If you are looking for the best summary of the Indian Budget -2017, Taresh brings the key highlights of this year's budget, made simplified.
A well-focused budget! All the relevant changes have been made. All such good steps will be good for industry, markets and the masses.
- With better monsoon, agriculture is expected to grow at 4.1% in 2016-17
- Already there is evidence of increased digital transactions. The BHIM app has been launched. It will unleash the power of mobile phones for digital payments and financial inclusion. 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. This should be a good move to help merchants to adopt more of digital transactions.
- Aadhar Pay, a merchant version of Aadhar Enabled Payment System, will be launched shortly. This will be specifically beneficial for those who do not have debit cards, mobile wallets and mobile phones. A Mission will be set up with a target of 2,500 crore digital transactions for 2017-18 through UPI, USSD, Aadhar Pay, IMPS and debit cards. Banks have focused on introducing additional 10 lakh new PoS terminals by March 2017. They will be encouraged to present 20 lakh Aadhar based PoS by September 2017.
- Senior Citizens health details in their Aadhaar Card
- 8% Senior Citizen Guaranteed Return in LIC policy but 8% p.a. but capped at a maximum of Rs.7.5 lacs with a term of 10 yrs, but taxable income.
- 500 railways stations to be made disable-friendly, to be equipped with lifts and escalators
- FIPB to be abolished
- Service charge on e-tickets booked through IRCTC will be withdrawn
- As against estimated 4.2 crore persons engaged in organised sector employment, the number of individuals filing return for salary income are only 1.74 crore. As against 5.6 crore informal sector individual enterprises and firms doing small business in India, the number of returns filed in this category are only 1.81 crore. Out of the 13.94 lakh companies registered in India up to 31st March, 2014, 5.97 lakh companies have filed their returns for Assessment Year 2016-17. Of the 5.97 lakh businesses that have filed their returns for Assessment Year 2016-17 so far, as many as 2.76 lakh companies have shown losses or zero income. 2.85 lakh companies have shown profit before tax of less than ` 1 crore. 28,667 companies have shown profit between ` 1 crore to ` 10 crore, and only 7781 companies have profit before tax of more than ` 10 crores.Among the 3.7 crore individuals who filed the tax returns in 2015-16, 99 lakh show income below the exemption limit of ` 2.5 lakh p.a., 1.95 crore show income between ` 2.5 to ` 5 lakh, 52 lakh show income between ` 5 to ` 10 lakhs and only 24 lakh people show income above ` 10 lakhs. Of the 76 lakh individual assesses who declare income above ` 5 lakh, 56 lakh are in the salaried class. The number of people showing income more than ` 50 lakh in the entire country is only 1.72 lakh. We can contrast this with the fact that in the last five years, more than 1.25 crore cars have been sold, and number of Indian citizens who flew abroad, either for business or tourism, is 2 crore in the year 2015. From all these figures we can conclude that we are largely a tax non-compliant society. The predominance of cash in the economy makes it possible for the people to evade their taxes. When too many people avoid taxes, the burden of their share falls on those who are honest and compliant.
- At present, the houses which are unoccupied after getting completion certificates are subjected to tax on notional rental income. For builders for whom constructed buildings are stock-in-trade, the budget proposed to apply this rule only after one year of the end of the year in which completion certificate is received so that they get some breathing time for liquidating their inventory. Great move!
- The budgets propose to make some changes in the capital gain taxation provisions in respect of land and building. The holding period for considering benefit from immovable property to be long term is 3 years now. This is proposed to be reduced to 2 years. Also, the base year for indexation is offered to be shifted from 1.4.1981 to 1.4.2001 for all classes of assets including immovable property. This move will significantly reduce the capital gain tax liability while encouraging the mobility of assets. It also plans to extend the basket of financial instruments in which the capital gains can be invested without payment of tax
- There is a scheme of possible income tax for small and medium taxpayers whose turnover is up to Rs. 2 crores. At present, 8% of their turnover is counted as presumptive income. The budget proposed to make this 6% in respect of turnover which is received by non-cash means. This benefit will be applicable for transactions undertaken in the current year also.
- The budget increases the threshold limit for an audit of business entities who opt for presumptive income scheme from `1 crore to `2 crores. Similarly, the threshold for maintenance of books for individuals and HUF is being increased from turnover of `10 lakhs to `25 lakhs
- To allow the people to claim the refund expeditiously, the time period for revising a tax return is being reduced to 12 months from completion of the financial year, at par with the time period for filing of return. Also the time for completion of scrutiny assessments is being compressed further from 21 months to 18 months for Assessment Year 2018-19 and further to 12 months for Assessment Year 2019-20 and after that.
- Rate of growth of advance tax & personal income tax is as high as 34.8% in last 3 quarters, that means, Demonetisation led to a 34.8% increase in personal income tax declarations
- Companies with turnover up to 5 crore will get tax deduction of 5%-Corporate tax for companies with turnover of up to Rs 50 crore cut to 25% from 30%-96 per cent Indian companies to benefit from lowered corporate tax for SMEs
- Capital Gains Tax On Housing Payable On Year In Which Project Is Completed.
- Cash transactions above Rs 3 lakh to banned from April 1
- Charitable trusts can now receive cash donations only up to Rs 5000. No cash transaction to be permitted over Rs 3 lakhs.
