02/02/2017
Existing Income Tax rates for Individual or Hindu undivided family or every association of persons or body of individuals, whether incorporated or not, or every artificial juridical person having income of Rs. 2.5 lakhs to Rs. 5 lakhs is reduced to 5% from the present rate of 10%.
The proposed tax slab rates for said persons are as follows:
| Slab | Rate of tax |
| UptoRs. 2,50,000 | Nil. |
| Rs. 2,50,001 to Rs. 5,00,000 | 5% |
| Rs. 5,00,001 to Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
- It is also proposed by Finance Bill, 2017 to reduce the income tax for smaller companies with annual turnover uptoRs. 50 crore to 25%. As per FM Budget Speech, this proposal will directly benefit 96% of companies.
- Surcharge of 10% of tax payable has been proposed to be levied on categories of individuals whose annual taxable income is between Rs. 50 lakhs and Rs. 1 crore.
Presumptive Income u/s 44AD
- Under scheme of presumptive income for small and medium tax payers whose turnover is upto 2 crores, the present, 8% of their turnover which is counted as presumptive income is reduced to 6% in respect of turnover which is by non-cash means.
Cash Transaction of above Rs 3 Lakh:
The FM in its Budget speech stated that “The Special Investigation Team (SIT) set up by the Government for black money has suggested that no transaction above Rs. 3 lakh should be permitted in cash. The Government has decided to accept this proposal. Suitable amendment to the Income-tax Act is proposed in the Finance Bill for enforcing this decision.”
This is another attempt from Government Side to curb Black Money and benami transactions.
Start-ups:
- For the purpose of carry forward of losses in respect of such start-ups, the condition of continuous holding of 51% of voting rights has been relaxed subject to the condition that the holding of the original promoter/promoters continues.
- Also the profit linked deduction available to the start-ups for 3 years out of 5 years is being changed to 3 years out of 7 years.
Minimum Alternate Tax:
- Proposal of trade bodies to abolish MAT has not been accepted.
- But, in order to allow companies to use MAT credit in future years it has been proposed to allow carry forward of MAT upto a period of 15 years instead of 10 years at present.
Changes in Capital Gain Taxation:
- Reduction in time period for land & building to qualify as LTCA: In case of immovable property, being land or building or both, time periods to qualify as long term capital asset is reduced from 36 Months to 24 Months. The Amendment shall be effective from April 1, 2018 and will, accordingly, apply in relation to the assessment year 2018-19 and subsequent years.
- Capital gains in case of joint development agreement: For joint development agreement signed for development of property, the liability to pay capital gain tax will arise in the year the project is completed.
- Base Year for calculating Capital Gain Tax: Base year for calculating Capital Gain Taxation has been shifted from 1981 to 2001.
For Banking Sector:
- Allowable provision for Non-Performing Asset has been proposed to be increased from 7.5% to 8.5%.
- It has been proposed to tax interest receivable on actual receipt instead of accrual basis in respect of NPA accounts of all non-scheduled cooperative banks also at par with scheduled banks.
Union Budget 2017- Important Changes on economical front
On Economic Front:
- Inflation has been brought under control. CPI-based inflation declined from 6% in July 2016 to 3.4% in December, 2016.
- Economy has moved on a high growth path. India’s Current Account Deficit declined from about 1% of GDP last year to 0.3% of GDP in the first half of 2016-17.
- As per FM Budget Speech, there is a 36% increase in FDI flow; Forex reserves at USD 361 billion in January enough to cover 12 months’ needs.
For Agriculture & Farmers
- To ensure flow of credit to small farmers, Government to support NABARD for computerisation and integration of all 63,000 functional Primary Agriculture Credit Societies with the Core Banking System of District Central Cooperative Banks. This will be done in 3 years at an estimated cost of 1,900 crores.
- Dairy Processing and Infrastructure Development Fund to be set up in NABARD with a total of 2000 crores and is proposed to be increased to 8000 crores over 3 years.
- Allocation under MNREGA increased to 48,000 crore from Rs. 38,500 crore. This is highest ever allocation to MNREGA.
