Tuesday, April 25, 2017

new changes in income tax fy 2017-18



INCOME TAX – KEY CHANGES AND ACTION POINTS FOR THE FY 2017-18 (AY 2018-19)

Finance Act 2017
  1. Finance Bill 2017 has been passed by both the houses of parliament and received assent from the President of India on 31st March, 2017 and became Finance Act 2017
  2. Far reaching changes have been made in the Finance Act and Income Tax (Amendment) Act, 2016
  3. Imposed huge penalties followed by prosecution for contravention
  4. We would like to bring few important highlights for your attention and further compliance
RESTRICTION ON CASH TRANSACTIONS

  • Limit for disallowance of business expenditure made in cash is reduced from Rs 20,000 to Rs 10,000 made to a person per day. (Limit of Rs 35,000 for payment made to transporters however continues)
  • Above dis allowance is extended on capital expenditure also by restricting depreciation and Capital Expenditure on R & D.
Read Full Article: Limits on Cash Transactions

RESTRICTION ON CASH RECEIPTS


  • No person shall receive Rs 2 lacs or more
  • Penalty at 100% of the amount involved
  • Covers all cash receipts be it cash sales, advance for sales, lease  advance, etc.
Read Full Article: Restriction on Cash Receipts


HOUSE PROPERTY INCOME

  • House Property Loss can be set off against other head of Income only up to Rs 2 lacs in the same year, balance loss has to be C/f to 8 AY's for set off against house property income only.
Read Full Article: House Property under Income Tax

CAPITAL GAINS
  1. In case of immovable properties Holding period reduced from 36 months to 24 months to qualify as long term capital asset .( please note that other capital assets like jewellery holding period should be 3 years for claiming Long Term)
  2. Joint Development agreements will be chargeable to tax in the year of receipt of completion certificate in the hands of the Individual or HUF.
  3. In case asset sold before issue of certificate by competent authority capital gains tax shall be charged in the year in which such transfer takes place.
  4. TDS @ 10% would attract on payments made under JDA
Read Full Article: Capital Gains F.Y: 2017-18

DEPRECIATION
  1. CBDT issued a Notification on 7th March, 2017 imposing cap on depreciation rates as under:
  2. Highest rate of Depreciation has been restricted to 40 per cent w.e.f financial year 2017-18. Impact can be understood as under:

OTHER SOURCES
  1. Dividend Received From Domestic Companies by all resident assessees (other than dividend received by Domestic Companies and Charitable Trusts) in excess of Rs 10 lacs chargeable to tax at 10% in the hands of the receiver.
  2. Disallowance of expenditure such as rent, interest, etc. is extended to “Income from Other Sources” also if TDS is not deducted from payments made to residents.
Read Full Article: Other Sources Under Finance Act 2017
               

TDS/TCS  CHANGES


  • Non Tax Audit individuals / HUF Assesses paying rent exceeding Rs 50,000/- to deduct TDS @ 5% once in a year through Challan cum return statement, without procuring TAN.
  • Any person paying consideration (other than in kind) under Joint Development Agreement shall deduct tax @ 10 %.
  • In case of TCS:
Read Full Article: New TDS or TCS Changes


TAX ON PRESUMPTIVE BASIS


  • In case of businesses opting for taxing on presumptive basis, existing rate of deemed total income of 8% reduced to 6% of turnover received by an A/c payee cheque/ Draft/ ECS during the PY or before due date of filing of return of income. (This is effective even for Sales during the FY 2016-17) 

   
UNEXPLAINED INCOME 

  1. Unexplained Credit [Liability side of Balance Sheet is not justified].
  2. Unexplained Investments [Asset being money?s worth not recorded in Balance Sheet ].
  3. Unexplained money etc. [Asset being money not recorded in Balance Sheet ]
  4. Investments, etc.. not fully disclosed in Books Of Accounts [Asset being money?s worth not fully recorded in Balance Sheet ]

Read Full Article: Unexplained Income

AIR/SFTR REPORTING
  1. Annual Information reporting (AIR) renamed as Specified Financial Transaction Reporting (SFTR). Earlier applicable to banks, MF's etc. , now extended even to tax audit assessees.
  2. Receipt of cash of Rs 2 Lacs or more against sale of goods or services of any nature. Clarification from GOI the limit is per transaction.
  3. Return to be filed in Form 61A. Return for FY ended March 31,2017 to be filed on or before May 31,2017.
  4. Penalty of Rs 100/day for not filing the SFTRA within time prescribed.
TAXATION OF GIFTS/ DEEMED GIFTS   
  1. Cash gift in excess of Rs 50,000/-
  2. Immovable Property in excess of Rs 50,000 as a gift
  3. Immovable property at a consideration which is lesser than Stamp Duty value of Property by more than Rs 50,000.
  4. Other than immovable Property (.i.e. shares, jewellery, paintings, etc.) in excess of Rs 50,000 as a gift
  5. Other than immovable Property at a consideration which is lesser than Stamp Duty value of Property by more than Rs 50,000..
Read Full Article: Tax Rates of Gift Tax

    Income Tax Slab Rates For A.Y: 2018-19
    1. Tax Rate For Firms/LLP'S – 30% + Surcharge At 12% For TI In Excess Of 1    Crore
    2. Tax Rates For Domestic Companies
    3. 25% If Total Turnover Or Gross Receipts < 50 Crores In 2015-16
    4. 30% In Case Of Turnover Or Gross Receipts > 50 Crores In 2015-16
    5. Surcharge Of 7% In Case Of TI In Excess Of 1 Crore But Less Than 10 Crores, at 12% In Case Of TI In Excess Of 10 Crores
    6. MAT Rate Continues At 18.5% but tax credit for MAT extended  from 10 to 15 years
    7. DDT Rate @ 20.358% [(15%+12% Surcharge) X 3% Cess with Grossing Up] Dagliya & Co

    Dagliya & Co.,
    Charted Accountants



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