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Showing posts with label Budget 2017. Show all posts
Showing posts with label Budget 2017. Show all posts

Friday, 3 February 2017

07:56

PROMOTING AFFORDABLE HOUSING AND REAL ESTATE SECTOR

PROMOTING AFFORDABLE HOUSING AND REAL ESTATE SECTOR

  • Between 8th November and 30th December 2016, deposits between 2 lakh Rupees and 80 lakh Rupees were made in about 1.09 crore accounts with an average deposit size of ` 5.03 lakh. Deposits of more than 80 lakh were made in 1.48 lakh accounts with average deposit size of ` 3.31 crores.
  • Under the scheme for profit-linked income tax deduction for promotion of affordable housing, carpet area instead of built up area of 30 and 60 Sq.mtr. will be counted.
  • The 30 Sq.mtr. limit will apply only in case of municipal limits of 4 metropolitan cities while for the rest of the country including in the peripheral areas of metros, limit of 60 Sq.mtr.will apply 
  • For builders for whom constructed buildings are stock-in-trade, tax on notional rental income will only apply after one year of the end of the year in which completion certificate is received
  • Reduction in the holding period for computing long term capital gains from transfer of immovable property from 3 years to 2 years. Also, the base year for indexation is proposed to be shifted from 1.4.1981 to 1.4.2001 for all classes of assets including immovable property
  • For Joint Development Agreement signed for development of property, the liability to pay capital gain tax will arise in the year the project is completed
  • Exemption from capital gain tax for persons holding land on 2.6.2014, the date on which the State of Andhra Pradesh was reorganised, and whose land is being pooled for creation of capital city of Andhra Pradesh under the Government scheme 

Source:Budget 2017
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Thursday, 2 February 2017

08:14

Strengthening of PAN quoting mechanism in the TCS regime

Strengthening of PAN quoting mechanism in the TCS regime

Statuary provisions for deduction of tax at source (TDS) at higher rate of 20% or the applicable rate whichever is higher) in case of non-quoting of Permanent Account Number (PAN) is provided under section 206AA of the Act and it exist since April, 2010.
PAN acts as a common thread for linking the information in the departmental data base. It may also be noted that the process of allotment of PAN is made simple and robust. PAN application can be made online and PAN gets allotted in less than a week.
In order to strengthen the PAN mechanism, it is proposed to insert new section 206CC to provide the following:
I. any person paying any sum or amount, on which tax is collectable at source under Chapter XVII BB (hereafter referred
to as collectee) shall furnish his Permanent Account Number to the person responsible for collecting such tax (hereafter referred to as collector), failing which tax shall be collected at the twice the rate mentioned in the relevant section under Chapter XVII BB or at the rate of five per cent. whichever is higher.
II. that the declaration filed under sub section (1A) of section 206C shall not be valid unless the person filing the declarationfurnishes his Permanent Account Number in such declaration.
III. that in case any declaration becomes invalid under sub-section (2), the collector shall collect the tax at source in  accordance with the provisions of sub-section (1).
IV. no certificate under sub section (9) of section 206C shall be granted unless it contains the Permanent Account Numberof the applicant.
V. the collector knows about the correct PAN of the collectee it is also proposed to provide for mandatory quoting of PAN of the collectee by both the collector and the collectee in all correspondence, bills and vouchers exchanged between them.
VI. that the collectee shall furnish his Permanent Account Number to the collector who shall indicate the same in all its correspondence, bills, vouchers and other documents which are sent to collectee.
VII. where the Permanent Account Number provided by the collectee is invalid or it does not belong to the collectee, then it shall be deemed that Permanent Account Number has not been furnished to the collector. 
VIII. to exempt the non-resident who does not have permanent establishment in India from the provisions of this proposed section 206CC of the Act.

This amendment will take effect from 1st April, 2017.
[Clause 72]

Source:Indian Budget 2017
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08:01

Extension of scope of section 43D to Co-operative Banks

Extension of scope of section 43D to Co-operative Banks

The existing provisions of section 43D of the Act, inter-alia, provides that interest income in relation to certain categories of bad or doubtful debts received by certain institutions or banks or corporations or companies, shall be chargeable to tax in the previous year in which it is credited to its profit and loss account for that year or actually received, whichever is earlier. This provision is an exception to the accrual system of accounting which is regularly followed by such assessees for computation of total income.
The benefit of this provision is presently available to scheduled banks, public financial institutions, State financial corporations, State industrial investment corporations and certain public companies like Housing Finance companies. With a view to provide a level playing field to co-operative banks vis-à-vis scheduled banks and to rationalise the scope of the section 43D,it is proposed to amend section 43D of the Act so as to include co-operative banks other than a primary agricultural credit societyor a primary co-operative agricultural and rural development bank.
Consequentially, as per matching principle in taxation, if the interest income on bad or doubtful debts is chargeable to tax on receipt basis, the interest payable on such bad or doubtful debts need to be allowed on actual payment. In view of this, it is proposed to amend section 43B of the Act to provide that any sum payable by the assessee as interest on any loan or advances from a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank shall be allowed as deduction if it is actually paid on or before the due date of furnishing the return of income of the relevant previous year.
These amendments will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-19 and subsequent years.
Source:indian Budget 2017

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Wednesday, 1 February 2017

22:35

Finance Minister reduces the tax rate from 10 to 5 per cent for individual income between Rs 2.5 to Rs 5 lakh.

