1. Limit for payment of expenses by cash (Both capital and revenue expenditure) reduced from RS. 20,000 to RS. 10,000 per day in aggregate per person.
2. No Person shall receive an amount of two lakh rupees or more, by cash (Sec 269ST).
3. For below Rs. 2 crores turnover cases - For Non cash sales (through Digital, Online, cheque, Bank etc.) : Net Profit will be taken as 6% of Turnover/ Gross Receipt. It is 8% For Cash Sales.
4. Tax Exemption limit is Rs.2,50,000/- (same as earlier) After that, up to 5 Lakh, Tax rate is 5% (earlier it was 10%).
5. Tax rebate is reduced to Rs.2500 from Rs.5000 per year for taxpayers with income up to Rs.3,50,000 (earlier Rs.5,00,000).
6. Surcharge at 10 percent of tax levied on rich taxpayers with income between Rs.50 Lakh and Rs.1 Crore. The rate for surcharge for the super-rich, with income above Rs.1 Crore will remain 15%.
7. Payment of Rent - Rs.50,000 per month by any Individual or HUF (not subject to Tax Audit requirement) - Deduct TDS @ 5%.
8. Long Term Capital gain in respect of Land and Building period reduced from 3 Years to 2 Years and Base year shifted from 01/04/1981 to 01/04/2001.
9. Corporate tax rate for the account year 2017-18 for companies with annual turnover up to Rs.50 crores (in account year 2015-16) is reduced to 25%. No change in firm tax rate of 30%.
10. Donation made exceeding Rs.2000 in cash will be not be eligible for deduction under section 80G.
11. Shares of unquoted shares to be taxed at (deemed) fair value.
12. Tax exemption will be available on reinvestment of capital gains in notified redeemable bonds (In addition to investment in NHAI and REC bonds).
13. Deduction for first time investors in listed equity shares or listed units of equity oriented funds under the Rajiv Gandhi Equity Savings Scheme under section 80CCG of IT act 1961 is withdrawn from FY 2017-18. If an individual has already claimed deduction under this scheme before April 1, 2017, They shall be allowed to avail a deduction for the next two years.
14. No tax is applicable for partial withdrawals from National Pension System. NPS subscribers will be able to withdraw 25% of their contribution to the corpus for emergencies before retirement. Withdrawal of 40% of the corpus is tax free before retirement.
15. In absence of PAN of the buyer of specified goods, the rate of TCS will be twice of the extent rate or 5%, whichever is higher.
16. From Financial Year 2017-18, if Return is not filed within due date, late fee of Rs.5,000 for delay up to 31st December, and Rs.10,000 thereafter. Such fee will be restricted to Rs.1,000 for small taxpayers with income up to Rs.5 lakh.
17. A simple one page tax return form is to be introduced for Individual with taxable income up to Rs. 5 lakh (excluding Business Income). Those filing returns for the first time in this category will generally not be subject to scrutiny.
18. Time period for revision of tax return cut to one year (from 2 years) from the end of relevant financial year or before completion of assessment, whichever is earlier.
19. Where Section 12AA registered trusts modify their object clause, they need to apply within 30 Days to CIT for approval.
20. It is mandatory to disclose the Aadhar number while filing IT Return. Earlier it was optional to disclose Aadhar number. Generally the last date of filing IT return is 31 July. Therefore, it is advisable for taxpayer to get their Aadhar number at the earliest
Important changes as per Budget 2018 with effect from April 1, 2018 which are going to impact
👉From today onwards a large number of Indians will see significant changes in their financial life. April 1 is the first day of the next financial year, 2018-19. The Budget proposals for the new financial year, announced on February 1, will come into force from today. *Below are the key changes which are going to affect individuals as well as companies*:
👉All taxpayers will pay a bit of more tax due to hike in and education cess. Budget 2018 had proposed to hike cess on income tax from 3% to 4% thereby increasing the tax payable by all categories of tax payers. Due to this change, the tax liability for highest tax bracket (assuming Rs 15 lakh income) goes up by Rs 2,625. For the middle income tax payers (between Rs 5 lakh and Rs 10 lakh), tax liability increases by Rs 1,125, and for the lowest bracket (Rs 2.5 lakhs to Rs 5 lakhs) by Rs 125
👉Senior citizens
If you have lots of money earning interest, you need not bother about tax as much as you used to. The exemption limit on income from interest for senior citizens will now be five times higher to Rs 50,000 per year. Those planning to upgrade or buy insurance will benefit from higher limit of deduction for health insurance premium and medical expenditure which has been raised to Rs 50,000 from Rs 30,000 under section 80D of the I-T Act.
👉Investors
Investors will pay tax on long-term capital gains (LTCG) exceeding Rs 1 lakh from sale of shares. However, indexation benefit for computing tax liability on sale of shares listed after January 31 will be available.
👉The salaried and the pensioners
The Budget proposed a standard deduction of Rs 40,000 in lieu of transport allowance and medical reimbursement. This will kick in from April 1. Presently, no tax is applicable on Rs 19,200 of transport allowance and medical expenditure of up to Rs 15,000. This has now been subsumed into the new standard deduction of Rs 40,000.
👉Small businesses
If the turnover of your company is up to Rs 250 crore, you have a big reason to cheer. You will pay less corporate tax, at 25 per cent. As 99 per cent of the tax-filing companies fall in this bracket, this is really a big change.
