Kya Khoya Kya Paya Budget 2017

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2 Kya Khoya Kya Paya Budget 2017 Breaking from the past, Finance Minister Arun Jaitley presented a path breaking budget in which the railway budget has been merged. This is the first time in history of India that the union Budget got presented on 1 st February instead of 28 th February followed by the Economic Survey put in public domain on 31 st Jan The main agenda of budget was TRANSFORM,ENERGISE and CLEAN INDIA taking into consideration Infrastructure, Financial Sector, Digital Economy, Rural Population, Primary Sector(farmers),Poor and the Underprivileged. The Union Budget was expected to be quite different from the previous. Markets displayed enthusiasm by unusual 486 points jump in the Sensex. Stable Tax Regime attracts foreign and domestic investment says Uday Kotak. Here are the important pointers from this year s budget which may prove useful to the Corporates and Multinationals from business and taxation stand point : Advantages for Startups and SMEs - Profit linked deductions to be available in 3 years out of 7 yrs.tax rate at 25% for turnover below Rs.50 crores. This will encourage entrepreneurship and create jobs in the country. To encourage FDI and also large green field projects, MAT credit carry forward has been enhanced to 15 yrs from current 10 yrs. Abolishing the FIPB is an encouragement to Foreign Direct Investments. With the highly competitive rates of taxation in Asian countries and other benefits like carry forward of MAT for 15years, one can expect rush investment in India in various sectors. Needless to mention that, apart from the tax and regulatory measure, with the improved Ease of Doing Business almost every good company of the world would want to take advantage of the demographic dividend of India. Government targets to bring 1 crore households out of poverty by 2019 by giving Infrastructure Status to the affordable housing. Even the home loan rates can further get softened. Low Cost Affordable Housing Scheme, time limit for completion extended to 5 years.eligibility change from super built up area to carpet area of 30 and 60 sq.m(322 sq.ft for metro cities and 645 sq.ft for non metro cities) for tax benefits to the housing projects. This can boost the housing development and construction related businesses. A higher allocation to infrastructure spends would be a big positive for the Steel, Cement and Infrastructure Sector at Large. Tax on dividend above Rs. 10 Lac in a year for all the persons is prudent move to cure the unjust enrichment of persons having higher incomes getting away with relatively lesser rate of dividend distribution tax. MGNREGA to double farmer s income: This means improved purchasing in the hands of common man and thereby boost in the consumption. The FMCG, Automobile and Electronics can see a boost due to this measure. APMH & ASSOCIATES LLP 2

3 Digital India - Bhim app will unleash mobile phone revolution - two new schemes to promote the app.digital Platforms like UPI would account for digital transactions worth of Rs. 2,500 crores according to the government's target. Cash expenditure above Rs.10,000 /- is also discouraged.to overcome money laundering activities no transaction above 3 lakhs permitted in cash. The proposed widening of connectivity like with BhartNet initiative shall make available the internet in every hand. This means ample low cost funds available with the payment banks, NBFCs and banks which are playing vital role due to more money remaining in the organized channels. Also more businesses shall get organized and compliant to handle this development. GST roadmap finalized, no change in current excise &service tax rates. It s time for the corporates to start working on the GST impact analysis and implementation to pocket optimum competitive advantage from the new tax reform. Overall the budget is positive displaying the intent to provide boost to small and medium enterprise and startups. This is when the honest will be honoured genuinely. This also means encouragement to foreign investments in to the country with respect to green field projects with a plethora of Make in India incentives and reduced corporate tax for companies with small turnover. APMH & ASSOCIATES LLP 3

4 Table of Contents Kya Khoya Kya Paya Budget Impact of Amendment in Slabs at a Glance... 5 Individuals (Male and Females) & HUFs... 5 Senior Citizens - Resident (Above 60 years but less than 80 years)... 5 Very Senior Citizens - Resident (Above 80 years)... 5 Rates of Income Tax... 6 The new rates... 6 In case of Co-operative Societies... 7 In case of Firms... 7 In case of Local Authorities... 7 In case of Companies... 8 Rates of Deduction of Tax at Source... 9 Important TDS rates... 9 Rates of Taxes on Capital Gains Powerful blogs on Union Budget 2017 by Team APMH Special Provision in Respect to Startups Taxation on Dividend Income earned by Non Corporates Changes in Returns Filing And Revisions Special Provisions For Computation Of Capital Gains In Case Of Joint Development Agreement.. 14 Budget 2017 Shifted Indexation Calculation Base To Who Gains? Fee For Delayed Filing Of Return No Notional Income for House Property held as Stock in Trade in the 1 st year Relief for FPIs from Tax liability in Budget When Can We Expect GST To Get Implemented? APMH & ASSOCIATES LLP 4

