Highlights of Budget 2017 Impacting Salaried Persons

Highlights of Budget 2017 Impacting Salaried Persons

A. Change in Tax Slabs and tax rebates: –

1. A new tax rate of 5% will be applicable for individuals having total income from 2.5 lacs to 5 lacs.

2. An additional surcharge @10% will be applicable for individuals having total income in the range of 50 lacs to 1      Crore.

3. Rebate of Rs. 5,000/- earlier received from income tax for individual residents in India whose total income is upto     5 lacs. Now the same has been changed to Rs. 2,500 for the persons whose total income is upto 3.5 lacs.

Hence, income tax rebate is available only to those individual residents who’s total income is upto 3.5 lacs and the Income tax rebate amount is 2,500 or the tax payable whichever is lower.

 So if your income is 3 lacs then you need not to pay any income tax i.e. your income is 3 lacs then 2.5 lacs is exempt and on additional 50,000 there is a tax of (50,000*5%=2,500) of 2,500 and income tax rebate is allowed of 2,500, therefore you need not to pay any income tax. And in case your total income is 3.5 lacs, the tax payable is ( {(250000*0%+100000*5%)-2500} = 2,500) is 2500 .

B. Where a person required to furnish a return of income fails to do so within the time prescribed then, he shall pay, by way of fee, a sum of,

(a) five thousand rupees, if the return is furnished on or before the 31st day of December of the assessment year;

(b) ten thousand rupees in any other case:

Provided that if the total income of the person does not exceed five lakh rupees, the fee payable under this section shall not exceed one thousand rupees.

Hence, if a person is required to file his/her return of income then the same should be filed within the prescribed time i.e. up to 31st July of Assessment Year.( For F.Y 2017-18 due date is 31st July 2018)  Otherwise he/she is liable to pay additional fee of INR 5000 with income tax if the said ITR is filed up to 31st December of Assessment Year or INR 10,000 if filed after 31st December of Assessment year.

Further, if the total income of the person is up to 5 Lakh rupees, then above fees is restricted only to INR 1000.

C. If there is a loss under the head “Income from house property”, then the same can be adjusted with other head of income only up to two lakh rupees for any assessment year. However, the unabsorbed loss shall be allowed to be carried forward for set-off in subsequent years in accordance with the existing provisions of the Act.

Hence, If the individual has paid interest on housing loan for which the property is let out on rent. Under the current scenario, the whole interest is allowable as deduction from rental income giving a loss under the head “House Property” and the same is adjustable with Income from salary, Business/Profession and other resources without any restriction. For e.g. a person having rental income of 2 lacs (after giving standard deduction of 30%) and paying interest of Rs. 5 lacs on borrowed loan. Then there is a loss of 3 lacs, which is allowable to adjust with salary and other heads income.

Now as per proposed law the loss under House Property can be set off with other head of income only up to 2 Lac rupees and 1 lacs rupees is available for carry forward for adjustment against House Property Income of next year/s.

D. In order to widen the scope of tax deduction at source, a new section 194-IB is introduced in the Act which says if an Individuals or a HUF (other than those covered under section 44AB of the Act i.e. who is not liable for Audit) who is responsible for payment of rent to a resident more than Rupees fifty thousand for a month or part of month during the year. Then, the person paying the rent is required to deduct the tax @5%.

Therefore, any payment of rent if exceeds by INR 50,000 for a month or part of a month, then the payee needs to deduct the tax @ 5%. Hence, salaried persons paying monthly rental payments exceeding INR 50,000/- p.m. needs to deduct tds of landlord. Amount of tax to be deducted is at the last month of previous year i.e. in month of March or the last month of tenancy period.

Further, In order to reduce the compliance burden, it is further proposed that the deductor shall not be required to obtain tax deduction account number (TAN).

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