Union Budget 2017 Highlights for Personal Income Taxpayers & Corporate Taxpayers

  • The much anticipated Union Budget 2017 was finally announced today by our honourable Finance Minister. It was broadly focused on 10 issues — farming sector, rural population, youth, poor and health care for the underprivileged, infrastructure, financial sector for stronger institutions, speedy accountability, public services, prudent fiscal management and tax administration for the honest. Here is what it brought for personal Income Tax payers and corporate taxpayers.

Personal Income Tax:

  • Any person who files his tax return for the first time will not be scrutinised unless the tax department has specific information encouraging scrutiny.
  • The government will simplify tax filing by introducing a new ITR form for taxpayers with income up to Rs. 5 lakhs.
  • The government has proposed to levy a surcharge of 10% for persons having income between Rs. 50 lakhs and Rs. 1 crore.
  • The government has not changed Income Tax exemption limit but reduced tax rate to 5% for persons having income between Rs. 2.5 lakhs to Rs. 5 lakhs.
  • On the down side the budget 2017 has proposed to restrict the benefit of set-off loss from house property to a maximum Rs. 2 lakh per financial year and the balance loss can be carried forward to next 8 years
  • Threshold limit for audit of entities opting for presumptive taxation under section 44AD has been increased to Rs. 2 crores.
  • The maximum amount of cash donation for a political party will be Rs. 2,000 from any one source.
  • The maximum amount of cash donation for charitable institution will be Rs. 2,000 from any one source.
  • Capital Gains Tax on the land acquired for creation of Telangana is to be exempted.
  • Threshold limit under Section 40A(3) for payment of expenses in cash has been reduced to Rs. 10,000.
  • Finance Bill has proposed a ban on cash transactions above Rs. 3 lakhs.
  • Presumptive income for businesses with turnover up to Rs. 2 crores has been reduced from 8% to 6% for non-cash means under section 44AD
  • Capital Gains tax under Joint Development Agreement to be levied in the year of project’s completion
  • 2001 shall be the base year for calculating the capital gains instead of existing 1981.
  • Holding period for Capital Gains to be considered on immovable property has been reduced from 3 years to 2 years.
  • The rate of growth of Advance Tax in personal Income Tax in the first three quarters of the current financial is 34.8%.
  • From 3.5 crore return filers, 99 lakh taxpayers disclosed income less than minimum exemption limit, while only 24 lakh disclosed income above Rs. 10 lakhs.
  • Finance Minister discloses surprising facts about the return filings in India to conclude that we are largely a tax non-compliant society.
  • Tax to GDP ratio of India is very low.

Corporate tax:

  • In order to give a boost to the banking sector, the government has proposed to increase allowable provision for Non-Performing Asset from 7.5% to 8.5%. This will reduce the tax liability of banks.
  • Interest receivable will be taxed on actual receipt instead of accrual basis in respect of NPA accounts of all non-scheduled cooperative banks also at par with scheduled banks. This will remove hardship of having to pay tax even when interest income is not realised.
  • Finance Minister has proposed to reduce tax rate by 5% for SMEs with annual turnover of up to Rs. 50 crores. The new rate will be 25%.
  • The government proposed to extend the facility of concessional withholding rates on interest payable to foreign entities.
  • The government proposed to carry forward of MAT credit for a period of 15 years instead of 10 years.
  • Finance Minister has proposed changes in Profit linked deduction for affordable housing scheme.
  • From a common man’s perspective, this budget brought relief to middle-class tax payers, made housing more affordable encouraged digitisation of our economy.

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