5 Impact of Amendment in Slabs at a Glance Individuals (Male and Females) & HUFs Gross Tax liability (incl. SC, &Cess) after Rebate under section 87A of RS. 2,500 Gross Tax liability (incl. SC, &Cess) after Rebate under section 87A of RS. 5,000 Net Tax Benefit (Loss) Income FY FY , ,000 2,500 2,500 = 0 + 3% = 5,000 5,000 = 0 + 3% = ,000 (because 5,000 2,500 = ,000 5,000 = of Rebate impact) 3% = 2,575 3% = , ,000 12, % = 12,875 25,000 5,000 = 20, % = 20,600 7,725 1,000,000 1,15, ,750 12,875 >10,000,000 say 1,826,963 1,673,750 6,000,000 (153,213) >10,000,000 say 3,686,756 3,701,563 11,000,000 14,806 Senior Citizens - Resident (Above 60 years but less than 80 years) Income Gross Tax liability (incl. SC, &Cess) after Rebate under section 87A of RS. 2,500 Gross Tax liability (incl. SC, &Cess) after Rebate under section 87A of RS. 5,000 Net Tax Benefit (Loss) FY FY , ,000 (because 2,500 2,500 = 0 + 3% 5,000 5,000 = 0 + 3% of Rebate impact) = 0 = ,000 10, % = 10,300 20,000 5,000 = 15, % = 15,450 5,150 1,000,000 1,13, ,600 10,300 >10,000,000 say 1,824,130 1,668,600 6,000,000 (155,530) >10,000,000 say 3,683,795 3,695,640 11,000,000 11,845 Very Senior Citizens - Resident (Above 80 years) Income Gross Tax liability (incl. SC, &Cess Gross Tax liability (incl. SC, &Cess Net Tax Benefit FY FY , ,000, , ,000 0 >10,000,000 say 1,812,800 1,648,000 6,000,000 (164,800) >10,000,000 say 3,671,950 3,671, ,000,000 APMH & ASSOCIATES LLP 5

6 Impact of 10% in case where income exceeds RS. 50 Lac 15% in case where income exceeds Rs. One Crore is considered in these tables. Other benefits include section 80C / 80CCC / 80CCD - 30% RS. 45,000 (No change) Additional benefit of RS. 50,000 in form of contribution to Notified National Pension Fund is also allowed (in addition to RS. 150,000 as aforesaid) under section 80CCD. Benefit of interest paid on housing loan RS. 30% on RS. 60,000 to continue. This apart, mediclaim will confer further benefit on the Assessee. New House purchased using loan after but before at a Cost <50 lakhs and home loan <35 lakhs. Additional interest of 50,000 per year will be available under section 80EE of the Income-tax Act Rates of Income Tax A. For Individuals, Hindu Undivided Families, Association of Persons, Body of Individuals, whether incorporated or not, Artificial Juridical Persons New Surcharge of 10% for non-corporates (not being firms), Individuals, HUFs earning Total Income exceeding RS. 50 Lac but not exceeding RS. One Crore (Change made) Surcharge of 15% for non-corporates (not being firms), Individuals, HUFs earning Total Income exceeding RS. One Crore (No Change) Surcharge of 12% for firms earning Total Income exceeding RS. One Crore (No Change) No change in Education Cess, and Secondary and higher Education Cess. Surcharge on domestic companies having income of more than 10 12% - 7% for domestic companies having income between 1 crore to 10 crores (No Change) Surcharge on non-domestic companies having income of more than 10 5% - 2% for non-domestic companies having income between 1 crore to 10 crores (No Change) Rebate under section 87A has undergone a change as tabulated hereunder: Financial year Financial year Total Income Not exceeding RS. 350,000 Not exceeding RS. 500,000 Amount of Rebate RS. 2,500 RS. 5,000 The new rates are as under: (Total Income in Rs.) 0% 5% 20% 30% Who am I? Individuals (Man and 250, ,001 to 500,001 to >1,000,001 APMH & ASSOCIATES LLP 6

