Friday, 3 February 2017

Major Tax Amendments proposed by Finance Minister in Union Budget 2017

1.    Insertion of new Section 234F – 

       Late filing fee to be paid by taxpayer in event of filing of ITR beyond due date – 

       a.    Rs. 5,000 if the return is furnished after the due date but on or before the 31st day of 

              December of the relevant assessment year;

       b.    Rs. 10,000 in any other case.

Note: However, in a case where the total income does not exceed Rs. 5 lakhs, such fee amount shall not exceed Rs. 1,000

2.      Companies (having annual turnover up to Rs. 50 crores) shall now be taxed at 25%.

3.      a.  6% presumptive rate of tax for non cash turnover up to Rs. 2 crores. (earlier it was 8%)

b.  Threshold limit for audit of business entities opting for presumptive income scheme increased from Rs. 1 crore to Rs. 2 crore.

4.      No cash transaction above 3 Lakhs will be permitted w.e.f. 1st April 2017.

5.      Taxpayers having taxable income in the bracket of Rs. 2.5 lakhs – Rs. 5 lakhs shall now be taxed at 5% (earlier it was 10%)

6.      Taxpayers having taxable income more than Rs. 5 lakhs shall be given a flat deduction of Rs. 12,500.

7.      a.   Revenue expenditure limit (allowable in cash) now stands at Rs. 10,000 (earlier it was Rs. 20,000).

b.   Capital expenditure limit (allowable in cash) now stands at Rs. 10,000 (earlier there was no such threshold limit).

8.      Income Tax Rebate of Rs. 2,500 u/s 87A shall be available only if taxable income of such individual is up to Rs. 3.5 lakhs.

9.    ‘Single page’ Income Tax return form for taxable income (other than business income) up to Rs. 5 lakhs (other than business income).

10.  Time limit for revising Income Tax Returns now stands at 12 months from end of relevant financial year (earlier it was 24 months from end of relevant financial year).

11.  Capital gain on shares will be exempt only if Securities Transaction Tax was paid while purchasing the shares.

12.  ‘Individual’ and ‘HUF’ taxpayers shall now have to deduct tax at source @ 5% if rent paid exceeds Rs. 50,000 per month.

13.  Self employed taxpayers can claim ‘20% contribution to NPS’ as a deduction from taxable income.

14.  Base year (for computing Long-Term Capital Gain) has been shifted from 01-04-1981 to 01-04-2001. This means lower profits on sale.

15.  Holding period for immovable property to be considered “long term” reduced to 2 years from 3. This shall ensure immovable property held beyond 2 years is taxed at reduced rate of 20% and eligible for various exemptions on reimbursement.

Have a great day ahead!


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