- Coverage under FasalBimaYojana scheme will be increased from 30% of cropped area in 2016-17 to 40% in 2017-18 and 50% in 2018-19 for which a budget provision of Rs. 9000 crore has been made.
For Youth
- SWAYAM platform, leveraging IT, to be launched with at least 350 online courses. This would enable students to virtually attend courses taught by the best faculty.
- Next phase of Skill Strengthening for Industrial Value Enhancement (STRIVE) will also be launched in 2017-18 at a cost of Rs. 2,200 crores.
- Incredible India 2.0 Campaign will be launched across the world to promote tourism and employment.
For the Poor and the under privileged:
- Affordable housing to be given infrastructure status.
- National Housing Bank will refinance individual housing loans of about 20,000 crore in 2017-18.
- Two new All India Institutes of Medical Sciences to be set up in Jharkhandand Gujarat.
- For senior citizens, Aadharbased Smart Cards containing their healthdetails will be introduced.
For Infrastructure:
- For transportation sector as a whole, including rail, roads, shipping, provision of Rs. 2,41,387crores has been made in 2017-18.
- For 2017-18, the total capital and development expenditure of Railways has been pegged at Rs. 1,31,000crores. This includes Rs. 55,000 crores provided by the Government.
For Financial Sector:
- In line with the ‘Indradhanush’ roadmap, Rs. 10,000 crores for recapitalisation of Banks provided in 2017-18.
- Foreign Investment Promotion Board to be abolished in 2017-18 and further liberalisation of FDI policy is under consideration
Digital Economy:
- 125 lakh people have adopted the BHIM app so far. The Government will launch two new schemes to promote the usage of BHIM; these are, Referral Bonus Scheme for individuals and a Cashback Scheme for merchants.
- Aadhar Pay, a merchant version of Aadhar Enabled Payment System, will be launched shortly.
- A proposal to mandate all Government receipts through digital means, beyond a prescribed limit, is under consideration.Existing Income Tax rates for Individual or Hindu undivided family or every association of persons or body of individuals, whether incorporated or not, or every artificial juridical person having income of Rs. 2.5 lakhs to Rs. 5 lakhs is reduced to 5% from the present rate of 10%.
The proposed tax slab rates for said persons are as follows:
| Slab | Rate of tax |
| UptoRs. 2,50,000 | Nil. |
| Rs. 2,50,001 to Rs. 5,00,000 | 5% |
| Rs. 5,00,001 to Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
- It is also proposed by Finance Bill, 2017 to reduce the income tax for smaller companies with annual turnover uptoRs. 50 crore to 25%. As per FM Budget Speech, this proposal will directly benefit 96% of companies.
- Surcharge of 10% of tax payable has been proposed to be levied on categories of individuals whose annual taxable income is between Rs. 50 lakhs and Rs. 1 crore.
Presumptive Income u/s 44AD
- Under scheme of presumptive income for small and medium tax payers whose turnover is upto 2 crores, the present, 8% of their turnover which is counted as presumptive income is reduced to 6% in respect of turnover which is by non-cash means.
Cash Transaction of above Rs 3 Lakh:
The FM in its Budget speech stated that “The Special Investigation Team (SIT) set up by the Government for black money has suggested that no transaction above Rs. 3 lakh should be permitted in cash. The Government has decided to accept this proposal. Suitable amendment to the Income-tax Act is proposed in the Finance Bill for enforcing this decision.”
This is another attempt from Government Side to curb Black Money and benami transactions.
Start-ups:
- For the purpose of carry forward of losses in respect of such start-ups, the condition of continuous holding of 51% of voting rights has been relaxed subject to the condition that the holding of the original promoter/promoters continues.
- Also the profit linked deduction available to the start-ups for 3 years out of 5 years is being changed to 3 years out of 7 years.
Minimum Alternate Tax:
- Proposal of trade bodies to abolish MAT has not been accepted.
- But, in order to allow companies to use MAT credit in future years it has been proposed to allow carry forward of MAT upto a period of 15 years instead of 10 years at present.