7 woman) below 60 years, HUF, and Non Residents 500,000 1,000,000 Resident Assessee of 60 years or above upto 79 years 300, ,001 to 500, ,001 to 1,000,000 >1,000,001 Resident Assessee of 80 years or above 500, ,001 to 1,000,000 >1,000,001 Implication of Surcharge Implication of Education Cess Implication of Secondary and Higher Education Cess Surcharge for Individuals earning Total Income exceeding RS. 50 Lac but not exceeding RS. One Crore at 10% of tax (subject to Marginal Relief) Surcharge for Individuals earning Total Income exceeding RS. One Crore at 15% of tax (subject to Marginal Relief) 2% across the board irrespective of level of income 1% across the board irrespective of level of income (Not to be calculated on Education Cess of 2%) B. In case of Co-operative Societies Where Total Income Tax Rate Surcharge Does not exceed RS. 10,000 10% 0% Exceeds RS. 10,000 but does not exceed RS. 20,000 20% 0% Exceeds RS. 20,000 30% 0% Implication of Surcharge Surcharge for earning Total Income exceeding RS. One 12% Implication of Education Cess 2% across the board irrespective of level of income Implication of Secondary and Higher Education Cess 1% across the board irrespective of level of income (Not to be calculated on Education Cess of 2%) C. In case of Firms Where Total Income Tax Rate Surcharge Whole of the Amount 30% Implication of Surcharge Implication of Education Cess Implication of Secondary and Higher Education Cess Surcharge for earning Total Income exceeding RS. One Crore at 12%of tax 2% across the board irrespective of level of income 1% across the board irrespective of level of income (Not to be calculated on Education Cess of 2%) D. In case of Local Authorities Where Total Income Tax Rate Surcharge Whole of the Amount 30% Implication of Surcharge Surcharge for earning Total Income exceeding RS. One Crore at 10%of tax Implication of Education Cess 2% across the board irrespective of level of income APMH & ASSOCIATES LLP 7

8 Implication of Secondary and Higher Education Cess 1% across the board irrespective of level of income (Not to be calculated on Education Cess of 2%) E. In case of Companies Where Total Income Tax Rate Surcharge In case of Domestic Companies - where its total turnover or the gross receipt in the previous year (financial year) does not exceed fifty crore rupees Otherwise: In case of Domestic Companies - Whole of the Amount In case of Foreign Companies Whole of the Amount (Including branches of such companies) Implication of Education Cess Implication of Secondary and Higher Education Cess 25% 7% if taxable income exceeds RS. One Crore but is less than 10 crores Marginal Relief provided for border line cases 12% if taxable income exceeds RS. 10 Crore Marginal Relief provided for border line cases 30% 7% if taxable income exceeds ` One Crore but is less than 10 crores Marginal Relief provided for border line cases 12% if taxable income exceeds ` 10 Crore Marginal Relief provided for border line cases 40% 2% if taxable income exceeds ` One Crore but less than ` 10 Crore Marginal Relief provided for border line cases 5% if taxable income exceeds ` 10 Crore Marginal Relief provided for border line cases 2% across the board irrespective of level of income 1% across the board irrespective of level of income (Not to be calculated on Education Cess of 2%) Notes: 1. Reduction in rate to 25% in case of domestic companies where its total turnover or the gross receipt does not exceed five crore rupees is linked with previous year There is an issue whether a company incorporated in financial year or thereafter will continue to be 30% or would get concessional rate of 25%. This being a beneficial provision extended to small companies, even such start up companies should be eligible for 25% rate; although divergent views prevail. 3. What constitutes total turnover or the gross receipt: is another issue. Whether it will include indirect taxes for this purpose? According to ICAI, it is the method of accounting that would matter. It appears that indirect taxes will be excluded to reckon limit under this section. F. The maximum marginal rate for Assessees other than foreign Companies will be % (30% plus 15% + Education Cess 2% + 1% Secondary and Higher Education Cess). APMH & ASSOCIATES LLP 8

