SyNoPSIS of the FINaNce BILL, 2017 By PaRaS KocHaR, advocate The following changes in the finance bill has been proposed by the Hon ble Finance Minister to the Income Tax Act, 1961 from 01-04-2017 TAX - (01) The exemption limit of individual and HUF has not been changed and shall be continue to be Rs.2,50,000/-.However, in case of senior citizens, it has been raised from Rs.2,50,000/- to Rs.3,00,000/-. (02) The rate of tax for Income between Rs.2.5 Lakh to Rs.5 Lakh has been reduced to 5% from 10%. (03) The rebate u/s 87A in respect of Income Tax subject to maximum amount of Rs.2,000/- is available if the total income does not exceed Rs.5,00,000/-. However, the total income has been proposed to be restricted to Rs.3,50,000/-. (04) The domestic companies having turn over not exceeding Rs.50 Crore will pay tax @ 25% instead of 30%. (05) Surcharge @ 10% will be imposed on income between Rs.50 Lakh to Rs.1 Crore for all types of assessee. (06) MAT credit to be carried forward to 15 Years against the present norms of 10 years. DONATION - (07) The voluntary contribution made by one Charitable Trust etc. to another Trust etc registered u/s12aa of Income Tax Act, 1961, towards corpus, shall not be treated as application of income. A controversy has been resolved. (08) No deduction will be allowed u/s 80G, if the donation is made in cash exceeding Rs.2,000/-. The previous limit was Rs.10,000/-. 1
CAPITAL GAINS - (09) In case of transfer of listed shares by any person, the exemption from Long Term Capital Gain u/s 10(38) of the Income Tax Act, 1961, shall be available if STT has been paid at the time of acquisition of shares where such shares have been acquired after 01-10-2004. (10) In case of Joint Development Agreement (JDA), the capital gain shall be chargeable to Income Tax in the year in which the completion certificate for the whole or part of the project is issued and the stamp duty value on the date of issue of completion certificate shall be treated as consideration amount. The agreement should be registered. However, in case the assessee has transferred his share in the project on or before the completion date, the capital gain shall deemed to be income of the previous year in which such transfer takes place. This proposal applies only to individual or HUF. (11) In case of sale of shares of a company other than quoted shares by any assessee, the fair market value of such shares shall be deemed to be consideration value for the purpose of determining capital gain as per section 48. (12) The FMV as on 01-04-2001 shall be treated as cost of acquisition in case the capital assets has been acquired prior to 01-04-2001 for determination of indexed cost of acquisition. Previously, it was 01-04-1981. (13) Holding period of immovable property has been reduced from 36 months to 24 months. BUSINESS AND PROFESSION - (14) No payment exceeding Rs.10,000/- towards any expenditure shall be made u/s40a(3). Previously, it was Rs.20,000/-. (15) If an assessee incurs any expenditure for acquisition of any asset, by paying cash exceeding Rs.10,000/-, then such expenditure shall be ignored for the purpose of determination of actual cost of such asset (Section 43). SEARCH AND SEIZURE AND SURVEY - (16) The "reason to believe" as recorded by the Income Tax Authority as mentioned in section 132(1) for the purpose of conducting search and seizure operation shall not be disclosed to any person or any authority or Appellate Tribunal. 2
(17) During course of search and seizure made the authorised officer may provisionally attach any property belonging to the assessee within the specified period and subject to certain conditions. However, the provisional attachment will cease to have effect after expiry period of six months from the date of such order. (18) The charitable trusts have also been brought under ambit of survey u/s 133A w.e.f. 01.04.2017. (19) The block period shall consist of beyond six assessment years in place of six years. The year of search will also be included in the block period. (20) If the assessing officer reveal from the books of accounts, documents, etc. in his possession that there is an escapement of income of more than Rs.50 lakhs or more in one year or in aggregate in the assessment year beyond block period but up to 10 years in form of assets such as immovable property, shares, deposits in bank accounts, loans and advances etc., he may issue notice u/s 153A for block assessment provided the search operation is made on or after 01.04.2017. TDS/TCS - (21) The tax at source shall be deducted by any individual or HUF responsible for paying rent exceeding Rs.50,000/- per month.the rate of TDS will be 5%. (22) The Tax at Source will be deducted in case of payment by mode other than in kind, in case of Joint Development Agreement. The rate of TDS will be 10%. (23) Any person paying any sum or amount on which tax is collectible at source shall furnish the PAN to the person collecting tax at source. If the person fails to give PAN, TCS will be twice the rate applicable or 5%, whichever is higher. The collector shall mention the PAN furnished by the collectee, in all its correspondence, bills, vouchers etc. related to collectee. RETURN AND ASSESSMENT - (24) In order to ensure timely filing of returns of income for the A.Y.2018-19 and onwards, it is proposed to levy a fee of delay in filing of return. In case the return is filed within 31st December, the fee will be Rs.5,000/- and if filed after 31st December, the fee will be Rs.10,000/- and the said fee will be paid along with self-assessment tax. However, if the return income is below Rs.5,00,000/-, the fee will be Rs.1,000/- only. 3
(25) The time limit for making scrutiny assessment for the A.Y.2018-19 shall be 30.09.2020 and for the A.Y.2019-20 shall be 31.03.2021. (26) Time period of revising return has been reduced to 12 Months. (27) The Form of Return of Income will be of one page for income below Rs.5 Lakh and without business income. MISC. PROPOSED CHANGES - (28) Any money, immovable property, specified movable property such as shares and securities, jewellery, bullion, etc. received without consideration or with inadequate consideration by any person subject to certain exemption and exceptions shall be taxable if the value exceeds Rs.50,000/-. (29) In case of loss under the head House Property, the said loss shall be set-off against other head of income to the extent of Rs.2,00,000/- only and the balance loss will be allowed to be carry forward to eight assessment years. (30) The books of accounts are required to be maintained if the turnover exceeds Rs.25 Lakh or Income exceeds Rs.2.5 Lakh. (31) For Presumptive Tax, Advance Tax is required to be paid only in one instalment i.e. before 15 th March. (32) No person shall receive an amount of Rs.3,00,000/- or more in aggregate from a person in a day in cash or in respect of a single transaction in cash or in respect of transaction in cash in relation to an event or occasion from a person. However, the restriction will not apply to following:- (Section 269ST) a. Bank, Government etc, b. receipt from sale of agriculture produce by an individual or HUF claiming agricultural income in respect of said produce, c. transaction of nature covered u/s 269SS such as loans or advances. In case of violation of above provisions, a penalty equal to such amount may be levied. (Section 271DA) 4
(33) If an accountant, a registered valuer or a merchant banker furnishes inaccurate information in a report or certificate, a penalty of Rs.10,000/- can be imposed on him. (34) Any assessee, other than domestic company and certain funds, trusts, institutions etc., deriving income from dividend in excess of Rs.10 Lacs shall be liable to pay tax on the gross amount @ 10% u/s 115BBDA (w.e.f. 01.04.2018). x--------------xxx-------------x 5