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Posted: 01 Feb 2017 06:28 AM PST
Salient Features of Direct Tax Proposals in Union Budget 2017
"Personal Income Tax: Personal income tax for people with income in the slab of 2.5 lakh to 5 lakh to be reduced to 5% instead of 10%. This will reduce their tax liability to half while all other tax payers above this slab will also be benefited in terms of lesser tax of Rs.12,500 per individual (revenue loss ofRs.15,500 crores).”
Salient Features of Direct Tax Proposals in Union Budget 2017
The Union Budget 2017 was laid before the Parliament today by the Hon’ble Finance Minister of India. The salient features of Direct Tax proposals are summarised below:
I. Affordable Housing: 1. Three concessions in the scheme of Income Tax exemption for affordable housing:
(a) Area of 30 and 60 Sq.mtr. to be counted as carpet area and not built-up area;
(b) 30 Sq.mtr. only in 4 metropolitan city limits and 60 Sq.mtr. for the rest of the country;
(c) Completion period extended from 3 years to 5 years.
2. Tax on Notional rental income for builders to be calculated only after 1 year from the end of the year in which completion certificate is received.
3. Changes in Capital Gain taxation for immovable properties:
(a) Holding period reduce for computation of long term capital gain from three years to two years
(b) Base year for counting the cost of property shifted from 1.4.1981 to 1.4.2001 for all classes of assets including immovable property.
4. Basket of financial instrument in which capital gain can be invested without payment of tax to be expanded.
5. For joint development agreement, the liability to pay capital gain tax will arise in the year in which project is completed.
6. For Andhra Pradesh capital, land belonging to owners as on 2.6.2014 to be exempted from capital gain if the same is offered under land-pooling mechanism.
II. Measures for stimulating growth: 1. Concessional withholding rate of 5 per cent. for interest received by foreign entities on loans given in India to be continued for another 3 years beyond 30.6.2017.
2. Start-ups to get two relaxations under the scheme of Income Tax holiday given last year.
(a) The condition of continuous holding of 51 per cent. voting rights to be relaxed as long as the original investment of promoter is not diluted.
(b) Exemption available for three years out of any 7 years from the date of establishment instead of 3 out of 5 years
3. The period of carry forward of MAT/AMT credit increased from 10 years to 15 years.
4. The corporate income tax to be reduced from 30% to 25% for companies with turnover upto Rs.50 crore in 2015-16. This will benefit 96% of existing 6.67 lakh companies. This will result into tax saving of 16.67% for these companies.
5. Deduction for provision for NPA of Banks to be increased from to 8.5% instead of 7.5% of profit.
6. In case of NPA of non-scheduled cooperative banks, interest to be recognised as income only when received.
III Promoting Digital Economy:
1. In the presumptive income tax for small traders, income to be taken as 6% of turnover which is received by digital or banking means.
2. Cash expenditure allowable to be reduced to Rs.10,000 from the existing Rs.20,000.
3. Cash transaction of above Rs.3 lakh not to be permitted. The penalty of equal amount to be levied in case of breach.
IV Transparency in Electoral Funding:
1. The cash donation to political parties from one person limited to Rs.2,000/-.
2. Electoral Bond to be introduced for facilitating donation to political parties from explained sources.
3. Political parties to file their return in time limit prescribed in the Income Tax Act.
V. Ease of Doing Business:
1. Domestic transfer pricing to be applied only if one of the two companies enjoys specified profit-linked deduction.
2. The audit limit for business entities opting for presumptive scheme to be increased from Rs.1 crore to Rs.2 crore.
3. Individuals and HUFs not required to keep books of accounts if their turnover is up to Rs.25 lakhs or income is upto Rs.2.5 lakhs.
4. Investment in Category 1 and 2 foreign portfolio investors registered with SEBI to be exempted from provisions of indirect transfer.
5. TDS of 5% not to be deducted for individual insurance agents if they certify their income to be below taxable limit.
6. Professionals in presumptive scheme to pay advance tax only in one instalment in March instead of four.
7. The time limit for revising a tax return reduced to 12 months. Also time limit for completion of scrutiny will be brought down to 12 months from Assessment Year 2019-20 onwards.
VI Personal Income Tax:
1. Personal income tax for people with income in the slab of 2.5 lakh to 5 lakh to be reduced to 5% instead of 10%. This will reduce their tax liability to half while all other tax payers above this slab will also be benefited in terms of lesser tax of Rs.12,500 per individual (revenue loss ofRs.15,500 crores).
2. Surcharge of 10% to be levied on individuals with income between Rs.50 lakhs to Rs.1 crore (revenue gain of Rs.2,700 crore).
