Income Tax 2017-18 – Highlights of Union Budget 2017

Income Tax 2017-18 – Highlights of Union Budget 2017

How to pay less tax this year and beyond


It is said that nothing in this world is certain except for death and
taxes. With this nifty Times of India-EY Guide, however, you can soften the
blow from the latter, legally of course. Read on for many happy returns.

With a decrease in tax rate from 10% to 5% for total income between Rs 2.5
lakh and Rs 5 lakh, there is tax saving of up to Rs 12,500 per year and
14,806 (including surcharge and cess) for those with income above Rs 1
Tax rebate is reduced to Rs 2,500 from Rs 5,000 per year for taxpayers with
income up to Rs 3.5 lakh (earlier Rs 5 lakh). Due to the combined effect of
change in tax rate and rebate, an individual with taxable income of Rs 3.5
lakh will now pay tax of Rs 2,575 instead of Rs 5,150 earlier.
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Surcharge@10% of tax levied on rich taxpayers, with income between Rs 50
lakh and 1 crore. The rate of surcharge for the super rich, with income
above Rs 1 crore, will remain 15%.
Holding period for immovable property to be considered “long term” reduced
to 2 years from 3. This will ensure immovable property held beyond 2 years
is taxed at reduced rate of 20% and eligible for various exemptions on
Long term capital gains tax will result in a lower payout owing to
beneficial amendments. The base year for indexation of cost (adjustment of
inflation) has been shifted to April 1, 2001 from April 1, 1981. This means
lower profits on sale.
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Further, tax exemption will be available on reinvestment of capital gains
in notified redeemable bonds (in addition to


in NHAI and REC bonds).
A simple one-page tax return form is to be introduced for individuals with
taxable income up to    Rs.5 lakh (excluding business income). Those filing
returns for the first time in this category will generally not be subject
to scrutiny.
Delay in filing tax return for 2017-18 will attract penalty of Rs 5,000 if
filed by December 31, 2018 and Rs 10,000 if filed later. Such fee will be
restricted to Rs 1,000 for small taxpayers with income up to Rs 5 lakh.
Deduction for first-time investors in listed equity shares or listed units
of equity-oriented fund under the Rajiv Gandhi Equity Savings
Scheme is withdrawn from 2017-18. If an individual has already claimed
deduction under this scheme before April 1, 2017, he/she shall be allowed
to avail a deduction for the next two years.
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Time period for revision of tax return cut to one year (from 2 years) from
the end of the relevant financial year or before completion of assessment,
whichever is earlier.