19 Changes in Income Tax laws in FINANCIAL YEAR 2017-18
For Salaried Persons
By Mr. Amit Kumar, Apnaplan.com
Changes in Income Tax (IT) laws from April 2017
The financial bill 2017 (commonly known as Budget) has
been passed by the Lok Sabha with some amendments.
This bill deals with government finances along with tax
provisions. Here are 21 changes that would be effective from the next
financial year (FY 2017-18) which starts on April 1, 2017.
1.
Reduced Tax for Lower slab..!
The tax rate for income between Rs 2.5 lakh to Rs 5 lakhs
has been reduced to 5% from 10%. This reduction would not benefit Very Senior
Citizens (person who are aged 80 years or more) as they had NO taxes in this
slab.
However there has been NO change in tax rates for other
slabs.
2.
Rebate under Section 87A reduced from Rs. 5,000 to Rs. 2,500 ..!
The income tax rebate under section 87A has been reduced
from Rs. 5,000 to Rs. 2,500.
Also the eligibility of taxable income limit has been
reduced from Rs. 5 lakh to Rs. 3.5 lakh. HUF or NRIs are not eligible for this
rebate.
Due to this change Senior citizens with income
between Rs. 3.5 lakhs to Rs. 4 lakhs would pay more tax in FY 2017-18 as
compared to FY 2016-17.
3. 10%
Surcharge for Income above Rs 50 Lakhs..
Budget 2017 has introduced 10% surcharge for people with
taxable income of more than Rs. 50 lakhs but less than Rs 1 crore.
The surcharge of 15% on income above Rs. 1 crore still
applies.
4. NO
RGESS Tax exemption from FY 2017-18..!
Tax exemption under section 80CCG for RGESS (Rajiv Gandhi
Equity Scheme) would NOT be available from FY 2017-18 on wards.
The deduction was introduced in Budget 2012 to encourage
retail participation in stock market but failed to take off as desired.
5.
Interest deduction on rented property capped at Rs. 2 Lakh..!
Budget 2017 has bridged the gap between self-occupied and
rented property by capping the deduction on housing interest to Rs. 2 lakh in
both cases.
Earlier for rented property there was NO capping. However
additional loss can be carried forward for 8 years.
6. More
tax deduction on NPS for self-employed..!
From next financial year self-employed individuals can
claim deduction up to 20% of their gross income for contribution made to
National Pension System (NPS).
The limit was 10% earlier. This deduction is part of
Section 80C and hence not very beneficial!
Additional tax deduction on investment upto Rs. 50,000
under Section 80CCD (1B) will continue to remain the same for all NPS
subscribers whether salaried or self-employed.
7.
Tax-exemption to partial withdrawal from NPS..!
Partial withdrawal up to 25% of the contribution made by
an employee would be exempted from tax.
8. TDS
of 5% if the monthly rent paid is more than Rs.50,000..!
The TDS deduction has to be done on the last month of the
financial year or the last month of tenancy. The TDS would be less of last
month rent or 5% of total rent paid.
This has been done to track high value transactions and
do away with the problem of fake rent receipts.
9.
Change of Base year for Indexation..!
For calculation of indexation in case of Long Term
capital gains for all assets, the base year has been changed from April 1, 1981
to April 1, 2001.
This would in most cases be beneficial for tax payers.
10.
Long Term Capital Gains for Property..!
Budget 2017 changed the holding period for property to 2
years (from 3 years earlier) to qualify for Long Term Capital gains.
This would
lead to lower taxes.
11.
Long Term Capital Gains on Shares..!
Long term capital gains on shares would only be available
if securities transaction tax (STT) was paid while acquisition of shares. This
will apply to all shares acquired after October 1, 2004.
However this does not include bonus shares or shares
allotted during IPO (initial public offer) or FPO (follow- on public offer). It
would impact ESOPs, etc.
12.
Aadhaar number must for applying for PAN Card and filing Income tax Return
Effective July 1, 2017 Aadhaar number would be compulsory
to obtain a new PAN card. Also you will need to link your existing PAN Car to
your Aadhaar number.
You will also have to mention your Aadhaar number in the
income tax return form from this year (AY 2017-18 onwards). This used to be optional
field until now.
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| Mr. Amit Kumar, Apnaplan.com |
13.
Penalty for Late filing of Income Tax Return
If the income tax return is filed after the due date but
on or before the December 31 of the assessment year, there will be a fine of Rs.
5,000.
In all other cases, there would be fine of Rs. 10,000.
However, in case the total income is less than Rs. 5 lakh, the penalty should
not exceed Rs. 1,000.
14.
Simple Tax Return Form..!
A simple one page income tax return (ITR) form would be
introduced for people with income less than Rs. 5 lakhs with NO income from Business.
15. NO
Scrutiny for First Time ITR..!
There would be NO scrutiny of income tax returns for
people who file ITR for the first time unless there is specific information
available with the Department regarding his high value transactions.
16.
Reduced Time to revise ITR..!
The time period to revise tax returns has been reduced to
12 months (1 year).
17. Income
Tax Cases can be reopened for up to 10 years..!
The income tax department can now scrutinize income tax
returns up to previous 10 years if it suspects undisclosed income or assets of
more than Rs. 50 lakhs. Currently this limit was 6 years.
18. Cash
Donation Limit to Rs. 2,000..!
Any donation above Rs. 2,000 in cash would not be
eligible for tax exemption u/s 80G.
Donations have to be digital or by cheque to qualify for
tax breaks.
19.
Limit of Rs 2 Lakh for cash transaction
Now you can not pay more than Rs. 2 lakh in cash
for any transaction.
The limit has been amended in the finance bill from the
earlier proposed limit of Rs. 3 lakh.
This limit is not only per day, but per transaction and
per event. In case of violation, the person has to pay 100% of the cash used in
transaction as penalty.
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