VII. Miscellaneous:
1. TCS exemption for state transport corporation in respect of purchase of vehicles.
2. Income of Chief Minister’s relief fund exempt from tax.
3. Penalty on accountant, registered valuer and merchant banker for furnishing incorrect information.
4. In order to ensure timely filing of return and expeditious issue of refund, a fee shall be levied for delay in filing of return.
Posted: 12 Feb 2017 11:34 PM PST
What are
allowances? Are all allowances taxable? – INCOME TAX FAQ
What is considered as salary income?
section
17 of the Income-tax Act defines the term ‘salary’. However, not going into
the technical definition, generally
whatever is received by an employee from an employer in cash, kind or as a
facility [perquisite] is considered as salary.
What are allowances? Are all allowances taxable?
Allowances are fixed periodic amounts, apart from
salary, which are paid by an employer for the purpose of meeting some
particular requirements of the employee. E.g.,
There are generally three types of allowances for
the purpose
of Income-tax Act – taxable allowances, fully exempted allowances
and partially exempted allowances.
My employer
reimburse
s to me all my expenses on grocery and children’s education. Would
these be considered as my income?
Yes, these are
in the nature of perquisites and should be valued as per the rules prescribed in this behalf.
During the year
I had worked with three different employers and none of them deducted any tax
from salary paid to me. If all these amounts are clubbed together, my income
will exceed the basic exemption limit. Do I have to pay taxes on my own?
Yes, you will
have to pay self-assessment tax and file the return of income.
Even if no taxes
have been deducted from salary, is there any need for my employer to issue
Form-16 to me?
Form-16 is a
certificate of TDS. In your case it will
not apply. However, your employer can issue a salary statement.
Is pension income taxed as salary income?
Yes. However,
pension received from the United Nations Organisation is exempt.
Is Family
pension taxed as salary income?
No, it is
taxable as income from other sources.
If I receive my pension through a bank who will issue Form-16 or
pension statement to me- the bank or my former employer?
The bank.
Are retirement
benefits like PF and Gratuity taxable?
In the hands of a Government employee Gratuity and PF
receipts on retirement are exempt from tax. In the hands of non-Government
employee, gratuity is exempt subject to the limits prescribed in this regard
and PF receipts are exempt from tax, if the same are received from a recognised
PF after rendering continuous service of not less than 5 years.
Are arrears of
salary taxable?
Yes.
However, the benefit of spread over of income to the years to which it relates
to can be availed for lower incidence of tax. This is called as relief u/s 89 of the
Income-tax Act.
Can my employer consider relief u/s 89 for the purposes of
calculating the TDS from salary?
Yes, if you
are a Government employee or an employee of a PSU or company or co-operative
society or local authority or
university or institution or association or body. In such a case you need to
furnish Form No. 10E to your employer.
My income from let out house property is negative. Can I ask my
employer to consider this loss against my salary income while computing
the TDS on my salary?
Yes, however,
losses other than losses under the head ‘Income from house property’ cannot be
set-off while determining the TDS from salary.
Is leave encashment taxable as salary?
It is taxable
if received while in service.
Leave encashment received at the time of retirement is exempt in the hands of
the Government employee. In the hands of non-Government employee leave
encashment will be exempt subject to the limit prescribed in this behalf under
the Income-tax Law.
Are receipts from life insurance policies on maturity along with
bonus taxable?
As per section 10(10D), any amount received under a
life insurance policy, including bonus is exempt from tax. However, following
receipts would be subject to tax:
Any sum received under sub-section (3) of section
80DD; or
Any sum received under Keyman insurance policy; or
Any sum received in respect of policies issued on
or after April 1st, 2003, in respect of which the amount of premium paid on
such policy in any financial year exceeds 20% (10% in respect of policy taken
on or after 1st April, 2012) of the actual capital sum assured; or
Any sum received for insurance on life of
*specified person (issued on or after April 1st 2013) in respect of which the
amount of premium exceeds 15% of the actual capital sum assured.
* Any person who is –
i) A person with disability or severe disability
specified under section 80U; or
ii) suffering from disease or ailment as specified
in the rule made under section 80DDB.
Following points should be noted in this regard:
Exemption is available only in respect of amount
received from life insurance policy.
Exemption under section 10(10D) is
unconditionally available in respect of sum received for a policy which is
issued on or before March
31, 2003.
Amount received on the death of the person will
continue to be exempt without any condition.
Authority: http://www.incometaxindia.gov.
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Sunday, February 5, 2017
in come tax 2017
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