Union Budget 2017

BUDGET 2017 PROPOSALS

TAX RATES

·         There is a change in Tax Rates, which will benefit Individual/HUF taxpayers. Tax Slab for Individual/HUF will be:

o   Upto Rs.250000/-                             NIL

o   Rs.250001 to Rs.500000                  5%

o   Rs.500001 to Rs.1000000               20%

o   Above Rs.1000000                           30%

·         Rebate of Rs.5000/- was allowed to taxpayers with Income below Rs.500000/-. Now this rebate has been reduced to Rs.2500/- and will be available only to persons with Income below Rs.350000/-.

·         Exemption Limit for Senior Citizens and Super Senior Citizens will continue to be Rs.300000/- and Rs.500000/- respectively.

·         Surcharge @ 10% has been imposed on the Individuals having income > 50 Lakhs and less than 1 Crore. Those with Income > 1 Crore will continue to pay surcharge @ 15%.

·         Corporate Tax in case of Domestic Companies will be 25% if Turnover was less than 50 crores in FY 2015-16.

MEASURES TO REDUCE CASH TRANSACTIONS

·         Revenue Expenditure incurred in Cash exceeding Rs.20000/- is not allowed as Expenditure while calculating Taxable Income. This limit is proposed to be reduced to Rs.10000/- w.e.f. 01/04/2017 (FY 2017-18, AY 2018-19)

·         Earlier restriction on Cash Expense was only applicable to revenue expenditure. Now this is proposed to be made applicable to Capital Expenditure also. If any Fixed Asset is purchased for which payment is made in Cash exceeding Rs.10000/-, then Depreciation will not be allowed on the Cash portion.

·         A new section 269ST has been proposed, which provides that no person shall receive amount of Rs.300000/- or more in Cash, in aggregate from a person in a day; or in respect of a single transaction; or in respect of transactions relating to one event or occasion from a person. Any person who contravenes the provision of this section can be levied penalty equal the amount of Cash received. [Eg. If Invoice is of R.450000/- and multiple Cash Receipts in respect of the Invoice are more than or equal to Rs. 300000/-, then penalty equal to the amount of cash received can be levied. ] This provision will be applicable from 1^st April 2017.

·         Deduction u/s 80G was allowed if the payment upto Rs.10000/- was made in Cash. Now this limit is proposed to be reduced to Rs.2000/-. If Donation of amount exceeding Rs.2000/- is made in Cash, then no deduction u/s 80G will be allowed.

PRESUMPTIVE TAXATION

·         Turnover limit for Presumptive Taxation for Businesses was increased from Rs.1 Crore to Rs. 2 Crore last year. It is again clarified that limit for Audit u/s 44AB is Rs.1 Crore. However if any person opts for presumptive taxation having turnover upto Rs.2 Crores, then he will not be required to get Books audited u/s 44AB.

·         To promote digital transactions and to reduce cash transactions, it is proposed that for persons opting for presumptive taxation u/s 44AD rate of income to be declared will be 6% for Non Cash Sales and 8% for Cash Sales. In respect of any Sale, if the payment is received otherwise than Cash, then deemed profit will be 6% of such Non Cash Sales. Such receipts can be made before the due date u/s 139(1) of filing Income Tax Return. This benefit will be given from FY 2016-17 (AY 2017-18).

·         Partnership Firms will have to declare income @ 8% (or 6% as applicable) of the Sales and pay tax on the same. Salary and interest to partners will not be allowed as deduction w.e.f. FY 2016-17 (AY 2017-18).

TDS/TCS

·         TDS on Rent is applicable in case of Individual/HUF only if the Turnover is more than 1 crore during the last Financial Year. Now TDS on Rent is proposed to be made applicable on Individuals/HUF with Turnover less than 1 Crores, or not doing Business, also. Applicable if monthly Rent is more than 50000/- pm. TDS @ 5% to be deducted. No need to obtain TAN only for this purpose. (applicable w.e.f. 01/06/2017)

·         TCS is applicable on Cash Sale of Jewellery if single invoice exceeds Rs. 5 Lakhs. This amount is proposed to be reduced to Rs.2 Lakhs. (w.e.f. 01/04/2017)

·         Form 15G/H can now also be filed by Insurance Commission Agents for non deduction of TDS, if Income is below exemption limit. (w.e.f. 01/06/2017)

·         TDS on Professional Services is proposed to be reduced to 2% in case of Call Centre Business.

·         TDS @ 20% or applicable rate (whichever higher) is applicable in case PAN of deductee is not available. No such provision existed in case of TCS. Similar provision is proposed to be introduced for TCS. TCS @ double the rate mentioned in section or 5%, whichever higher will be collected if PAN is not available. (w.e.f. 01/04/2017)

CAPITAL GAINS

·         In case of immovable property (Land or Building or Both), period of holding for qualifying an asset as long term has been reduced from 36 months to 24 months.

·         Base Year for calculation of Capital Gains will be shifted from 01/04/1981 to 01/04/2001.

·         In case of assets acquired before 01/04/2001, Fair Market Value as on 01/04/2001 shall be considered for Capital Gains calculation.

·         Presently Exemption is available on Sale of securities (Shares/ MF), if STT has been paid on the Sale. It is proposed that the Exemption of Capital Gain on Sale of Securities will only be available if the STT has also been paid on Purchase of such Securities (If Purchased after 01/10/2014). Some cases like IPO, Bonus Issue, Rights issue, etc. will be notified on which such condition will not apply. Now proof of Date of Purchase will also be required for claiming exemption.

·         To widen the scope of the section 54 EC, it is proposed to add notified bonds by the Central Government apart from bonds of REC or NHAI where investment can be made. (w.e.f. AY 2018-19 onwards)

OTHER PROVISIONS

·         Section 44AA is proposed to be amended to increase monetary limits of income and gross receipts for maintenance of books of accounts from Rs. 120000/- to Rs. 250000/- and from Rs. 10 Lakhs to Rs. 25 Lakh, respectively in the case of Individuals and HUF carrying on business or profession. (w.e.f. AY 2018-19). For Other Assessees, limit remains the same.

·          If return is not filed within due dates u/s 139(1)

(i) a fee of 5000/- shall be payable, if the return is furnished after the due date but on or before 31^st December of the Asst Year;

(ii) a fee of 10,000/- shall be payable in any other case.

However, in a case where the total income does not exceed five lakh rupees, it is proposed that the fee amount shall not exceed Rs.1,000/-. The amount of fees will have to be paid before filing the Return. If the Fees is not paid, then the same will be shown as demand during the processing.

·         For the Assessment Year 2018-19, the time limit for making assessment has been reduced to 18 months from the end of assessment year, from the existing 21 months. From the Asst Year 2019-20, the time limit will be 12 months from the end of the Asst Year.

·         Receipt of any sum of money or the property by any person without consideration or for inadequate consideration in excess of Rs. 50,000 is chargeable to tax as Income from Other Sources in hands of recipient being Individual/HUF. Now this provision is made applicable to all assessees.

·          In case of Charitable Trusts, for claiming Exemption, they will have to file their Income Tax Return within Due Date. If Return is filed late, their exemption can be withdrawn. In case there is change in the Objects of the Trust, they have to file fresh registration by making application within a period of 30 days from the date of such change.