Good, bad, ugly: Budget for taxpayers, investors, consumers and businessmen

Fine up to ₹10000 for late filing of income tax returns. No service tax on non-residential MBA programmes from IIMs. Train ticket purchased online through IRCTC will be exempted from service tax.

The budget 2017-18 has been presented on the floor of parliament, and it has some relief like lowering tax rates for income between ₹2.5 lakh to ₹5 lakh and drastic changes like no cash transactions above ₹3 lakh. 

Now is the time to dig deeper and find out the good, bad, and ugly fallout of this budget on taxpayers, investors, consumers and businessmen. 

Taxpayers: 

The Good: 

1. Tax rates halved from 10% to 5% for employees earning between ₹2.5 lakh to ₹5 lakh per annum. 

2.    For those earning up to ₹5 lakh per annum will have to fill just one-page tax form. 

3.     For the self-employed deductions on contribution to the National Pension Scheme has been doubled and it is 20% now from earlier 10%. However, it is subjected to a limit of ₹1.5 lakh. This will encourage self-employed people to invest on National Pension Scheme and avail tax rebates. 

The Bad: 

1.    Tax rebate on individual income up to ₹3.5 lakh has been reduced from ₹5000 to ₹2500 meaning you can not avail more than ₹2500 deductions now. 

2.    Tax break incurred by interest paid on rented homes has been capped at ₹2 lakh under this budget. Real estate sector will feel some burn due to this.

3.    For income between ₹50 lakh to ₹1 crore, there will be a 10% surcharge.

The Ugly: 

1.    Taxpayers will have to pay up to ₹10,000 for late filing of income tax returns. Better be on time. 

2.    Cash donation made to any charitable trust has been reduced to ₹2000 from earlier ₹10,000. No illegal or anonymous donation anymore.

Investors: 

The Good: 

1.    Through this budget, the government has shifted the base for computation of indexation benefit for long-term capital gains has been shifted from April 1, 1981, to April 1, 2001. 

2.    The holding period for computation of long-term capital gains is 2 years now as opposed to 3 years earlier.

3.    Now, the reinvestment of capital gains in notified redeemable bonds apart from National Highway Authority (NHAI) and Rural Electrification Corporation Limited (REC) have been made qualified for tax exemption on long-term capital gains. 

4.    Investors can also partially withdraw from NPS tax-exempt up to 25% of the employee’s contributions.

The Bad: 

1.    On receipt of inadequate consideration, fair market value will be taken as the value of sale for the unlisted shares. 

The Ugly: 

1.    This budget has abolished the exemption on long-term capital gains on listed shares’ transfer if the securities transaction tax was not paid on the purchase of then unlisted shares bought post-October 1, 2004. 

Consumers: 

The Good: 

1.    Salaried employees, Professionals, and smaller businessmen who are paying more than ₹50000 as rent a month will now have to deduct tax at source by 5%.

2.    Non-residential MBA programmes from IIMs are going to cost less as you will not have to pay service tax on these programmes anymore. Good time to get another certificate? Maybe.

3.    Train ticket purchased online through IRCTC will be exempted from service tax, meaning now travel more on lesser cost. 

4.    The government has revised the custom duty exemptions on goods imported through packets, postal parcels, and letters in which the CIF value is lesser than ₹1000.

The Bad:

1.    Due to higher excise tax cigarettes, pan masala, bidis, gutkas, and other tobacco products will become costlier. This is bad strictly from the point of view of those who consume these. 

The Ugly: 

1.    Silver coins, medallions to become costlier because of higher customs duty. 

Businessmen: 

The Good:

1.    Firms with a turnover of up to ₹50 crore in the financial year 2015-16 will have to pay 25% tax as opposed to 30% earlier.

2.    Tax holiday for start-ups for 3 out of 7 years as opposed to 3 out of 5 years earlier. 

3.    5% beneficial withholding tax rate on interest on external commercial borrowings (ECBs) of the Indians firms has been extended by 3 years till June 2020. This has also been extended to their rupee-denominated bonds. 

4.    Period to use and carry forward Minimum Alternate Tax (MAT) credit has been increased from 10 to 15 years.

The Bad: 

1.    No cash transaction above ₹3 lakh is allowed anymore.

2.    Money, specified movable property, and immovable property valuing more than ₹50000 received as a gift or for inadequate money will be taxed.

The Ugly: 

1.    No reduction in any other corporate tax rates other than the MSMEs.