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Budget 2017: 11 major changes made to your income tax calculation

Read on to find out!

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Finance minister Arun Jaitley was focused on making India digital and said that we are on cusp of a huge digital revolution, He had set a target as weeks i.e. 2,500 crore digital transactions for 2017-18 via varies routes like UPI, USSD, Aadhar Pay, IMPS &debit cards, let us understand the impact of budget on you as an individual:-

1) Change in Tax Slabs (based on the assumption that 80C limit of Rs 1.5 lakh has exhausted.)

⇒ A taxpayer with taxable income of Rs 5 lakh will pay Rs 2,575 as tax against the earlier Rs 5,150

⇒ A taxpayer with taxable income of Rs 15 lakh will pay Rs 2,24,025 in tax against the earlier Rs 2,36,900

⇒ The annual income tax outlay for those earning up to Rs 60 lakh has gone up. Now, people falling under this category will pay Rs 17,75,977 in tax against the Rs 16,27,400 earlier.

⇒ A taxpayer with taxable income of Rs 1.2 crore will pay Rs 39,88,803 in tax against the Rs 40,03,610 earlier. 

Take a look at the table carefully to understand this break up. 

P.S. - The table is based on the assumption that 80C limit of Rs 1.5 lakh has exhausted. 


Image source: Prepared by the author
 


Image Source: Prepared by the author

2) Surcharge

Post the changes made in Budget 2017, individuals earning between Rs 50 lakh and Rs 1 crore will have to pay a surcharge of 10% on the total income tax payable by them. So far, only those with income above Rs 1 crore were required to pay a surcharge of 15%, which has been left unchanged. 

3) Simplified form of income tax returns

The government has introduced a single page income tax returns form for taxpayers with taxable income of up to Rs 5 lakh. This doesn't include business income.

4) No Scrutiny

Assessees filing returns for the first time will not be subject to scrutiny even if they engage in high level transactions. It will only happen if there's any specific information available with the Income Tax Department. 

5) Revised Income Tax Returns

The time period for revising an income tax return has been slashed to 12 months from the completion of the financial year from the existing two-year window. 

6) Scrutiny time limit

The time to complete the scrutiny assessments has been reduced to 18 months from the existing 21 months for the Assessment Year 2018-19, and to 12 months for the Assessment Year 2019-20 and thereafter.

7) Cash transactions 

Taxpayers will not be allowed to make any transactions above Rs 3 lakh in cash. The decision was taken based on the recommendations of the Special Investigation Team (SIT) on black money set up by the Supreme Court.

8) Capital Gains & Indexation

Long-term Capital Gain period on immovable property has been reduced to two years from three years, and the base year for the indexation has been shifted from 1.4.1981 to 1.4.2001. 

9) Extended tax holiday for start-ups 

The period of profit-linked deductions available to the start-ups has been increased to seven years from the current five years but the tax breaks are still available only for the profits made by start-ups in the first three years and this benefit is only available to the startups which are recognised by the government's Department of Industrial Policy & Promotion (DIPP).

10) National Pension Scheme
 

It is proposed that the partial withdrawal from NPS should not exceed 25% of the contribution made by the employee under Pension Fund Regulatory and Development Authority Act 2013. This amendment will come to effect from April 1, 2018.

11) Over Rs 50,000 paid in rent
 

Any taxpayer paying monthly rent of Rs 50,000 or more will now have to deduct 5% TDS to make sure that the recipients of large rental incomes declare full rental income in their tax returns. This will be implemented from June 1, 2017. 

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