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Major Amendments made by Income Tax–Finance Act, 2017

There have been major amendments in Income Tax–Finance Act, 2017. To help you understand properly, we have broken it down in this article.

RESTRICTION ON CASH TRANSACTIONS SEC 40 A (3)

                                                                   

  1. Disallowances of Business expenditures made in cash is reduced from Rs. 20,000 to Rs. 10,000 made to a person per day.

  2.  Disallowance is extended on capital expenditure also by restricting and capital expenditure on Research and Development.

Example: If  computer is bought for Rs 50,000 and paid Rs 20,000 cash and remaining Rs 30,000 paid by cheque then only on Rs 30,000 depreciation will be allowed


80G DEDUCTIONS

No deduction shall be allowed u/s 80G if payment exceeds Rs. 2,000 in cash


SEC 269ST

No person shall receive an amount of Two Lakhs Rupees (Rs 2,00,000) or more—

(a)

 

in aggregate from a person in a day; or

(b)

 

in respect of a single transaction; or

(c)

 

in respect of transactions relating to one event or occasion from a person, otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account:

Provided that the provisions of this section shall not apply to —

(i)


Any receipt by;

  • government

  • any banking company, post office savings bank or co-operative bank;



(ii)

 

Transactions of the nature referred to in section 269SS;

(iii)

 

Such other persons or class of persons or receipts


 From the bare reading of section 269ST, this section impacts the payee and not the payer. It is the payee or recipient who is made liable for violation of section 269ST in the form of penalty u/s 271D. A penalty equal to the amount of such receipt shall be imposed u/s 271D 

Example: If Mr. A buys Car From Y  by paying of Rs 5,00,000/- here Y is liable for violation of section 269ST in the form of penalty u/s 271D of Rs 5,00,000/-

HOUSE PROPERTY INCOME

House Property loss can be set off against other head of income only up to Rs 2,00,000 in the same year. Balance loss has to be carried forward to 8 Assessment Years for set off against house property income only.

 

CAPITAL GAIN

  1.  In case of immovable properties holding period reduced from 36 months to 24 months to qualify as long term capital asset (Movable Assets like Jewellery holding period should be 3 years to consider long term asset)

  2. Shift in the base year from 1981 to 2001 for computation of Long Term Capital Gain. If assets purchased prior to 01.04.2001 indexation benefit will be available on Cost or FMV whichever is higher as on 01.04.2001

  3. Tax Exemption will be available on reinvestment of capital gains in any other notified redeemable bonds in addition to investment in NHAI and REC to the maximum of Rs 50 Lakhs 

 

DEPRECIATION

Highest Rate of Depreciation has been restricted to 40 % with effect from financial 2017-18

 

OTHER SOURCES

  1. Dividend received  from domestic company by all resident assessees ( Other than Domestic Company and Charitable Trust ) in excess of Rs 10 Lakhs chargeable to tax at 10% in the hands of receiver

  2.  Disallowance of expenditure such as rent, interest, etc. is extended to “Income From Other Source” also if TDS is not deducted from payments made to residents

TDS

  1.  Non Tax Audit Individuals /HUF assesses paying rent exceeding Rs 50,000 /- to deduct TDS at the rate 5%

  2. Any person paying consideration (other than in kind) under Joint Development Agreement shall deduct tax @10%.

SEC 234F

Fees for late filing of Income Tax Return Introduced

Fees has to be paid under self assessment mandatorily irrespective of cause

  1. Where Total Income is less than 5 Lakhs – Rs 1,000/-

  2. Where Total Income is more than 5 lakhs and Income Tax Return filed after due date but before December of Assessment Year – Rs 5,000/-

  3. In  all other cases – Rs 10,000/-


TAX SLABS FOR INDIVIDUALS


 Tax Rates For Firms / LLP’s – 30%+surcharge at 12% for Total Income in excess of 1 Crore


TAX RATES FOR DOMESTIC COMPANIES

  1. 25% if Turnover or Gross Receipts is less than 50 Crores in 2015-16

  2. 30% if Turnover or Gross Receipts is more than 50 Crores in 2015-16

  3. Surcharge of 7% in case of Total Income in excess of 1 Crores but less than 10 Crores, at 12% in    case of Total Income exceeds 10 Crores.

  4. MAT Rate constitutes at 18.5% but tax credit for MAT is extended from 10 to 15 years.

Those were all about the major amendments from Income Tax–Finance Act, 2017, please visit us for any queries.