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Thursday, 2 February 2017

Proposed amendments in Direct Tax - Budget 2017

The Honb'le Finance Minister Mr. Arun Jaitely has presented Union Budget 2017 on February 1, 2017. A brief summary on proposals made in direct taxes as under:

Amendment in tax rates

1. Surcharge at the rate of 10% shall be levied from AY 2018-19 if income of an individual, HUF, AOP, BOI and AJP exceeds Rs. 50 lakh but less than Rs. 1 crore. Surcharge on income above 1 crore shall be same as 15%.

2. Rate of tax has been decreased from 10% to 5% in case of individuals having income between the slab of Rs. 2,50,001 to 5,00,000. Other slab rates will remain same as of last year.

3. In case of domestic companies tax rate shall be 25% if turnover/gross receipts of previous year 2015-16 does not exceeds Rs. 50 crore.

Amendment in TDS provisions

1. A new section 194IB proposed to be inserted with effect from June 1, 2017. As per said section, individuals or HUF not liable for tax audit u/s 44AB shall deduct TDS at the rate of 5% on amount of rent paid to a resident if such amount of rent paid exceeds Rs. 50,000 per month or part of month. To avoid compliance burden, such deductors shall not need to obtain TAN and they shall be liable to deduct TDS only once in a previous year.

2. Proposed to extend levy of concessional rate of TDS @5% under section 194LC and 194LD upto July 1, 2020.

3. Rate of TDS under section 194J proposed to be reduced from 10% to 2% if payment of professional fee or fee for technical services being made to a person engaged in the business of call centre.

Amendment related to capital gains

1. Period of holding for immovable property proposed to be reduced from three years to two years to qualify as long term capital asset.

2. New section 10(37A) proposed to be inserted with retrospective effect from April 1, 2015 to provide that transfer of capital asset being immovable property in Amaravati under land pooling scheme shall not be chargeable to tax under the Act.

3. It is proposed to change the base year for computation of capital gains from year 1981 (01.04.1981) to 2001 (01.04.2001).

4. Exemption benefit of section 54EC proposed to be extended to the investment in any bonds specified by the Central Government redeemable after three years.

Period for carry forward of MAT and AMT

Term for carrying forward and set off of tax credit of MAT and AMT proposed to be extended from ten years to fifteen years.

Restrictions on cash transactions

1. Cash donations under section 80G proposed to be limited upto Rs. 2,000 instead of earlier limit of Rs. 10,000.

2. Proviso proposed to be inserted in section 43 to disallow the expenditure on acquisition of any asset if such expenditure is made in cash exceeding Rs. 10,000 per day.

3. Limit of cash payment under section 40A(3) proposed to be reduced from Rs. 20,000 to Rs. 10,000 in a single day.

4. Presumptive rate of tax under section 44AD proposed to be reduced from 8% to 6% in respect of turnover received through digital modes however 8% shall remain same for any other mode.

5. New section 269ST proposed to be introduced to restrict receipt of cash exceeding Rs. 3 lakhs from a person in a day in respect of a single transaction or for transactions relating to one event from a person. Such restriction shall not apply in case of Government, banks, post office or cooperative banks.

6. Political parties shall be restricted to accept donations in cash for a value of Rs. 2,000 or more.     

The Honb'le Finance Minister Mr. Arun Jaitely has presented Union Budget 2017 on February 1, 2017. A brief summary on proposals made in direct taxes as under:

Amendment in tax rates

1. Surcharge at the rate of 10% shall be levied from AY 2018-19 if income of an individual, HUF, AOP, BOI and AJP exceeds Rs. 50 lakh but less than Rs. 1 crore. Surcharge on income above 1 crore shall be same as 15%.

2. Rate of tax has been decreased from 10% to 5% in case of individuals having income between the slab of Rs. 2,50,001 to 5,00,000. Other slab rates will remain same as of last year.

3. In case of domestic companies tax rate shall be 25% if turnover/gross receipts of previous year 2015-16 does not exceeds Rs. 50 crore.

Amendment in TDS provisions

1. A new section 194IB proposed to be inserted with effect from June 1, 2017. As per said section, individuals or HUF not liable for tax audit u/s 44AB shall deduct TDS at the rate of 5% on amount of rent paid to a resident if such amount of rent paid exceeds Rs. 50,000 per month or part of month. To avoid compliance burden, such deductors shall not need to obtain TAN and they shall be liable to deduct TDS only once in a previous year.

2. Proposed to extend levy of concessional rate of TDS @5% under section 194LC and 194LD upto July 1, 2020.

3. Rate of TDS under section 194J proposed to be reduced from 10% to 2% if payment of professional fee or fee for technical services being made to a person engaged in the business of call centre.

Amendment related to capital gains

1. Period of holding for immovable property proposed to be reduced from three years to two years to qualify as long term capital asset.

2. New section 10(37A) proposed to be inserted with retrospective effect from April 1, 2015 to provide that transfer of capital asset being immovable property in Amaravati under land pooling scheme shall not be chargeable to tax under the Act.

3. It is proposed to change the base year for computation of capital gains from year 1981 (01.04.1981) to 2001 (01.04.2001).

4. Exemption benefit of section 54EC proposed to be extended to the investment in any bonds specified by the Central Government redeemable after three years.

Period for carry forward of MAT and AMT

Term for carrying forward and set off of tax credit of MAT and AMT proposed to be extended from ten years to fifteen years.

Restrictions on cash transactions

1. Cash donations under section 80G proposed to be limited upto Rs. 2,000 instead of earlier limit of Rs. 10,000.

2. Proviso proposed to be inserted in section 43 to disallow the expenditure on acquisition of any asset if such expenditure is made in cash exceeding Rs. 10,000 per day.

3. Limit of cash payment under section 40A(3) proposed to be reduced from Rs. 20,000 to Rs. 10,000 in a single day.

4. Presumptive rate of tax under section 44AD proposed to be reduced from 8% to 6% in respect of turnover received through digital modes however 8% shall remain same for any other mode.

5. New section 269ST proposed to be introduced to restrict receipt of cash exceeding Rs. 3 lakhs from a person in a day in respect of a single transaction or for transactions relating to one event from a person. Such restriction shall not apply in case of Government, banks, post office or cooperative banks.

6. Political parties shall be restricted to accept donations in cash for a value of Rs. 2,000 or more.     

Threshold limit under section 44AA - Maintenance of books of account

Threshold limit for maintenance of books of accounts under section 44AA increased from Rs. 1,20,000 to Rs. 2,50,000 for business and from 10,00,000 to 25,00,000 for profession.

Specified Domestic Transactions

Payments made to specified persons under section 40A(2)(b) are proposed to be excluded from section 92BA (Specified Domestic Transactions).

Advance tax by assessee declaring income u/s 44ADA

Professionals declaring their income under presumptive section 44ADA shall be liable to pay their advance tax

Threshold limit for maintenance of books of accounts under section 44AA increased from Rs. 1,20,000 to Rs. 2,50,000 for business and from 10,00,000 to 25,00,000 for profession.

Specified Domestic Transactions

Payments made to specified persons under section 40A(2)(b) are proposed to be excluded from section 92BA (Specified Domestic Transactions).

Advance tax by assessee declaring income u/s 44ADA

Professionals declaring their income under presumptive section 44ADA shall be liable to pay their advance ta

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