Budget 2017 review: 10 things taxpayers need to keep in mind

 INCOME TAX REVISION

INCOME	PROPOSED TAX RATE %	EXISTING TAX RATE
Upto Rs 250,000	NIL	NIL
Rs 250,001 –Rs 500,000	5	10
Rs 500,001-Rs 1,000,000	20	20
Rs 1,000,001- above	30	30

 

For those in the Rs 2.5-Rs5 lakh income slab, you get a tax saving of upto Rs 12,500 per year and Rs 14,806 for those with an income above Rs 1 crore.

 

Now the tax rebate has been brought down to Rs 2,500 from the earlier Rs 5000 for people with salary upto Rs 3.5 lakh. Combining the tax rebate and the reduction in the tax rate, it essentially means that people upto this income will be paying Rs 2575 as tax instead of the Rs 5150 earlier.

 

A surcharge of 10 per cent of tax payable on categories of individuals whose annual taxable income is between Rs 50 lakh and Rs 1 crore has been proposed. This is likely to give additional revenue of Rs 2,700 crore.

 

In keeping with the promise of simplification, a one pager tax return form will be introduced and this will apply to individuals with a total income not exceeding Rs 5 lakh (other than business income). Also, such filers will not be subject to a scrutiny by the income tax department, for the first year, unless there is some information with the income tax department that necessitates this.

 

Tax returns can now be revised within 12 months of the end of the fiscal year instead of 24 months in the current regime. Failure to furnish a tax return within the specified due date shall attract a fee ranging between Rs 1,000 to Rs 10,000 depending upon the time the return is filed and taxable income.

 

 Long term capital gains: It is proposed that income arising on sale of equity shares listed on Indian stock exchanges would be tax free only when they were acquired after 1 October 2004 and the acquisition was subject to securities transaction tax (there are some exceptions to this).

 

It is also proposed that partial withdrawal (as per the rules governing National Pension System) not exceeding 25% of the contributions made by an employee shall not be taxable.

 

Individual taxpayers would be required to deduct taxes at a rate of 5% on housing rentals paid to a resident landlord, if the monthly rent exceeds Rs 50,000.  It is proposed that the tax could be deducted at the time of credit of rent for the last month of the tax year or last month of tenancy, as applicable.

 

The government has also proposed to phase out tax benefits up to Rs 25,000 on stock market investment under Rajiv Gandhi Equity Savings Scheme (RGESS). The deduction for three consecutive assessment years is allowed up to Rs 25,000 to a resident individual for investment made in listed equity shares or listed units of an equity oriented fund is subject to fulfillment of certain conditions. An assessee who has claimed deduction under this section for assessment year 2017-18 and earlier assessment years shall be allowed deduction under this section till the assessment year 2019-20 if he is otherwise eligible to claim the deduction as per the provisions of this section.