Finance Minister reduces the tax rate from 10 to 5 per cent for individual income between Rs 2.5 to Rs 5 lakh. 

Finance Minister appeals to all citizens to contribute to Nation Building by making a small payment of 5 per cent tax if their income is falling in this slab. 

A simple one- page Income Tax Return form for the category of individuals having taxable income upto Rs 5 lakhs other than business income 

The Union Finance Minister Shri Arun Jaitley reduced the rate of taxation from existing 10 per cent to 5 per cent for individual assesses between income of Rs 2.5 lakhs to Rs 5 lakhs. This would reduce the tax liability of all persons below Rs 5 lakh income either to zero (with rebate) or 50 per cent of their existing liability.

While presenting the General Budget 2017-18 in the Parliament today, the Union Finance Minister Shri Jaitley said that the present burden of taxation is mainly on honest tax payers and salaried employees who are showing their income correctly. Therefore, post-demonetisation, there is a legitimate expectation of this class of people to reduce their burden of taxation. The Finance Minister further said that if a nominal rate of taxation is kept for lower slab, many more people will prefer to come within the tax net. The Finance Minister made an appeal to all the citizens of India to contribute to Nation Building by making a small payment of 5 per cent tax if their income is falling in the lowest slab of Rs 2.5 lakhs  to Rs 5 lakhs.


The Union Finance Minister Shri Jaitley said that the Government is trying to bring within tax-net more people who are evading taxes. So, in order to expand tax net, it is decided to have a simple one-page form to be filed as Income Tax Return for the category of individuals having taxable income upto Rs 5 lakhs other than business income. Also, a person of this category who files income tax return for the first time would not be subjected to any scrutiny in the first year unless there is specific information available with the Department regarding his high value transaction.

In his Budget Speech, the Finance Minister further said that in order not to have duplication of benefit, the existing benefit of rebate available to the same group of beneficiaries is being reduced to Rs 2500, available only to assessees upto income of Rs 3.5 lakhs. The combined effect of both these measures will mean that there would be zero tax liability for people getting income upto Rs 3 lakhs per annum. and the tax liability will only be Rs 2,500 for people with income between Rs 3 and Rs 3.5 lakhs. While the taxation liability of people with income upto Rs 5 lakhs is being reduced to half, all the other categories of tax payers in the subsequent slabs will also get a uniform benefit of Rs 12,500 per person. The total amount of tax foregone on account of this measure is Rs 15,500 crore.

In order to make good some of this revenue loss on account of this relief, a surcharge of 10 per cent of tax payable on categories of individuals whose annual taxable income is between Rs 50 lakhs and Rs 1 crore has been proposed. This is likely to give additional revenue of Rs 2,700 crore.

The Finance Minister said that the direct tax proposals for exemptions, etc. would result in revenue loss of Rs 22,700 crore but after counting for revenue gain of Rs 2,700 crore for additional resource mobilisation proposal, the net revenue loss in direct tax would come to Rs 20,000 crore.

Source:PIBNEWS


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Friday, 13 January 2017

19:40

Budget 2017 and income tax rates: Why Arun Jaitley should cut rates instead of hiking tax exemptions

Budget 2017 and income tax rates: Why Arun Jaitley should cut rates instead of hiking tax exemptions

Given the need to assuage demonetisation pains and the need to collect more taxes, finance minister Arun Jaitley is expected to cut tax rates on February 1, but he has to refrain from populism while doing so.
Given the need to assuage demonetisation pains and the need to collect more taxes, finance minister Arun Jaitley is expected to cut tax rates on February 1, but he has to refrain from populism while doing so. Keep in mind, as the Economic Survey pointed out this year, India’s tax-to-GDP is 5.4 ppt below comparable countries and just 15% of national income is reported to the tax authorities. In this context, while hiking tax-exempt income to, say, Rs 3 lakh—or bringing back standard deduction as appears to have been recommended by the Easwar panel—will be popular, this will remove 15-20 lakh taxfilers out of the 130 lakh there are today. The Survey points out that, had the limits not been raised from FY09, there would have been 1.65 crore more returns and tax-GDP levels would have risen 0.32 ppt due to this alone.
Apart from greater efficiency in bringing in lucrative sectors like real estate into the tax net, the big challenge is the low compliance of those earning between Rs 10-15 lakh—tax compliance here is a mere 10% versus 20-25% in all other tax brackets, based on a comparison of the tax data with a theoretical income distribution of the country for that year. Since this is likely due to the fact that the top 30% tax bracket kicks in at a fairly modest level of income, the solution is to, say, create another bracket of Rs 10-20 lakh and tax that at, maybe, 20%. While this segment brings in around Rs 50,000 crore of taxes—based on data for AY 2014-15—the cut in rates will probably be more than made up by the impact of the increased compliance. This will necessitate cuts in rates in the lower slabs—in AY 2014-15, the Rs 2.5-5 lakh income group brought in around a tenth of personal income tax collections, so the loss in doing so may not be much while the move will be widely welcomed. Since the government loses around Rs 55,000 crore on various tax exemptions like those on insurance, it will be important to phase them out—while this will hurt those in the upper-middle income brackets, perhaps removing surcharges may neutralise the impact.
Though the tax-exemption limit has been overtaken by time, much of this was a recommendation of the Direct Taxes Code in 2009 anyway—that recommended doing away with all tax deductions and taxing incomes of Rs 1.6-10 lakh at 10%, Rs 10-25 lakh at 20% and above that at 30%. The finance minister would do well to revisit that document.




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