The budget of 2017 has many
provisions which affect an Individual taxpayer. Let us discuss these in detail.
1.Reduced tax rates for initial tax
slab and imposition of surcharge on higher taxable income
Looking at the fact that the tax
base of the tax payer is very narrow in the country as compared to other
countries, the finance minister did not have the luxury of increasing the
present limit exemption limit of Rs. 2.50 lakhs. In order to increase the tax
base, the Finance minister has proposed reduced tax rate for the initial tax
slab of Rs. 2.50 lakhs to Rs. 5 lakhs from 10% to 5%. This will reduce tax
liability almost all the taxpayers. However in order to make up for the loss
due to proposal of reduced tax rates, the finance minister has proposed to levy
e surcharge of 10% on the taxpayers whose income is above Rs. 50 lakhs.
Surcharge of 15% on the income above 1 Crore will continue to be levied.
2.Reduction in amount and
eligibility for tax rebate under Section 87A
Presently an Individual tax payers
is eligible to a tax rebate of up to Rs. 5000/- in case the taxable income does
not exceed Rs. 5 lakhs. The Finance minister has proposed to reduce both. Now
the eligibility for this rebate has been reduced to Rs. 3.5 Lakhs and the
quantum of the tax rebate will also be restricted to Rs. 2500/- only so
effectively individual with income less than 3 lakhs and senior citizens with
income less than 3.50 lakhs will not have to pay any tax still will have to
file income tax returns.
3 Revision of income tax return and
fee for delay in filing of income tax returns
The time limit for filing of your
income tax return was reduced by one year to the end of the assessment year by
the previous budget. Meaning thereby that you can file income tax return of the
year ending 31st March 2017 by 31st March 2018. Currently you are allowed to
revise your return within one year from the end of the assessment year or
before completion of the assessment whichever happens earlier. So the return
for 31st March 2017 can be revised any time before the assessment is completed
but by 31st March 2019. This budget proposes to reduce this time limit and
bring the time limit for filing of the return and revising the return filed to
before end of assessment year.
4.Reduction in holding period for
immovable property and change in base year for indexation
Presently land and building qualify
for benefits of concessional treatment as long term if the same are held for
more than 36 months on date of sale. The budget proposes to bring down it to 24
months. This is beneficial provision for owner of the immovable properties.
Presently, for the purpose of computation of capital gains, you have the option
to take the fair market value of the property as on 1st April 1981 as your cost
in case acquired before this date and apply the benefit of indexation on it.
The budget proposes to move this from 1st April 1981 to 1st April 2001. This
will be very beneficial for all the tax payers as the price appreciation
between your date of acquisition and 1st April 2001 becomes fully tax free in
your hand. Though you were allowed to index the market value on 1st April 1981
but the general price increase in capital assets have been more than the cost
inflation index between these years.
5 Concession for partial withdrawal
of NPS and higher deduction for non salaried persons
Till now the salaried are entitled
to contribute and claim deduction for contribution to NPS account upto 10% of
salary in addition to contribution by employer of 10%. So an employee can get
deduction for 20% of his salary for contribution towards his NPS account, whereas
a non salaried was allowed to claim deduction only 10% of his income. The
budget proposes to remove this anomaly and make non salaried also to be
eligible for deduction upto 20% of his income. Moreover presently 40% of the
withdrawal from the NPS corpus on attaining 60 years of age is fully exempt
whereas any partial withdrawal during continuance of the account is fully
taxable. Now the budget proposes to make partial withdrawal upto 25% of the
account holder contribution fully exempt.
6.TDS on Rent paid by Individual and
HUF and
The budget proposes to cast a duty
on the individual and HUF taxpayers to deduct tax at source @ 5% of the rent
paid by them in case the amount of the rent exceeds Rs. 50,000/- per month.
7.Restriction on set off of loss on
let out property
The budget also proposes to put a
cap on set off of loss due to interest on money borrowed under the head income
from House property against
other income up to Rs. 2 lakhs for a year and the unabsorbed loss shall be
allowed to be carried forward and set off against income under this head only.
Read more: http://www.simpletaxindia.net/2017/02/7-changes-for-individual-in-budget-2017.html#ixzz4Xi2teMZy
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