9 G. Rates of Deduction of Tax at Source Provisions as to deduction of tax at source (TDS) applicable for the accounting year Notes: 1. The deduction of tax depends upon the type of recipients 2. Surcharge and Education Cess not to be effected on the basic rate except in case of Salaries where Surcharge, Education Cess, and Secondary and Higher Education Cess will have to be effected Main Section Nature of Payment Rates of Taxes 192 Salaries In case Individuals (man and woman) below 60 years and Non-Residents Up to RS. 250,000 0% >250,001 but <500,000 (subject to 87A) 5% >500,001 but up to,1000,000 20% >1,000,000 30% In case Resident Assessee of 60 years or above Up to RS. 300,000 0% >300,001 but <500,000 (subject to 87A) 5% >500,001 but up to 1,000,000 20% >1,000,000 30% In case Resident Assessee of 80 years or above Up to RS. 500,000 0% >500,001 but up to 1,000,000 20% >1000,000 30% Important TDS Rates Section Nature If Payee is Resident 194A Interest 10% Basic Exemption 5,000 Contract with persons 194C other than Individual and HUF 2% Individual and HUF 1% Basic Exemption One Contract: 30,000 Overall 100,000 APMH & ASSOCIATES LLP 9

10 194H Commission 5% Basic Exemption 15, I Rent 10% Rent on Machinery 2% Basic Exemption 180, IB Rent 5% By a person being individual and HUF not in business Basic Exemption 50,000 per month 194J Professional 10% Fees (Including Technical Services Fees and Royalties) Basic Exemption) 30,000 In case payee does not furnish Permanent Account Number, rate of tax deduction in all the above cases will 20%. In case of non residents, there is no need to increase to 20% withhold tax at source even if such person does not hold PAN as section 206AA now specifically provides that. Just make TDS at prescribed rate or rate as per DTAA whichever is beneficial subject to necessary compliance. TDS on Transporters is not required to be made subject to availability of PAN of the Transporter provided the Transporter does not own more than 10 Trucks (declaration to this effect to be obtained with effect from June 1, 2015). 15% p.a. will be charged if tax is not deducted in time. 18% p.a. will be charged if tax deducted is not paid in time. Summarized Chart on TDS for determining applicability of SC and Cess for Residents and Non Residents Class of Assessee Tax SC Cess Resident: - Salaries - Others X X Non Resident (other than companies) - Salaries - Others Non Resident (Companies) - Companies APMH & ASSOCIATES LLP 10

11 Dividends Distribution Tax Dividend declared, distributed, or paid in financial year -> Rate of Dividend Distribution Tax under section 115-O Net Increase effective April 1, % + 12% SC + 3% Cess = % % + 12% SC + 3% Cess = % 0% Rates of Taxes on Capital Gains Where Total Income Whole of the Amount (subject to basic exemption limits available) Implication of Surcharge Implication of Education Cess Implication of Secondary and Higher Education Cess STT paid Long Term Capital Gains Short Short Term Term (Non STT (STT paid) paid) 15% Taxed at Normal rates of Tax as applicable to the Assessee Long Term Capital Gains (STT not paid) 10% without indexation and 20% or indexation Surcharge 7%/ /12% as applicable as stated above only if taxable income exceeds RS. One Crore/ Ten Crores in case of Companies and 15% in case of individuals if income exceeds Rs one crore with Marginal Relief provided for border line cases in both events Surcharge reintroduced for earning Total Income exceeding RS. One Crore 2% across the board irrespective of level of income 1% across the board irrespective of level of income (Not to be calculated on Education Cess of 2%) Exempt from Tax provided corresponding acquisition is subjected to STT if the same is acquired on or after October 1, 2004, or otherwise as may be Notified. Powerful blogs on Union Budget 2017 by Team APMH Special Provision in Respect to Startups - By CA Charvik Momaya Clause 36 : Relates to amendments in case of Section 80-IAC of the Income Tax Act which comprises of special provisions provided to specified businesses. Conditions to be fullfilled in order to qualify for the said specified business: "Eligible business" means a business which involves innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property. APMH & ASSOCIATES LLP 11

