Income Tax Changes applicable from April 1st, 2017
The tax proposals in the Budget 2017 have now become laws with the completion of budgetary exercise for the year 2017-18 by Lok Sabha. The Finance Bill has come with several amendments including-
- Limit of Rs. 2 lakh on cash transactions
- Income tax officers to raid homes without providing any reason
- Making Aadhar compulsory for filing ITR & getting PAN
Well apart from the above, let us have a look to other significant income tax changes that will have an impact from April 1st 2017 Onwards.
- Tax saving due to change in tax rate from 10% to 5%
For total income between Rs. 2.5 lakh-5 lakh – Tax saving of up to Rs.12,500
For total income above Rs. 1 crore – Tax saving of up to Rs. 14,806
- Reduction in tax rebate for taxpayers with income up to Rs.3.5lakh
Tax rebate is reduced from Rs.5,000 to Rs.2,500 per year. Due to simultaneous change in tax rate and rebate, individuals having taxable income of Rs. 3.5 lakh will now pay tax of Rs. 2,575 instead of Rs. 5,150.
- Surcharge Rate
For income between Rs. 50 lakh-1 crore –10% applicable
For income above Rs. 1 crore – 15% applicable
- Provisions regarding immovable property
Holding period considered as “long term” to be reduced from 3 years to 2 years. So the immovable property held beyond 2 years will be taxed at reduced rate of 20 per cent and eligible for various exemptions on reinvestment.
- Tax on Long Term Capital Gains
The base year for cost indexation is shifted from April 1, 1981 to April 1, 2001. This will lead to low profits on sale.
Further, tax exemption will be available on the reinvestment of capital gains in notified redeemable bonds in addition to investment in NHAI & REC bonds.
- Revision of Tax returns
Time period for revising tax returns is cut to 1 year instead of 2 years from the end of the relevant FY or before completion of assessment, whichever is earlier.
- Penalty for late filing of returns for 2017-18
- 5,000 if filed by 31st Dec 2018
- 10,000 if filed later
Such fee will be restricted to Rs. 1,000 for small taxpayers with income up to Rs.5 lakh.
- Deduction for first-time investors in listed equity shares
Deduction is withdrawn from 2017-18 for first-time investors in listed equity shares/ listed units of equity oriented fund under Rajiv Gandhi Equity Savings Scheme.
But if an individual has already claimed deduction under this scheme before April 1st, 2017 then he/she shall be allowed to avail it for the next 2 years.
- ITR Form for individuals with taxable income up to Rs. 5 lakh (excluding business income)
A simple one page tax return form is to be introduced for those individuals with taxable income up to Rs. 5 lakh (excluding business income).Further, individuals filing returns for the first time in this category will not be subject to scrutiny.