1. Individual tax rate
Tax rate for Rs 2.5 lakh to 5 lakh slab has been reduced from 10% to 5%
Tax rate for Rs 5 lakh to Rs 10 lakh slab remains unchanged at 20%
Tax rate for above Rs 10 lakh slab remains unchanged @ 30%
For senior citizens aged 60 and above no tax up to Rs 3 lakh (remains unchanged)
For senior citizen aged above 80, no tax till Rs 5 lakh (remains unchanged)
Tax rebate u/s.87A is reduced from Rs 5,000 to Rs 2,500 and the limit for getting the rebate is reduced from Rs 5 lakh to 3.5 lakh
As a result, up to Rs 3 lakh income, tax payable will be Nil (tax @ 5% Rs. 2,500/-less rebate Rs.2,500/-)
For 3 ½ lakhs income, the tax payable will be Rs 2,500/-(tax @5% Rs 5,000 less rebate Rs 2,500/-)
For those with income up to Rs 4 lakh and 80C relief up to Rs 1,50,000/-, tax payable will be nil.
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2. Surcharge
For those with income of Rs 50 lakh to Rs 1 crore, surcharge is introduced @10%.
For those with income above Rs 1 crore, surcharge remains at 12% (no change)
Click for Onmanorama income-tax calculator
3. Corporate tax
For companies whose annual turnover is below Rs 50 crore, the tax rate is reduced from 30% to 25%
4. a)Holding period for considering as long-term capital gain of land and building reduced from 3 years to 2 years.
b) Base year of indexation for calculation of capital gain is shifted from 1981 to 2001, giving substantial relief from capital gain in sale of land and building.
5. For business turnover upto 2 crores, presumptive income is reduced from 8% to 6% for non-cash transaction to encourage digital payments.
6. Limit for payment in cash per day allowable under income tax u/s.40A(3) is reduced from Rs 20,000/- to Rs 10,000/-
7. Transaction above Rs 3 lakh cannot be done in cash.
8. Limit of turnover and limit of profit u/s.44AA for compulsory maintenance of account books increased from Rs 10 lakhs to Rs 25 lakh and from Rs 1.2 lakh to Rs 2.5 lakh respectively
9. Minimum Alternate Tax (MAT) carry over period is increased from 10 years to 15 years.
10. Interest on NPA Accounts (Non performing assets) is made taxable only on actual receipts of interest. Earlier it was taxable on mercantile basis on accrual. This is a great relief to the Banking sector.
11. Tax limit for scrutiny assessment reduced from 21 months to 18 months and 12 months respectively from the end of the Asst. Year for F.Y. 2016-2017 and 2017-2018.
12. Cash donation limit u/s.80G to charitable trust reduced from Rs 10,000 to Rs 2,000
13. One page income tax return introduced for assessees having income below Rs 5 lakh.
14. Major changes in budget that were expected but has not come through.
a) No change in 1 year holding period for getting complete exemption from taxation on sale of shares and no change in 15% tax for sale of shares having holding period of less than 1 year. This has given great relief to the stock market which they are celebrating.
b) No change in tax u/s.80C limit of Rs 1.5 lakh
c) No change in service tax rate of 15%
d) No change in excise duty on cigarettes.
(The author is a Kochi-based chartered accountant.)