Changes in Capital Gain Taxation:
- Reduction in time period for land & building to qualify as LTCA: In case of immovable property, being land or building or both, time periods to qualify as long term capital asset is reduced from 36 Months to 24 Months. The Amendment shall be effective from April 1, 2018 and will, accordingly, apply in relation to the assessment year 2018-19 and subsequent years.
- Capital gains in case of joint development agreement: For joint development agreement signed for development of property, the liability to pay capital gain tax will arise in the year the project is completed.
- Base Year for calculating Capital Gain Tax: Base year for calculating Capital Gain Taxation has been shifted from 1981 to 2001.
For Banking Sector:
- Allowable provision for Non-Performing Asset has been proposed to be increased from 7.5% to 8.5%.
- It has been proposed to tax interest receivable on actual receipt instead of accrual basis in respect of NPA accounts of all non-scheduled cooperative banks also at par with scheduled banks.
Union Budget 2017- Important Changes on economical front
On Economic Front:
- Inflation has been brought under control. CPI-based inflation declined from 6% in July 2016 to 3.4% in December, 2016.
- Economy has moved on a high growth path. India’s Current Account Deficit declined from about 1% of GDP last year to 0.3% of GDP in the first half of 2016-17.
- As per FM Budget Speech, there is a 36% increase in FDI flow; Forex reserves at USD 361 billion in January enough to cover 12 months’ needs.
For Agriculture & Farmers
- To ensure flow of credit to small farmers, Government to support NABARD for computerisation and integration of all 63,000 functional Primary Agriculture Credit Societies with the Core Banking System of District Central Cooperative Banks. This will be done in 3 years at an estimated cost of 1,900 crores.
- Dairy Processing and Infrastructure Development Fund to be set up in NABARD with a total of 2000 crores and is proposed to be increased to 8000 crores over 3 years.
- Allocation under MNREGA increased to 48,000 crore from Rs. 38,500 crore. This is highest ever allocation to MNREGA.
- Coverage under FasalBimaYojana scheme will be increased from 30% of cropped area in 2016-17 to 40% in 2017-18 and 50% in 2018-19 for which a budget provision of Rs. 9000 crore has been made.
For Youth
- SWAYAM platform, leveraging IT, to be launched with at least 350 online courses. This would enable students to virtually attend courses taught by the best faculty.
- Next phase of Skill Strengthening for Industrial Value Enhancement (STRIVE) will also be launched in 2017-18 at a cost of Rs. 2,200 crores.
- Incredible India 2.0 Campaign will be launched across the world to promote tourism and employment.
For the Poor and the under privileged:
- Affordable housing to be given infrastructure status.
- National Housing Bank will refinance individual housing loans of about 20,000 crore in 2017-18.
- Two new All India Institutes of Medical Sciences to be set up in Jharkhandand Gujarat.
- For senior citizens, Aadharbased Smart Cards containing their healthdetails will be introduced.
For Infrastructure:
- For transportation sector as a whole, including rail, roads, shipping, provision of Rs. 2,41,387crores has been made in 2017-18.
- For 2017-18, the total capital and development expenditure of Railways has been pegged at Rs. 1,31,000crores. This includes Rs. 55,000 crores provided by the Government.
For Financial Sector:
- In line with the ‘Indradhanush’ roadmap, Rs. 10,000 crores for recapitalisation of Banks provided in 2017-18.
- Foreign Investment Promotion Board to be abolished in 2017-18 and further liberalisation of FDI policy is under consideration
Digital Economy:
- 125 lakh people have adopted the BHIM app so far. The Government will launch two new schemes to promote the usage of BHIM; these are, Referral Bonus Scheme for individuals and a Cashback Scheme for merchants.
- Aadhar Pay, a merchant version of Aadhar Enabled Payment System, will be launched shortly.
- A proposal to mandate all Government receipts through digital means, beyond a prescribed limit, is under consideration.
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About the author
vijay rai
ACCOUNTS AND TAX CONSULTANTS
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