Arjuna (Fictional Character): Krishna, Tomorrow is the festival of Gudi Padwa i.e. start of New Year. And it's the last week of financial year 2017. New financial year will be starting from 1st April. According to budget, what are the changes made in income tax which will be applicable from new financial year and which will increase the prosperity of tax payers?
Krishna (Fictional Character): Arjuna, tomorrow is the first day of the Chaitra month to mark the beginning of New Year and also arrival of spring season. In Maharashtra state people build the Gudi in front of their houses by decorating it with cloth, flowers, pot and worship it and welcome the new year. If we relate Gudi to Income Tax then the pot is Year 2017, the stick is Income Tax Act and Cloth is provisions of income tax. From this, it is important to learn the amended provisions and it is required to make planning for the same.
Arjuna: Krishna, which changes are made in cash transactions from 1st April 2017?
Krishna: Arjuna, the following are the changes which will be levied on cash transactions from 1st April 2017-
1) Government has levied many restrictions on Cash transactions i.e. on cash payments or receipts in cash. From 1st April 2017, the limit of making cash expense per day per transaction is changed from Rs. 20,000 to Rs. 10,000. If this provision is not followed then 100% penalty can be levied. For example: If the businessman buys stationary of Rs 12,000 in cash then 100% penalty i.e. Rs. 12,000 will be levied on him.
2) Before 1st April 17 there was no restriction on the cash receipt but from 1st April 2017 the limit of cash receipt per day per person is Rs. 2 lakhs. If any person breaks the above provision then 100% penalty can be levied to the person. For example- If the businessman makes cash sales of Rs. 2,25,000 to other person and if he get cash receipt then the shopkeeper is liable to pay 100% penalty i.e. Rs 2,25000. Further if donation is given in cash above Rs. 2000 then deduction of the same will not be available.
3) To promote the Digital economy and cashless transaction, the government have changed the provision of section 44 AD at 6% presumptive income (earlier it was 8%) for the assessees whose annual turnover is less than Rs 2 Crore. This provision is applicable for the financial year 2016-17 also.
Arjuna: Krishna, What are the provisions of return applicable from 1 April 2017 according to Budget?
Krishna: Arjuna, now every person will have to file the Income Tax Returns on time otherwise late fees will have to be paid. If the income is below Rs. 5 lakh then Rs. 1000 late fees will be levied. And if the income is more than Rs 5 lakh and return was filed after due date till 31st December then Rs. 5000 will be charged as late fees and after that Rs. 10,000 will be charged. It is proposed that a Simple One Page return will have to be filed for the taxable income up to 5 lakhs. No scrutiny will be there for the persons who are filing their return first time and have a taxable income up to 5 lakhs. Further, it is mandatory to mention Adhar Number for filing income tax return.
Arjuna: Krishna, What are the changes made in budget relating to the provisions of House Property?
Krishna: Arjuna, 1) Every person paying Rs 50,000 or more in a month as rent to the owner then 5% TDS is required to be deducted.
2) Every year the deduction of Rs. 2 lakhs can be taken as loss from house property. The balance if any above Rs 2 Lakhs can be carried forward for 8 years.
Arjuna: Krishna, What changes made in the provisions of immovable property according to budget?
Krishna: Arjuna, 1) Immovable Property will be treated as long term capital asset if it is held for more than 2 years before 1st April 17 it was 3 years.
2) Base Year for the purpose of computation of Capital Gains is shifted to 2000-01 from 1980-81.
Arjuna: Krishna, what are the other important changes from 1 April 2017 according to the Budget?
Krishna: Arjuna, Earlier 10% tax was charged on taxable income from Rs 2.5 Lakh to 5 Lakhs now it is changed to 5% which means there is a saving of Rs. 12,500. For domestic companies whose Turnover in the Financial year 2015-16 is less than Rs 50 Lakhs, the tax rate is changed from 30% to 25%.
Arjuna: Krishna, What taxpayers should learn from above?
Krishna: Arjuna, There will be huge changes coming in the new financial year. Like restrictions on cash transactions after demonetization, GST, Benami property, for Builders and developers Real Estate Regulation Act, etc. will be levied in 2017. The taxpayers should build their Gudi properly in the finance world and should follow tax laws strictly.
Tags Income Tax