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Tuesday, March 28, 2017

New Income Tax Rules from April 1, 2017

New Income Tax Rules from April 1, 2017

From FC Bureau

Indian Income tax officials will now be able to reopen tax cases up to 10 years back if search opera­tions reveal undisclosed income and assets of over Rs. 50 lakh.

As the Lok Sabha has cleared the finance bill, the tax proposals announced in the budget and subsequent amendments are set to kick in from April 1, 2017 requiring taxpayers to brace up for change.

From the next financial year (2017-18), the cash dealings have been capped at Rs. 2 lakh with the government keeping its focus on digital modes of payment to curb black money.

From 2017 July onward it will become mandatory to quote Aadhaar number for filing income-tax returns. Not only that, a person will have to link his /her PAN number, issued by the income tax department, with the 12-digit Aadhaar number.

“The government has hit cash transactions very hard. From next fiscal, it would not be possible even for a son to take a gift of more than Rs. 2 lakh in cash from his/her father as it will be illegal. With linking of Aadhaar with PAN, the government will keep a tab on an individual's income which will help it better target the subsidies,” said Mr. Naveen Wadhwa, a senior executive with Taxmann.

High Income tax evasion..!

It is generally believed that the tax evasion is very high in India. The latest data shows that among the about 3.7 crore individuals who filed tax returns in 2015-16, only 99 lakh showed their income below the exemption limit of Rs. 2.5 lakh.
The income tax data suggests that direct tax collection – which includes corporate tax – is not commensurate with the income and consumption pattern.

As against an estimated 4.2 crore persons engaged in organised sector employment, the number of individuals filing return for salary income are only 1.74 crore.

40 amendments..!

The central government this week proposed as many as 40 amendments in the finance bill, many of which are aimed at expanding the taxpayer base, reduce litigation, eliminate black money and bring about stricter enforcement of tax laws.

With the passage of the finance bill by the Lok Sabha it has become law as it is a money bill for which the nod of the lower house is sufficient.

Income Tax savings..

Now that the new law has come into force, small and medium taxpayers are set to get relief with tax incidence coming down. The tax rate on income between Rs. 2.5 lakh and Rs 5 lakh will come down to 5% from 10%. This will reduce the tax liability of all persons below the income level of Rs. 5 lakh per annum either to zero (with rebate) or 50% of their existing liability.

Further, the concession available to people earning up to Rs. 5 lakh has been reduced by half to Rs. 2,500 under section 87A of the Income Tax Act.

Tax experts estimate tax savings of up to Rs. 7,700 for those with a taxable income between Rs. 3 lakh and Rs. 5 lakh.

For those earning between Rs. 5 lakh and Rs. 50 lakh a year, tax savings will be up to Rs. 12,900.

Surcharge..!

In accordance with the change in the law, a 10% surcharge will be applicable for individuals having annual income of Rs. 50 lakh to Rs.  1 crore.

In a big relief to the taxpayers from paper work, a one-page form has been introduced for filing return from next year (2018). 

Those earning up to Rs. 5 lakh would benefit from the new initiative which will also help the government widen the tax base.

However, no deduction will be allowed for investment in Rajiv Gandhi Equity Saving Scheme (RGESS) from assessment year 2018-19. The scheme had been brought earlier for first-time individual investors in the securities market with gross total income below a certain limit.

The government has put emphasis on compliance and has decided to not hesitate from taking intrusive measures. With the changes in the tax law becoming effective from April, income tax officials will now be able to reopen tax cases up to 10 years back if search operations reveal undisclosed income and assets of over Rs. 50 lakh.

At present, tax authorities can reopen the cases going back to 6 years but the fresh amendment gives them additional power to go after tax-evaders.
From next fiscal (2017-18), those who do not file their returns will have to fall in line. The new law provides for up to Rs 10,000 in penalty for those not filing their returns within the stipulated time.

The fine is lower at Rs. 1,000 for those earning up to 5 lakh a year.
The rules have also been amended to qualify for long-term gains for property reducing the minimum period to two (2) years from the existing three (3) years.

New section -  Rent..!

A new section 194-IB has been inserted in the Act to provide that individuals or a HUF (other than those covered under 44AB of the Act), responsible for paying to a resident any income by way of rent exceeding Rs. 50,000 for a month or part of month during the previous year, shall deduct an amount equal to 5% of such income as income-tax (TDS) thereon.

National Pension System (NPS)

This is set to bring persons who get a large rental income come into the tax net. The new provision will come into effect from June 1, 2017.

From next year, partial withdrawals from National Pension System (NPS) will not attract tax. The NPS subscribers will now be able to withdraw 25% of their contribution to the corpus for emergencies before retirement.


New Income Tax Rules from April 1, 2017 Reviewed by S. Chitra on March 28, 2017 Rating: 5 New Income Tax Rules from April 1, 2017 From FC Bureau Indian Income tax officials will now be able to reopen tax cases up to 10 ye...

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