12 "Eligible start-up" means a company or a limited liability partnership engaged in eligible business which is incorporated on or after the 1st day of April, 2016 but before the 1st day of April, The total turnover of its business should not exceed Rs.25 Crores in any of the previous year beginning on or after and ending on Deduction Allowed : When the gross total income of the business includes the profits and gains that arises from the above mentioned eligible business, then 100% deduction is allowed on the said earned income. Options granted for claiming deduction : Can be claimed consecutively for 3 Assessment Years beginning from the date of incorporation of such Eligible Business. Can be claimed consecutively for any 3 Assessment Years amongst the 5 Years. Conditions to be compiled for the said deduction : The business should not be formed by any split up,reconstruction,re-establishment or revival of a business already in existence. The business should not be formed by the transfer to the new business of machinery or plant previously used for any purpose. Following plant and machinery will which was used outside India by any person other than the assessee shall not be regarded as machinery or plant previously used for any purpose, if all the following conditions are fulfilled : OR Such machinery or plant was not, at any time previous to the date of the installation by the assessee, used in India. Such machinery or plant is imported into India. No deduction on account of depreciation in respect of such machinery or plant has been allowed or is allowable under the provisions of this Act in computing the total income of any person for any period prior to the date of the installation of the machinery or plant by the assessee. Amended Provision : The Amended provision has extended the years for deduction from the said 5 years to 7 years. According to the new amendment the deduction shall be allowed for any 3 consecutive Assessment years out of 7 years, beginning from the year in which such eligible start-up is incorporated. APMH & ASSOCIATES LLP 12

13 The amendment will take effect from and will apply in relation to the A.Y and subsequent years. Comparison : Sr.No Proposed Areas Of Amendment Existing Provision Proposed Provision 1 Years allowed for deduction. Any 3 Consecutive A.Y. amongst 5 years. Any 3 Consecutive A.Y. amongst 7 years. Taxation On Dividend Income Earned By Non Corporates - By CA Charvik Momaya Normally, income from dividend received from Indian companies was not taxable in the hands of the recipient. The companies used to pay Dividend Distribution tax from their own funds on behalf of its shareholders. In this scenario, persons used to earn higher amount of dividends without being taxed at Minimum marginal rate. From FY , a new section was introduced to tax resident individuals, HUF and firms receiving dividend above Rs 10 lakhs in a 10% without giving any deduction on expenses incurred for earning the dividend. Now, the Finance Minister, Mr Arun Jaitley, in his budget speech, has widened the scope of this section and ALL PERSONS are proposed to be included over and above resident individual, HUF and firms : Except: 1) Domestic Company, 2) Funds or institution for charitable purpose 3) Trust or institute for public religious & charitable purpose 4) Other educational institution not for purpose of profit 5) Any hospital or other medical institutionnot for purpose of profit. APMH & ASSOCIATES LLP 13

14 Dividend income > Rs. 10,00,000 Resident Non-Resident Domestic company, Educational Institute, Trust, Fund Etc. Other than (Domestic co, Educational Institute, Trust, Fund Etc.) NO tax NO tax Tax Amount = 10% total amount of Divident Income Changes in Returns Filing And Revisions By Deepak Pasad Due Date for Revise Return Existing Provision : Sub-section (5) of the said section 139 provides that a person can furnish a revised return, in case he discovers any omission or wrong statement in his return of income already furnished, within one year from the end of the relevant assessment year or before completion of assessment, whichever is earlier. Proposed Provision : To amend the said sub-section (5) so as to provide that the time for furnishing of revised return shall be available upto the end of the relevant assessment year or before the completion of assessment, whichever is earlier. Note: The amendments will take effect from 1st April, 2018 and will, accordingly apply in relation to assessment year and subsequent years. Special Provisions For Computation Of Capital Gains In Case Of Joint Development Agreement - By CA Amlesh Gupta Joint Development Agreement (JDA) for Immovable Property, which is now a days most prevalent type of land development in the real estate sector. Now this will get a boost as some key tax reforms have been announced by Finance Minister ArunJaitley in the Union Budget Earlier, in case of Joint Development Agreement for Immovable Property between owner of immovable property and the developer, Capital Gain Tax triggers in the year in which possession of immovable property is handed over to the developer for development of a project. The land holder had to evaluate the price of the land held while entering an agreement with the builder and pay the APMH & ASSOCIATES LLP 14

