Union Budget Highlights - (2017- 2018) – 10 Critical Points

On 1st February 2017, Union Finance Minister Arun Jaitley presented the Union Budget 2017-18 in Lok Sabha. This is the 4th Budget of the NDA or NAMO Government.

Here, are the top 10 critical points of the Union Budget 2017-18, you must know:

Personal Income Tax

• The rate of taxation for Individual assesses between an income of 2.5 lakhs to 5 lakhs reduced to 5% from the present rate of 10%.
• Surcharge of 10% of tax payable on categories of individuals whose annual taxable income is between 50 lakhs to 1 crore.
•  Simple One-Page Income Tax Return (ITR) for the category of individuals having taxable income up to 5 lakhs other than business income and no scrutiny for the first timers.

Business Taxation

• Threshold limit for Audit of business entities who opt for presumptive income scheme increased from 1 crore to 2 crores.
• Similarly, the threshold for maintenance of books for individuals and HUF increased from turnover of 10 lakhs to 25 lakhs or income from 1.2 lakhs to 2.5 lakhs
• Commission payable to individual insurance agents exempt from the requirement of TDS subject to their filing a self-declaration that their income is below taxable limit  
• Under scheme for presumptive taxation for professionals with receipt up to 50 lakhs p.a. advance tax can be paid in one instalment instead of four.

Revising Tax Return

• 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 thereafter.

Cashless Transactions

• No Cash transactions above 3 lakh would be permitted subject to certain exceptions
• Presumptive Income under Section 44AD for small and medium tax payers whose turnover is up to 2 crores, the present, 8% of their turnover is reduced to 6% in respect of turnover which is by non-cash means

Political Funding

• Maximum amount of cash donation, a political party can receive, will be Rs. 2000/- from one person.  
• Political parties will be entitled to receive donations by cheque or digital mode from their donors.
• Amendment to the Reserve Bank of India Act to enable the issuance of electoral bonds in accordance with a scheme that the Government of India would frame in this regard.
• Every political party would have to file its return within the time prescribed in accordance with the provision of the Income-tax Act.
• Existing exemption to the political parties from payment of income-tax would be available only subject to the fulfilment of these conditions

Taxation for Companies/MSMEs

• MAT credit is allowed to be carried forward up to a period of 15 years instead of 10 years at present.  
• For MSME companies more viable, income tax for companies with annual turnover up to 50 crores is reduced to 25%

Startup India Tax Benefits for Startups

• For the purpose of carry forward of losses in respect of 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) exemption available to the start-ups for 3 years out of 5 years is changed to 3 years out of 7 years

Housing / Real Estate Sector

• Under the scheme for profit-linked income tax deduction for the promotion of affordable housing, carpet area instead of the built up area of 30 and 60 Sq.mtr. Will be counted.  
• For builders for whom constructed buildings are stock-in-trade, tax on notional rental income will only apply after one year of the end of the year in which completion certificate is received.
• Reduction in the holding period for computing long-term capital gains from transfer of immovable property from 3 years to 2 years.
• Base year for indexation is proposed to be shifted from 1.4.1981 to 1.4.2001 for all classes of assets including immovable property.

For Farmers

• The target for agricultural credit in 2017-18 has been fixed at a record level of `10 lakh crores.
• Farmers will also benefit from 60 days’ interest waiver announced on 31 Dec 2016
• To ensure the flow of credit to small farmers, Government to support NABARD for computerization and integration of all 63,000 functional Primary Agriculture Credit Societies with the Core Banking System of District Central Cooperative Banks.

Ease of Doing Business in India

• Foreign Portfolio Investor (FPI) Category I & II exempted from indirect transfer provision. Indirect transfer provision shall not apply in case of redemption of shares or interests outside India as a result of or arising out of redemption or sale of investment in India which is chargeable to tax in India
• Scope of domestic transfer pricing restricted to only if one of the entities involved in related party transaction enjoys specified profit-linked deduction.

Hope, you find these points well, In the case of any query, please let us know in the comments section or Contact us.