2017 Budget Major Changes in Income Tax and TDS

2017-Budget Major Changes in

Income Tax and TDS

Income Tax's Changes

Change in Income Tax Slab Rate for Individuals

EXISTING SLAB RATE

INCOME	TAX
UPTO 2,50,000	Nil
2,50,000  – 5,00,000	10% of Income Greater than 2,50,000
5,00,000  – 10,00,000	20% of Income Greater than 5,00,000  + 25,000
> 10,00,000	30% of Income Greater than 5,00,000  + 1,25,000

Applicable for ITR of Financial Year 2016-17  (AY 2017-18) Applicable for Payroll till 31 March 2017

NEW SLAB RATES

INCOME	TAX
UPTO 2,50,000	Nil
2,50,000  – 5,00,000	5% of Income Greater than 250000
5,00,000  – 10,00,000	20% of Income Greater than 5,00,000  + 12,500
> 10,00,000	30% of Income Greater than 5,00,000  + 1,12,500

Applicable for ITR of Financial Year 2017-18  (AY 2018-19) Also applicable for Payroll from  1 April 2017

Change in Rebates

Existing

Rebate of Max 5000 if Income between 250000  – 500000

New

Rebate of 2500 if Income between 250000  – 350000

Changes in Surcharge

Existing

If Income More than 1 Crores,  then 15% Surcharge

New

If Income between 50 lacs to 1 Crores,  then 10% Surcharge

If Income More than 1 Crores,  then 15% Surcharge

Income Tax Slab Rate for Companies

Existing Income Tax Rate (Financial Year 2016-17  or AY 2017-18)

Income	Tax %
Normal Cases	30%
Small Company if FY 2014-15 turnover upto 5 cr	29%

Surcharge Rate

Income upto	Surcharge rate
Upto 1 Cr	0%
1 - 10 Cr	7%
>10 Cr	12%

Education Cess Rate 3%

New Income Tax Rate (Financial Year 2017-18  or AY 2018-19)

Income	Tax %
Normal Cases	30%
Small Company if last year turnover upto 50 cr	25%

Surcharge Rate

Income upto	Surcharge rate
Upto 1 Cr	0%
1 - 10 Cr	7%
>10 Cr	12%

Education Cess Rate 3%

Change in Long Term Capital Gain

If Asset held  for more than  3years 2 years, it is a Long Term Capital Asset and  Long Term

Capital Gain will be charged on it.

New (Financial Year 2017-18  or AY 2018-19)

     On Long Term Capital Gain, Indexation will be applicable on Asset

     Base Year is 2001

     For Assets held  before 1/4/1981, FMV as on 1/4/2001 is applicable

Financial Year	CII	Financial Year	CII
2001-02	100	2009-10	148
2002-03	105	2010-11	167
2003-04	109	2011-12	184
2004-05	113	2012-13	200
2005-06	117	2013-14	220
2006-07	122	2014-15	240
2007-08	129	2015-16	254
2008-09	137	2016-17	264

Cash Payment Greater than  10000  Disallowed

     Cash Payments > 10000 are  disallowed under Section  40(a)

       In case  of fixed assets (CAPEX) purchased in cash  more than 10000,  depreciation will not be charge on it.

Section 44AD Scheme

     For FY 2016-17  (AY 2017-18)

     If Turnover of Business upto 2 Crore,then

     8 % of Turnover is Profit for Cash Transactions

     6% of Turnover is Profit for Other Transactions

     No need to make  books  of accounts

     No need to do Audit

While other  changes  are applicable from  FY 2017-18  (AY 2018-19), this budget change  is applicable from  FY 2016-17  (AY 2017-18) onwards

Section 44ADA Presumptive Income of Professionals

Applicable  for Financial  Year 2016-17  (AY 2017-18)

IF Gross Receipts upto 50 lacs

     50% of Receipts will be Profit

     No need for Audit

     No need to maintain books  of accounts

If Professional says that his profit less than  50%,then  compulsory books  of accounts and compulsory audit

Due Dates of Advance Tax

In Case of All Business except Section  44AD Business and  Section  44ADA Business

Due Date	% of Tax
15 - Jun	15%
15 - Sep	45%
15 - Dec	75%
15 - Mar	100%

For Section  44AD Business and  Section 44ADA Professionals

Due Date	% of Tax
15 - Jun	Nil
15 - Sep	Nil
15 - Dec	Nil
15 - Mar	100%

Cash Donations Trust and Political Parties

     Political Parties can take Cash Donations of upto 2000

     Trust can take cash  Donations upto 2000

Donation under 80G in Cash

If Donation amount is more than 2000, it cant  be made in Cash

If made in cash,  then deduction not allowed

Cash Receipt more than  3 Lacs not  allowed

Section  269ST No person can receive cash  more than 3 lacs in following cases

1.   Total Cash Transactions per  day to per  party  can’t be more than 3 lacs

2.   Single Transaction can’t be more than 3 lacs (even if paid  in parts)

3.   Different transactions relating to single event can’t be more than 3 lacs

Penalty

It is equal to amount of contravention (Section  271DA) Example:-  If 4 Lacs received in cash,  then 4 lacs will be penalty

Exception

Government, Banks and  Other Notified  persons can receive amount more than 3 lacs

Loss under House Property Setoff of 2 lacs  for even

Rented Property

  In case  of Self Occupied Property, Maximum 200000  is allowed as Deduction for  Interest on housing loan

In case  of Rented Property, Deduction for Interest on housing loan is allowed without any limit

     Loss if any can be setoff  with any other Income without any limit only upto 2 lacs