15 tax on the notional gains. Now this payment will be deferred to that year in which certificate of completion issued by the competent authority. This will encourage land owners to enter into development agreements with realtors and eventually lead to an increase in supply of properties. FM has proposed payment of Capital Gains Tax for such type of arrangement will be in a year after the project is completed i.e. when the Certificate of Completion issued by the competent authority. It has been now proposed with respect to minimize the genuine hardship which the owner of land may face in paying capital gains tax in the year of transfer, it is proposed to insert a new sub-section (5A) in section 45 so as to provide that in case of an assessee being individual or Hindu undivided family, who enters into a specified agreement for development of a project, the capital gains shall be chargeable to income-tax as income of the previous year in which the certificate of completion for the whole or part of the project is issued by the competent authority. Further it is also a win-win situation as it has been proposed to reduce the holding period for longterm capital gains on land and buildings to two years from three years, apart from deferring the capital gains tax in the year in which completion certificate received. People will be more inclined to do JDA transaction. There will more bonafide development. More land owners would be forthcoming to offer their land on JDAs to developers, Venkatesh Gopalkrishnan, president (business development) and chief investment officer of Mumbai-based Shapoorji Pallonji Real Estate. Budget 2017 Shifted Indexation Calculation Base To Who Gains? - By CA Ravi Jain As per the budget 2017, the move to shift the base year from 1981 to 2001 for computation of indexed cost of acquisition of an asset could have an impact for investors. How indexation helps? Indexation refers to the adjustment in purchase price of an investment during the period for which it was held. This inflated cost is considered as the purchase price while computing the gains arising from the sale of the asset from the taxation perspective. This benefit is available after holding period of 2 years in case of property sale, and after 3 years in case of sale of unlisted shares, gold and debt funds. The cost of inflation index notified by the income tax department every year is used to compute this indexed cost of any asset. Tax computation on Long term capital gains Eg : you bought a property in June 2005 at a price of Rs.40lakhs and sold it to Rs.1 crore in December last year. While the actual capital gain is rs.60 lakhs, without indexation, benefit, the liability would be Rs 12 lakhs (20%of Rs 60lakh), but due to indexation,is as follows: Particulars Amount Full value of consideration ( ) 1, 00, 00,000 Less: Indexed cost of acquisition( ) (90,54,000) (40lakhs*1125/497) APMH & ASSOCIATES LLP 15

16 LTCG 9,46,000 Tax liability (20%on 9,46,000) 1,89,000 CII for the year of purchase ( ) is 497; ( ) is 1125 Considering the above example due to indexation, the tax liability has reduced to Rs.1,89,000 from the actual liability of Rs.12, 00,000. Till now capital gain was calculated with 1981 as the base year, which means in case the property was purchased before 1/4/1981, then it would be calculated on the (FMV on 1981 or actual purchase price) whichever higher, taking the base index is as 100 for year Now, the scenario has changed as per budget 2017, the base year is changed to The purchase price will be calculated on the basis of FMV of Accordingly, capital gains on assets acquired before 1/4/2001, will be also calculated using FMV as on Indexation would be done on the basis of new cost inflation index with the base year of This will accordingly change the computation of capital gains, but with different results. Property Owners Gain? For one, between 1981 and 2001, the index has jumped four times from 100 to 406 whereas property prices have surged 10times in the same period. The shift in base year will help align the index with the actual rise in property rates, and help investors get the full benefit of indexation. Illustration You have purchased property in August 1991 for Rs. 10 lakhs and sold it in FY 2016 for Rs, 70 lakhs, Under the Old base year of 1981 CII for CII for Particulars Amount Full value of consideration ( ) 70,00,000 Less: Indexed cost of acquisition( ) (56,53,266) (10lakhs*1125/199) LTCG 13,46,734 Tax liability (20%on 13,46,734) 2,69,347 Under the new base year 2001 The new CII index has been announced (assumed): actual cost of the property in is Rs.15 lakhs; FMV on is Rs.25 lakhs CII for CII for CII for Since (25lakhs> 15lahs) on ( ) ie FMV> actual cost, cost of acquisition will be Rs. 25lakhs. (Indexed cost of acquisition will be calculated on base year , FMV or actual cost whichever is higher) APMH & ASSOCIATES LLP 16

