In the beginning of every fiscal year, employees are asked for details like their investment and other income by their employer to arrive at the annual tax liability of an employee. This annual exercise also helps you do tax planning for the year. Based on the declaration, your employer calculates TDS or tax deducted at source. The employer will deduct tax from salary and deposit it with the tax authorities. Starting April 1, 2017, some income tax laws have changed.
Here are changes in tax laws one should be aware before submitting tax declaration:
The tax rate on income between Rs. 2.5 lakh and Rs. 5 lakh has been halved to 5 per cent from 10 per cent. However, rebate under Section 87A gets reduced from Rs. 5,000 to Rs. 2,500. And no rebate will be applicable for taxpayers having income above Rs. 3.5 lakh.
Important amendments in Income Tax Act which have become effective from the new F.Y. 2017-18 are as under.
Reduced Tax Rate : The new Finance Bill has brought much relief to the middle class by effectively reducing taxability of salaried individuals in the income bracket Rs. 2.5 lakh to Rs. 5 lakh. In the F.Y. 2015-16, the tax rate for this income group was 10%. This will get reduced to 5% in the upcoming F.Y. All other income groups will also receive a uniform tax benefit of Rs. 12,500.
Reduction in tax rebate : Although middle class salaried people received some tax benefits, the government has cut down its losses by halving the rebate from Rs. 5,000 to Rs. 2,500 for assessed with income up to Rs. 3.5 lakh. So, the effective tax liability even without claiming any chapter VI deductions will still be zero for individuals with income up to Rs. 3 lakh & Rs. 2,500 for those with income between Rs. 3 & Rs. 3.5 lakh.
The Government of India is speeding up on the road to curbing tax evasion. So, it is leaving no stone unturned in achieving this target. As you know black money was one of the major electoral promises of the NDA (National Democratic Alliance) government in 2014, so it is taking all the coordinated efforts in this direction one after another.
With respect to the recent amendments proposed by our Finance Minister, Arun Jaitley in the Finance Bill, GOI on Tuesday proposed to make Aadhaar card mandatory for PAN application and filing income tax returns as well. This move will come into effect from 1st July. Earlier, the Aadhaar Card was optional for both.
According to the amendment, existing taxpayers will have to link their PAN cards with Aadhaar numbers by a certain date to be specified later. And the new PAN applicant will be required to declare their Aadhaar numbers in the PAN application itself. Those, who fail to disclose their Aadhaar number, their PAN and income tax return will be deemed invalid. For the existing taxpayers who don’t have Aadhaar allotted in their name will have to enrol themselves immediately and they can file their tax returns using this enrolment number.
Under the existing tax provisions, you can file your tax return without any penalty till the end of the assessment year.
If you delay tax filing beyond assessment year, tax officer can impose the penalty up to Rs. 5,000, which is done very rarely and fails to create any impact on taxpayers.
To tighten the noose around stubborn non-filers, in budget 2017 the government has introduced a new section 234F which levies mandatory late filing fees for non-filing the tax returns within allowed time.
If you feel that Income Tax Return filing is a taxing task, you are not alone. For a layman, just the name is enough to induce shivers. The tax return filing season for F.Y. 2016-17 is on the horizon & the government has come up with a good news at the right time.
Do you remember that our Finance Minister had promised to introduce a simple one-page ITR form for tax filers? The form was expected to offer huge relief to taxpayers with income below Rs. 5 lakh. The recent news is even better than that. Now this one-page ITR form will make tax return filing simpler for a bigger chunk of taxpayers. Salaried individuals with income up to Rs. 50 lakh & having rental income from one house only will also be able to file their tax return easily with this one-page ITR.
Why has this step been taken?
There are several reasons why people find filing taxes daunting & boring. For most people, this is a once in a year activity. Income Tax rules also change every year. So, people tend to forget how they filed their taxes in the previous year. As a result, they have to learn everything all over again. This further leads to poor tax planning, unclaimed refunds & defective IT returns. A large number of people often skip this essential activity.