- To cleanse the system of political funding maximum cash donation for parties will be R s2000 from one source from existing limit of 20,000. Political parties can now receive a maximum cash donation of Rs 2000: The maximum contribution a political party can receive from anyone source is Rs 2000; Political parties will need to file income tax returns. Propose to amend RBI Act for the issue of electoral bonds for political funding.
- Personal Income Tax rate changes:
- Reduced the current rate of taxation for individual assesses between the income of Rs. 2.5 lakhs to Rs. 5 lakhs to 5% from the present rate of 10%.
- This would reduce the tax liability of all persons below Rs. 5 lakh income either to zero (with rebate) or 50% of their current liability.
- the current benefit of rebate available to the same group of beneficiaries is being reduced to Rs. 2500 available only to assessees up to income of Rs. 3.5 lakhs. The combined effect of both these measures will mean that there would be zero tax liability for people getting income up to Rs. 3 lakhs p.a. and the tax liability will only be Rs. 2,500 for people with income between Rs. 3 and Rs. 3.5 lakhs.
- Those in the tax slab of Rs 2.5 lakh to Rs 5 lakh –( have got slab changed to 5% instead of 10%). Further, it is interesting to note is that an existing rebate under Section 87A (currently given to people with income up to Rs 5 lakh) is now reduced to Rs 2500 from the current Rs 5000 for individuals earning between Rs 2.5 lakh to Rs 3.5 lakh.
- If the limit of Rs. 1.5 lakh under Section 80C for investment is used entirely, then the tax would be zero for people with income of Rs. 4.5 lakhs.
- While the taxation liability of people with income up to Rs. 5 lakhs is being reduced to half, all the other categories of tax payers in the subsequent slabs will also get a uniform benefit of Rs. 12,500/- per person. Therefore, all other categories will also get a uniform benefit of Rs. 12,500. All other classes of taxpayers in subsequent brackets will get the benefit of Rs 12,500. Rs 12,500 would be the tax saving for those in 20%, 30% tax brackets.-Basically a Rs. 12,500 tax cut for all.
- Additional Surcharge of 10% on people with income Rs 50 lakh to Rs 1 crore. Surcharge on Rs 1 crore and more stays. Tax the rich! Are you Rich? More than 1 crore : 15% surcharge (already exists)
- A single one-page form for filing IT returns for taxable income up to 5 lakh rupees.
- For quick refund of tax -returns time-frame reduced to 12 months.
- Now you can revise your Income Tax return only within 12 months. Processing time to reduce too.
- .Duty exempted on various machines with POS and iris readers to encourage
- Proposed amendment in RBI Act to enable issuance of electoral bonds that government will issue.
- Govt to unveil scheme for leather and footwear sector
- No relief for NRI, Rich.
- No changes in limit under section 80C
- Masses should be happy that LTCG and STCG have not been touched!
- 5% TDS on Insurance agents removed but only for those whose income is not in the tax payable limit. Not for all agents.
13 Important Amendment in Income Tax, which FM did not cover in Budget Speech
1) Deemed sale value for sale of unquoted shares introduced. To be taxed at fair value. Sec 50CA
2) In absence of PAN, the rate of TCS will be twice of the extent rate or 5%, whichever is higher. Sec.206CC.
3) New Section 269ST introduced whereby Rs three lakh in cash cannot be received on a single day or in respect of a single transaction.
4) If Return not filed as per Sec. 139 (1), the concept of late fee introduced. Rs. 5000 for delay up to 31st Dec. and Rs. 10000 thereafter. A late fee to be paid before filing the Return. Sec 234F
5) CA issuing a wrong certificate would be penalised with Rs. 10000
6) Capital gain on shares will be exempt only if STT was paid while purchasing the shares.
7) HP loss can be set off against other head of income only to the extent of 200000 in the same year. Balance loss can be c/f to 8 A.Ys.
8) Ind and HUF to deduct TDS even if unaudited @ 5% if rent is paid 50000
9) TDS in 194J amended, now 2 percent TDS instead of 10
10) The scope of section 56 will be widened and will also cover any kind of gifts in cash or kind or for no consideration with few exemptions and exception
11) MAT book profit calculation aslo ammended
12) Disallowance of expenditure from income from other sources if TDS is not deducted
13) Self employed can also claim 20% contribution to NPS as deduction.
(please re-check above 13 points, not authenticated source!)
Proposed new slabs could be:
Here is the (old) existing tax slab for the current Financial Year 2016-17:(below 60 age)
Here is the (old) existing tax slab for the very Senior Citizen for the current Financial Year 2016-17:(Above 80 age):
7 Interesting news that I liked:
- Sher o shayari ka budget hai, kisaano ke liye kuch nahi kia,yuvaon ke liye kuch nahi kiya: Rahul Gandhi
- We were expecting fireworks, instead got a damp squib: Rahul Gandhi
- Any step to clean political funding will be supported by us: Rahul Gandhi
- General budget is pro-rich and pro-corporate, alleges senior Congress leader Mallikarjun Kharge
- Arun Jaitley has presented an ‘Uttam’ Budget, devoted to strengthening the hands of the poor: Narendra Modi
I liked the following Kavita when the minister talked about demonisation and changing colours of money:
I also liked the ending of the budget speech of the minister as:
Madam Speaker, I have outlined the Budget proposals under our overarching agenda: “Transform, Energise and Clean India”. Our emphasis will now be on implementing all these proposals for the benefit of the farmers, the poor and the underprivileged sections of our society. Madam Speaker, it is said: “When my aim is right, when my goal is in sight, the winds favour me and I fly”. There is no other day, which is more appropriate for this, than today.