This year budget has some changes with respect to last year. This year budget was very crucial due to demonization. The middle-class Indians have a high expectation on the lowering income tax rate or more income tax deductions. Finance Minister Mr. Arun Jaitley has emphasized on broader economic perspectives such as fiscal deficit as well as disparity on various economic classes who give and don’t give income taxes even if they earn well.
The main benefit in the budget 2017-18 is the reduction of income tax for the taxable income from Rs 2.5 Lakh to Rs.5 Lakh. The income tax for the above category was 10% which is reduced to 5% for the assessment year 2018-19.
Here are the changes in income tax for FY 2017-18 according to general budget 2017
1. Changes in Income Tax Slab
As already said, the budget 2017 has reduced the income tax for taxable income ranges between Rs 2.5 lakh and Rs 5 Lakh. The income tax rate in this slab for FY 2016-17 is 10% whereas it will be 5% for FY 2017-18. So, the persons with taxable income of more than 5 lakhs will have a straight benefit of Rs 12,500 in a year.
2. Income Tax Rebate Reduced
Earlier, for the taxable income of below Rs 5 lakh gets the tax credit of Rs 5000. Now, not only the amount of tax credit has been reduced but also the eligibility amount is also reduced to Rs 3.5 lakh. And the tax credit amount has been reduced to Rs 2500.
If you don’t have any home loan or HRA to show, Rs 1.5 lakh invested in tax-saving schemes, you don’t have to pay tax up to the income of Rs 4.5 lakh.
We will look at the following three examples with different income.
|Rs 4,50,000||Rs 8,00,000|
Sec 80 C
3. Capital Gains Tax
Capital gain tax is applicable on any increment on capital such as Stocks, debt mutual funds, and property. This year budget has changed the definition of long term gain for the immovable properties such as residential flat, land. Earlier, if the sale of properties happens within 3 years of purchase of property it would be called as short term gain. If the sale happens after 3 years of purchase, it would be called as Long-term capital gain. Now, those 3 years has been reduced to 2 years. If you sell your flat after two years, you can get the benefit of indexation. You can also get the benefit by investing the capital gain to some financial instruments or new property.
This change is to add fuel to the promotion of housing sector. The government has taken many steps to boost the economy. Real estate sector is one of them by which demand can be created in the market.
This rule is applicable from April 1, 2017, and people can take the income tax benefit for AY 2018-19.
The benefit which is given to the low earners has been compensated by rich persons. Those who have taxable income of Rs 50 lakhs to Rs 1 crore will pay the surcharge. They have to pay a 10% surcharge on taxable income.
5. Simple Income Tax Return
Income Tax Department will simplify the tax return from into a one-page form. This will help to taxpayers to fill up the form easily. More and more taxpayers will now do their own without any hitch or without the help of a chartered accountant.
Also Read: Which Income Tax Return (ITR) Form to File in Assessment Year 2017-18?
6. Filing of Income Tax return
From AY 2018-19, Income Tax return is to be filed before the due date. Otherwise, a fee of maximum Rs 10,000 will be levied if you don’t file the income tax return on time. It is also specified that, if you file the income tax before December 31st, you have to pay Rs 5000 as fine. In other cases, the fine would be Rs 10,000. But in the case of total income not exceeding Rs 5 lakhs, the fine would be not more than Rs 1000. Finance minister also announced no scrutiny of income tax for the first year who is filling the income tax return with income under RS 5 lakhs.
By taking all the above measures finance minister tries to incentivize the honest taxpayers, create more demand and include more and more taxpayers in the tax net.
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