh	Resident individuals
80TTA	Rs 10,000 per year	Individuals/ Hindu Undivided Families
80U	Rs 75,000 for people with disabilities Rs 1.25 lakh for people with severe disabilities	Resident individuals

TDS

SECTION	NATURE OF PAYMENT	CUT OFF(RS.)	INDIVIDUAL/ HUF	OTHERS
192	Salaries	–	Avg. rates	NA
192A	Premature withdrawal from EPF	30000 (50000)	10	NA
193	Interest on securities	10000	10
194	Dividends	2500	10
194A	Interest Banks/Other	10000/5000	10
194B	Winnings from lottery	10000	30
194BB	Winnings from horse race	5000 (10000)	30
194C	Contractor- Single/Yearly	30K/75K (1 lakh)	1	2
	Transporter(44AE) Declaration with PAN	As above	–	–
194D	Insurance commission	20000 (15000)	10 (5%)
194DA	Life Insurance Policy	100000	2 (1%)
194EE	NSS	2500	20 (10%)	NA
194G	Commission/Lottery	1000 (15000)	10 (5%)
194H	Commission/Brokerage	5000 (15000)	10 (5%)
194I	Rent Land & Building F&F	180000	10
	Rentplant/Machinery/Equipment		2
194IA	Immovable property	50 lakh	1
194J	Professional fees	30000	10
194LA	Immovable property	2 lakh (2.5 lakh)	10
Cut off limit & rates given in RED are applicable w.e.f 01-06-2016

Changes In TDS Threshold Limits wef 01-06-2016

SECTION	PARTICULARS OF PAYMENT	OLD LIMIT	NEW LIMIT
192A	Payment of EPF due to an employee	30000	50000
194BB	Winnings from horse race	5000	10000
194C	Payment to contractors	75000	100000
194D	Insurance commission	20000	15000
194H	Commission or brokerage	5000	15000
194LA	Compensation on immovable property	200000	250000
194DA	Life Insurance Policy	2%	1%
194EE	NSS Deposits	20%	10%
194G	Commission on lottery tickets	10%	5%
194H	Commission or Brokerage	10%	5%
194K	Income in respect of units	Proposed to be omitted w.e.f. 01-06-2016
194L	Payment of compensation on acquisition of capital asset
194LBB	Units of Investment Fund	Read details	10% or Rates in force
194LBC	Investment in a Securitization Fund	Read details	25% or 30%
206C	Sale of motor-vehicles > Rs. 10 lakhs	—	1%
206C	Sale in goods/services in cash > Rs. 2 lakh (Other than bullion and jewellery)(Other than payments on which TDS is made)	—	1%

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