     Remaining loss can be carry forward for 8 years  and  adjusted against loss from House Property

Changes in ITR Dues  Dates (AY 2016-17  to 2018-19)

FY 2015-16  (AY 2016-17)

     Due Date of ITR is normally 31-July-2016  (30 Sept 2016 in case  of Audit)

     However, Return can be filed late also till

1.    31-March-2017 (Without  penalty)

2.    31-March-2018 (With Penalty of Rs 5000)

     Hence,  Return can be filed till one  year from  end  of Assessment Year)

     If return filed on time,  then only it can be revised under Section  139(5)

FY 2016-17(AY 2017-18)

     Due Date of ITR is normally 31-July-2017 (30-Sept-2017 in case  of Audit)

     However, Return can be filed late also till 31-March-2018 (Without penalty)

(Now It cannot be filed after 31-March-2018)

       Hence  Return can be filed till end  of Assessment Year (and not one year from  end of assessment year)

     Both Original and  Revised Return can be revised

       However, Revised Return can be filed till 31-March-2019 (till one year from  end of assessment year)

FY 2017-18  (AY 2018-19)

     Due Date of ITR is normally 31 July 2018 (30 Sept 2018 in case  of Audit)

     However, Return can be filed late also till

1.    31 Dec 2018 (With Penalty of 5000)

2.    1 Jan 2019 to 31 Mar 2019 (With Penalty of 10000)

(Note If Total income is upto  5 lacs, then  Penalty is reduced to 10000)

     Penalty to be taken into account while determining demand and  refund.

     Both Original and  Revised Return can be revised

       However, Revised Return can be filed till 31.3.2019 till end  of assessment year and  (not one  year  from  end  of AY)

  

Compulsory Maintenance of Books  Limit Increased

(Section 44AA)

It is compulsory to maintain books  of accounts if

Turnover > 1000000 25,00,000

or

PGBP Income > 120000  2,50,000

or both in any of last 3 years

(In case of new business, where turnover is likely to exceed  25,00,000 or Total income

Likely to Exceed 2,50,000  during Current Year)

Section 80CCD (1)

Contribution by Employee to National Pension

Scheme

FY 2016-17

Maximum amount which can be contributed was

1.    In case  of employee:- 10% of Salary+10%  of Salary by employer

2.    In Case of Self Employed/Business-10% of GTI

FY 2017-18

Maximum amount which can be contributed is

1.    In case  of employee:- 10% of Salary+10%  of Salary by employer

2.    In Case of Self Employed/Business-20% of GTI

Changes in TDS

Form 15H for TDS on Insurance Agent

15H Form now applicable to insurance commission agents

Existing  (Financial Year 2016 - 2017 or AY 2017-18)

Insurance Agent get Commission from  Insurance Companies.

Currently Insurance Companies deducts TDS at 10% on Commission if Commission made is more than 15000  p.a.

New  (Financial Year 2017 - 2018 or AY 2018-19)

Rates of TDS and  Commission are  same.

Insurance Agents can give Form 15H Self Declaration to Insuarance Company if their  total income is less than Income Tax slab Rate.

If this form is given, Insurance Company will not deduct TDS.

Section 194J TDS on Call Centers Now 2%

Existing  Rate (Financial Year 2016 - 2017 or AY 2017-18)

Section	Description	Cutoff	Rate of TDS
194J	Professional/Technical/Royalty/Non Compete Fees	30000	10%

New  Rate of TDS (Applicable from  1 June 2017)

Section	Description	Cutoff	Rate of TDS
194J	Professional/Technical/Royalty/Non Compete Fees
	Paid to Business Exclusively in Call Center Business	30000	2%
	Other Persons	30000	10%

Example

Suppose a Mobile Company Vodafone hires  the services of A Ltd. where A Ltd will operate call center of Airtel at a cost of 1 lacs

    Vodafone will deduct 10% TDS in this case  and  pay A ltd 90000  (Till 31 May 2017)

      From 1 June 2017, 2% TDS will be applicable. Vodafone will deduct 2% TDS in this case and  pay A Ltd 98000

TDS Section 194 - IB TDS on Personal Rent @ 5%

In case  of any person

Any Person liabile to pay rent for more than 50000  p.m are  to deduct TDS @ 5%

Section	Description	Cutoff	Rate of TDS
194-IB	Rent Paid	50000  PM	10%

Note:-

This section  is not applicable to those  Rent which are covered  under  Section 194I

Difference between Section 194I and Section 194 - IB

Implication of Section 194-IB on Payroll

     Many Employees who are  claiming  HRA through fake Rent Receipts

       Those employees who are  showing Rent receipts of more than 50000  p.m have  now to deduct 5% TDS

TCS Rate if No Pan No Given

It is Higher of

     Double  of TCS Rate

     5%

Example

       If TCS Rate is 1%, then in case  of no Pan number, TCS Rate is 2% or 5% whichever is higher i.e. 5%

      If TCS Rate is 2%, then in case  of no Pan number, TCS Rate is 4% or 5% whichever is higher i.e. 5%

       If TCS Rate is 5%, then in case  of no Pan number, TCS Rate is 10% or 5% whichever is higher i.e. 10%

No TCS in Following Cases

From 1 April 2017 onwards

1. Cash Sale of Jewellery more than 500000

2. No TCS on Purchase of Motor  vehicles  by

     Central Govt

     State  Govt

     Embassy/Consulte/Trade Representative of Foreigh  Business

     Local Authority

     Public Sector  Company in Passenger Transport Business

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