Key highlights of the
Finance Budget are presented as under:
ü SLAB RATE: Reduction in Income tax rate from 10% to 5 % for
individuals having income between Rs. 2.5 Lakhs - Rs. 5 Lakhs. This is clear cut
reduction in 50% rate for the above slab, i.e. No tax for income up to Rs. 3
lakhs.
ü ADDITIONAL SURCHARGE: In order to compensate the government loss in revenue
due to reduction in tax rate, there will be an additional surcharge of 10% on
individual income above Rs. 50 Lakhs to Rs. 1 Crore. 15% surcharge on income
above Rs.1 Crore will remain continued.
ü FILING OF ITR: One page form has been designed as Income Tax Return for
individuals filing return for the first time having taxable income upto Rs. 5
Lakhs other than business income. No scrutiny has been promised in the Budget
for persons filing return for the first time upon fulfilling the prescribed
conditions.
ü TIME LIMIT FOR REVISON OF ITR: For revision of return, time period
has been reduced to twelve months from completion of financial year at par with
the time period of filing of return.
ü TIME LIMIT FOR ASSESMENTS: For scrutiny assessments, time
period has been compressed from 21 months to 18 months for Assessment Year 2018-19
and further to 12 months for Assessment Year 2019-20 and onwards.
ü AUDIT UNDER PRESUMTIVE METHOD: For Audit of business entities who
opt for presumptive method of income tax, threshold limit has been increased
from Rs. 1 Crore to Rs. 2 Crores.
ü MAINTENANCE OF BOOKS OF ACCOUNT: Regarding maintenance of books of
accounts for individuals and HUF’s, threshold limit has been increased from
present turnover of Rs. 10 Lakhs to Rs. 25 Lakhs or income from present Rs. 1.2
Lakhs to Rs. 2.5 Lakhs, which proves to be slight relief for individuals and
HUF’s.
ü ADVANCE TAX: For professionals going for presumptive taxation with
receipts upto Rs. 50 Lakhs, there is now an option to pay advance tax
instalment in one go instead of earlier paying 4 instalments.
ü TDS ON INSURANCE AGENTS: TDS requirement has been relaxed for commission
payable to individual insurance agents subject to the condition of submitting a
self declaration form that their income falls below threshold limit.
ü DEEMED INCOME UNDER PRESUMTIVE SCHEME: For small and medium tax payers
which are covered under presumptive taxation scheme, there is a big relaxation
in computing their deemed income @6% from present 8% of turnover if turnover is
below Rs. 2 Crores which is by no cash means.
ü CASH EXPENDITURE: Proposed to limit the cash expenditure allowable as
deduction, both for revenue as well as capital expenditure to Rs. 10,000. Similarly,
the limit of cash donation which can be received by a charitable trust is being
reduced from 10,000/- to 2000/-.
ü MAT PROVISIONS: MAT will continue and credit will be allowed to be carried
forward for a period of 15 years instead of only 10 years at present.
ü TAX RATE REDUCTION FOR SME’S & MME’S: There is a big and rewarding relief
to the small and medium sized enterprises which account for 96% of our
industry. Income tax rate has been reduced from 30% to 25% with turnover upto
Rs. 50 crores, which proves boost to SME’s & MSME’s sector.
ü REAL ESTATE: For builders carrying constructed buildings as stock-in-trade,
tax which they are currently paying on notional income will apply after one
year of the end of the year in which completion certificate has been received.
This is a sign of giving them rest for 1 year from paying tax.
ü LONG TERM CAPITAL GAIN PERIOD: With regard to Capital gain tax,
holding period has been reduced from 3 years to 2 years for transfer of
immovable property in the budget. It has also been proposed to shift the base
year of indexation from 1 April 1981 to 1 April 2001 for all classes of assets
including immovable property.
ü CARRY FOWARD OF LOSSES: In respect of carry forward of losses for start ups,
the condition of continuous holding of voting rights of 51% has been relaxed in
the budget subject to the condition that the holding of the original promoter
continue. Not only that, the profit linked exemption available for 3 out of 5
years has been changed to 3 out of 7 years.
ü TRANSPARENCY IN ELECTORAL FUNDING: The cash donation to political
parties from one person limited to Rs.2,000/; Electoral Bond to be introduced
for facilitating donation to political parties from explained sources and Political
parties to file their return in time limit prescribed in the Income Tax Act.
ü Miscellaneous: TCS exemption for state transport
corporation in respect of purchase of vehicles; Penalty on accountant,
registered valuer and merchant banker for furnishing incorrect information and Income
of Chief Minister’s relief fund exempt from tax.