17 Particulars Amount Full value of consideration ( ) 70,00,000 Less: Indexed cost of acquisition( ) (66,00,000) (25lakhs*264/100) LTCG 4,00,000 Tax liability (20%on 4,00,000) 80,000 Under the old regime, you are paying Rs lakhs as tax. You are benefiting from the change in tax rule as you will pay Rs.80,000/- only under the base year changed to 2001, since FMV> Actual cost in I believe that the property prices have arisen sharper than the CII. Hence likely to benefit from this change in tax rule. Fee For Delayed Filing Of Return -By Deepak Pasad In view of the non-intrusive information-driven approach for improving tax compliance and effective utilization of information in tax administration, it is important that the returns are filed within the due dates specified in section 139(1). Further, the reduced time limits proposed for making of assessment are also based on pre-requisite that returns are filed on time.in order to ensure that return is filed within due date, it is proposed to insert a new section 234F in the Act to provide that a fee for delay in furnishing of return shall be levied for assessment year and onwards in a case where the return is not filed within the due dates specified for filing of return under sub-section (1) of section 139. The proposed fee structure is as follows: (i) (ii) (iii) a fee of five thousand rupees shall be payable, if the return is furnished after the due date but on or before the 31st day of December of the assessment year; a fee of ten thousand rupees shall be payable in any other case. However, in a case where the total income does not exceed five lakh rupees, it is proposed that the fee amount shall not exceed one thousand rupees. (Relief to Small Tax Payers) In view of above, it is proposed to make consequential amendment in section 140A to include that in case of delay in furnishing of return of income, alongwith the tax and interest payable, fee for delay in furnishing of return of income shall also be payable. It is also proposed to make consequential amendment in sub-section (1) of section 143, to provide that in computation of amount payable or refund due, as the case may be, on account of processing of return under the said sub-section, the fee payable under section 234F shall also be taken into account. Consequentially, it is also proposed that the provisions of section 271F (Existing Provision for penalty for belated return) in respect of penalty for failure to furnish return of income shall not apply in respect of assessment year and onwards. These amendments will take effect from 1st April, 2018 and will, accordingly apply in relation to assessment year and subsequent years. APMH & ASSOCIATES LLP 17

18 No Notional Income for House Property held as Stock in Trade in the 1 st year -By CA Amlesh Gupta This is great amendment in Budget 2017 which is very much relevant to the entities engaged in the business of Real Estate. It brings a great relief from notional tax on unsold flats (stock-in-trade) of developers. Clause 12 of the Finance Bill 2017 proposes to amend Section 23 of the Income Tax Act with a view to provide breathing time to the Real Estate Developers for liquidating their inventory. Earlier whenever a property was vacant and not let out, annual value of the property was considered to be the Income from that Property and chargeable to tax under the head Income form House Property. This was creating a lot of difficulty for the Real Estate Developers. When there was genuinely no demand and sale of properties, the Developers still had to pay Tax. This created hardships to Real Estate Developers. So the Finance Bill 2017 has proposed to insert new sub section 5 to section 23 which provides that where the house property consisting of any building and land appurtenant thereto is held as stockin-trade and the property or any part of the property is not let during the whole or any part of the previous year, the annual value of such property or part of the property, for the period upto one year from the end of the financial year in which the certificate of completion of construction of the property is obtained from the competent authority, shall be taken to be NIL. With the insertion of the above sub-section, the Real Estate Developers need not charge the Notional Income to Capital Gains Tax if their Property remains as Stock-in-Trade for a period of one year from the end of the financial year in which the certificate of Completion of construction of the Property is obtained from the competent authority. It is expected that this will give relief to some extent to Real Estate Developers for at least one year. This amendment provides some justice to real estate industries by not charging tax on income which is never in reality. This is a welcome move. This amendment will take effect from 1st April, 2018 and will, accordingly apply in relation to assessment year and subsequent years. Relief for FPIs from Tax liability in Budget By CA Hemant Mehta Foreign Investors who are operating in the form of Foreign Portfolio Investors (FPI) were confusedover the applicability of indirect transfer tax provisions on foreign portfolio investors started on 21 December, when the Central Board of Direct Taxes (CBDT) said that FPIs were subject to indirect transfer tax provisions, which impose taxes on offshore transactions if the value of Indian assets represents 50% or more of the value of all assets owned by the FPI. Foreign investors had then termed the move as a case of double taxation as they were already paying securities transaction tax (STT) and were worried about the retrospective impact of the APMH & ASSOCIATES LLP 18