👉All companies
Every companies will have to adopt more detailed revenue recognition ways from April 1 as the government has notified a new accounting standard. Indian Accounting Standard (Ind AS) 115 would be effective from the new financial year, that is tomorrow. Once it is in force, the other two standards, Ind AS 18 and 11, which are related to revenue and construction contracts, would be withdrawn.
👉Drivers
If you drive on national highways, get ready to pay more from April 1. National Highways Authority of India has revised its toll rates by 5 to 7 per cent. The rates have been revised on the basis of Wholesale Price Index (WPI) and may vary from one toll plaza to another in the same region.
👉Transporters
The businesses that transport goods worth over Rs 50,000 from one state to another will have to carry an electronic or e-way bill from April 1. An anti-evasion measure that would help boost tax collections by clamping down on trade that currently happens on cash basis, the *e-way bill* provision of the Goods and Services Tax (GST) was introduced on February 1.
Folowing appeared in Financial Express 5th March 2018
Link to newspsper Financial Express
Income Tax planning for 2018-19:
New tax rules every taxpayer should know.
As we step into the new fiscal year, it is imperative that we plan our finances. Let us review the key changes which may impact the cash flow and investment decisions for FY2018-19.
Start of the year is a perfect time to plan investments with an oversight of the changes from a tax perspective, so that one does not lose the small benefits which are now available.
As we step into the new fiscal year, it is imperative that we plan our finances. Financial planning needs to be done considering the changes introduced in this year’s Union Budget. So let us review the key changes which may impact the cash flow and investment decisions for the tax year 2018-19, from an individual tax perspective.
Tax slabs in the new year have not changed vis-a-vis the last year.
Lowest tax rate continues to stay at 5% and the maximum at 30%.
The tax exemption income limits for different categories of individual taxpayers are as mentioned below:
Individuals below 60 years – Rs 250,000
Individuals over 60 years and under 80 years – Rs 300,000
Individuals over 80 years and above – Rs 500,000
Given the fact that the status quo in tax slabs has not delighted the individual taxpayer, the government continues to levy an additional cess on the income tax.
To address the education and health needs of the poor and rural families, the erstwhile secondary and higher education cess of 3% has been replaced with a 4% ‘Health and Education Cess’. Consequently, the maximum marginal rate of tax has increased from 35.535% to 35.88%.
The salaried class may have something to celebrate as starting from the tax year 2018-19, the government has reintroduced the “standard deduction” of Rs 40,000.
Standard Deduction was last abolished in the Finance Act 2005. It is a fixed amount of deduction by which gross salary can be reduced to calculate taxable income under the head “salary”.
The deduction of Rs 40,000 replaces the exemption available towards transport allowance of Rs 1,600 per month and medical reimbursement of Rs 15,000 per annum, which will no longer be available from the tax year 2018-19.
Senior citizens have been looked at favorably by the Finance Minister as various benefits have been given to this class of taxpayers in the form of increased deduction limits. Deduction from interest income earned by senior citizens will henceforth be governed by a new section. As per the new provisions, senior citizens can avail a higher deduction of Rs 50,000 in respect of interest income earned by them from deposits held in banks, post offices and co-operative banks. At the same time, threshold limit for deduction of tax at source on interest income for senior citizens has been raised from Rs 10,000 to Rs 50,000.
Another benefit to cheer senior citizens has been given by way of an increase in the deduction limit for payment of health insurance premiums. Till last year, the deduction available was restricted to Rs 30,000; which has now been raised to Rs 50,000. This will boost investment in health insurance policies by senior citizens, to help them stay sufficiently covered in case of any unforeseen circumstances.
In addition to above, the limit of deduction with respect to expenditure incurred on medical treatment of specified diseases (e.g. malignant cancers, chronic renal failure, hematological disorders, etc.) in case of a senior citizen has been increased to Rs 1 lakh. Deduction available until last year was Rs 60,000 in case of senior citizens and Rs 80,000 in case of very senior citizens.
Barring the above beneficial changes for senior citizens, individuals will now have to pay tax at the rate of 10% on long-term capital gains in excess of Rs 1 lakh, arising from transfer of equity shares, equity-oriented mutual funds and unit of business trust where securities transaction tax has been paid. Further, no benefit of indexation will be available against such gain. A section providing the method to grandfather the long-term capital gains earned till January 31, 2018 has been inserted for the assets which are sold after March 31, 2018. As regards the intervening period i.e. February 01, 2018 and March 31, 2018 the tax exemption status continues.
In line with the changes brought in the capital gain tax regime, the deduction from long-term capital gain available under section 54EC of the IT Act in case of transfer of any long-term capital asset will now be restricted to transfer of land and building only. Further, exemption under this section will be available if the capital gain amount is invested in bonds issued by National Highways Authority of India (NHAI) or Rural Electrification Corporation Limited (REC) or any bond as notified by the Central Government, issued on or after 1 April 2018, and redeemable after five years.
National Pension Scheme (NPS) is another tax saving instrument under which employees are currently allowed tax-free withdrawal up to 40% of the total amount payable on closure of the account or on opting out of the scheme. In order to motivate the investment in this scheme and also to bring parity between salaried and self-employed investors, this exemption has now been extended to all the subscribers.
Start of the year is a perfect time to plan investments with an oversight of the changes from a tax perspective, so that one does not lose the small benefits which are now available. “While it may seem small, ripple effects of small things are extraordinary” – Matt Bevin.
(By Divya Baweja, Partner, Deloitte India; Divya Agarwal, Senior Manager, and Mitesh Agrawal, Manager with Deloitte Haskins and Sells LLP)
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