TAX IMPLICATIONS POST BUDGET FOR THE YEAR 2017 – 2018 – A GLANCE
- Income Tax rate decreased from 10% to 5% per year for this year and further. For income between Rs. 2.5 lakh to Rs. 5 lakh, there is a tax saving of upto Rs. 12,500 per year.
For those with income above 1 crore the tax saving is Rs. 14,806 inclusive of surcharge and cess.
- Tax rebate of Rs. 5,000 reduced to Rs. 2,500 per year for tax payers with income upto 3.5 lakh which was Rs. 5,000 for income upto Rs. 5 lakh.
With this effect, resulting from change in tax rate and rebate, an individual with income upto 3.5 lakh will now pay Rs. 2,575 saving Rs. 2,575 which was Rs. 5,150 for income upto Rs. 5 lakh for the range Rs. 2.5 lakh to Rs. 5 lakh.
- The rich tax payers with income between Rs. 50 lakh and Rs. 1 crore will pay surcharge @ 10%. The surcharge of 15% remains untouched for the super rich with income above Rs. 1 crore per year.
- Immovable property is taxed @ 20% with holding period of 2 years instead of 3 years with eligibility for various exemptions on reinvestment.
- Beneficial amendments made on long term capital gains tax will result in lower payout. The base year for indexation has been changed to April 1st 2001 from April 1st 1981 lowering profits on sale.
Tax exemption will be available on reinvestment in notified redeemable bonds in addition to investment in NHAI and REC.
- For individuals with income upto Rs. 5 lakh, excluding business income, a simple one page form is to be introduced. Those filing returns for the first time in this category will generally not be subject to scrutiny.
- Delay in filing tax return for 2017 – 2018 for income above Rs. 5 lakh will attract penalty of Rs. 5,000 till 31st December 2018 and Rs. 10,000 if filed later. Fee of Rs. 1,000 will be levied on small tax payers with income upto Rs. 5 lakh.
- The Rajiv Gandhi Equity Savings Scheme is withdrawn from 2017 – 2018. If an investor has already claimed deduction under this scheme before April 1st 2017, he / she shall be allowed to avail a deduction for the next 2 years.
- Time period for revision of tax return will be one year (which was 2 years earlier) from the end of the relevant Financial Year or before completion of assessment, whichever is earlier.