Budget 2017 made several changes in terms of Income Tax of Individuals & businesses, the filing of Income Tax Returns, Capital Gains and Investments. We list them in detail below:
Income Tax: Budget 2017 Changes
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 ( the person who are aged 80 years or more) as they had NO taxes in this slab.
2. 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.
Download Automated Income Tax Form 16 Part B for F.Y. 2016-17 & A.Y.2017-18 which can prepare at a time 50 employees Form 16 Part B for F.Y.2016-17
3. Rebate under Section 87A reduced 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.
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 onwards. The deduction was introduced in Budget 2012 to encourage retail participation in the stock market but failed to take off as desired.
Download Automated Tax Form 16 Part A & B for Financial Year 2016-17, this Excel Utility can prepare at a time 50 employees Form 16 Part A & B for f.Y. 2016-17
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 home loan 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 the 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 up to 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.
Download Automated Form 16 Part A & B and Part B for Financial Year 2016-17, this excel utility can prepare One by One Form 16 Part A&B and Part B for Financial Year 2016-17
8. 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.
9. 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.
10. 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.
11. Reduced Time to revise ITR
The time period to revise tax returns has been reduced to 12 months.
12. Limit of Rs 3 Lakh for cash transaction
Now you cannot pay more than Rs 3 lakh in cash for any transaction. This limit is not only per day but per transaction and per event.
13. 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.
14. Reduced Cash Expense Exemption
The limit on cash expenses claimed by a person has been reduced from Rs 20,000 to Rs 10,000 per day.
15. Cash donation to Political parties restricted to Rs. 2,000
Political parties can receive cash donations of only Rs. 2,000. They can receive cheques and digital payments. People willing to donate can do so by buying election donor bonds. These bonds will be redeemable.
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