19 circular. Responding to the criticism, the tax department had put the circular on hold on 18 January. Exempting FPIs category I and II from provisions of indirect tax was on expected lines. The government s intent was to prevent tax evasion when securities are sold offshore; to that extent, the category III FPIs have been kept out of the ambit of exemption and may be liable to pay indirect tax on securities sold off-shore. With the above news sensex soars to 3 months high level by 1.8%. When Can We Expect GST To Get Implemented? - By CA Pranav Kapadia GST is being considered as the greatest tax change in the historical backdrop of free India and is being anticipated as One Nation, One Tax There has been substantial progress towards ushering in GST, by far, the biggest tax reform since independence. The preparatory work for this path breaking reform has been a top priority for the government. Finance Minister Arun Jaitley said Demonetization plus GST means bigger economy and higher and better GDP by means of this statement, he is concerned about the clean tax structure which will prevail in the Indian economy. He said since it is transactional tax, it can be introduced any time; it is benefit to the industry as the revised implementation date of July 1, 2017 for GST. Industry will get more time to prepare them with much clarity in the biggest reform in indirect taxation in India. It is delighted moment for the industry that there has been consensus of the GST Council and a definitive announcement of the rollout date. Benefits of GST: Unified tax system removing a bundle of indirect taxes. Less tax compliance. Removes cascading effect of taxes. Manufacturing costs will be reduced, hence prices of consumer goods likely to come down. Due to reduced costs some products like cars, FMCG etc will become cheaper. A unified tax regime will lead to less corruption which will indirectly affect the common man. Hence, this is possible only if the benefit is actually passed on to the consumers. Negative Impact of GST : Services will become expensive eg.telecom, banking, airline etc. Being a new tax, it will take some time for the people to understand its implications. If actual benefit is not passed to consumer and seller increases his profit margin, the prices of goods can also see a rising trend. In addition to it, the main disadvantages are that the states would lose some autonomy and compensation verification. The manufacturing and service providing states like Gujarat, APMH & ASSOCIATES LLP 19

20 Maharashtra, Tamil Nadu and Karnataka could see a lesser comparative advantage as most of their goods and services are consumed outside the state. How will GST get more revenue for the government? 1. Single registration, Single Law / Rule, Only One type of periodical returns & One type of Audit etc, in place of multiple will motivate even small traders to register for GST. 2. Maximum coverage under GST umbrella as for registration the limit is 20 Lakhs in place of 150 Lakhs for Small scale industries. 3. GST is Destination based / End use based tax, so customers will prefer to purchase from GST registered organizations to avail facility of GST credit. Part of credit is not loaded on goods cost. 4. Maximum Dealers / Traders will try to avail GST Credit for sale of goods at minimum prices to end users so they will insist for GST Invoices from GST registered organizations. 5. In the GST Return GSTR1 all the transaction will have to be shown like Goods & Services not invoiced. The duty liability has to be completed in next month for such transactions. 6. Credit note or debit note are also have to be shown in GSTR1, previously these transaction were not shown in monthly returns. Under debit notes duty liability has to be completed in current or next month. 7. GST Credits of inward supplies have to be credited on the basis of auto populated data in GSTR2 A, so there will be control on wrong credit. 8. All the Goods & services received even form unregistered organizations are to be disclosed. At present they are beyond control of Central Excise or VAT. Thus they will be traced to register under GST. 9. Goods & services receipts & sales under e-commerce have to be shown in inward & outward returns. Nowadays there is tremendous increase in e-commerce business. Presently they are not under control everywhere. There will be control by GST on e-commerce transactions. Conclusion: With the processes involved in the implementation of GST from the present position, earliest date declared is 1st July 2017.More important from the businessmen and the consumers point of view, this change is going to have substantial impact on the business as well as to consumers depending upon the structure of the business and location of of business and consumer. Therefore it becomes essential to restructure the business and location depending upon the assessment of implication of GST on each type of transactions. For more Blogs on Union Budget 2017 click APMH Knowledge Centre APMH & ASSOCIATES LLP 20