All about Income Tax for FY 2017-18 or AY 2018-19 + Automatic Master of Form 16 Part B with 12 BA for F.Y.2016-17 and A.Y.2017-18

As per the Budget presented by Finance Minister Arun Jaitley on 1 Feb 2017, the tax rate for those earning up to Rs 5 lakh is reduced to 5% and flat Rs 12,500 rebate offered to all taxpayers. But tax compliance will become stricter and delays in filing tax returns will cost money. This article gives Overview of Income Tax for FY 2017-18 AY 2018-19 applicable for income earned from 1 Apr 2017 to 31 Mar 2018, Income Tax Slab Rates for FY 2017-18 or AY 2018-19.This will be applicable, if passed, from 1 Apr 2017 to 31 Mar 2018

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·                                 The Budget has also proposed stricter rules for not filing tax returns on time. There will be a fee of 5,000 if the tax return is filed after the due date, but before 31 December of the assessment year. If filed after that, the fee will be 10,000. However, if the annual income of the taxpayer is up to 5 lakh, the fees will be lower at 1,000.

·                                 The tax rate for those earning up to 5 lakh has been reduced from 10% to 5%, a move that will affect nearly two crore taxpayers.The tax rebate enjoyed by this segment of taxpayers under Section 87 has been reduced from 5,000 to 2,500 and will apply only to incomes up to 3.5 lakh.

·                                 The tax rebate enjoyed by this segment of taxpayers under Section 87 has been reduced from 5,000 to 2,500 and will apply only to incomes up to 3.5 lakh.For other taxpayers, the Budget has offered a flat tax rebate of 12,500. If you add the savings on education cess, most taxpayers will save 12,875. Those earning over 1 crore will save over 14,000.However, upper

·                                 For other taxpayers, the Budget has offered a flat tax rebate of 12,500. If you add the savings on education cess, most taxpayers will save 12,875.

·                                 Those earning over 1 crore will save over 14,000.However, upper-middle-class taxpayers earning between 50 lakh and 1 crore will shell out more tax due to the 10% surcharge on tax.

           Simplification of the Income Tax Return form for income up to 5 lakh. This ITR form will now be a one-page document, very similar to the Saral form introduced several years ago. The finance minister also said that anyone filing tax returns for the first time will not attract scrutiny. This might induce individuals to start filing their tax returns.


  • Salaried taxpayers who fudge house rent receipts will now find it difficult to claim exemption for housing rent allowance. The budget proposes to make it mandatory for TDS to be deducted if the rent exceeds 50,000 a month. Three years ago, it was made mandatory to mention the landlord’s PAN if the rent exceeded 1 lakh a year. Now, with the TDS requirement, it will become even more difficult to submit fake rent receipts to claim tax exemption.
  • There is No Change in 80C limit  It is still Rs 1.5 lacs. The investment in NPS or National pension scheme gives you extra tax deduction of up to Rs 50,000
  • NO RGESS Tax exemption from FY 2017-18 Tax exemption under section 80CCG for RGESS (Rajiv Gandhi Equity Scheme) would NOT be available from FY 2017-18 on wards. The deduction was introduced in Budget 2012 to encourage retail participation in stock market but failed to take off as desired.
  • Tax-exemption to partial withdrawal from NPS Partial withdrawal up to 25% of the contribution made by an employee would be exempted from tax.

·         Income From House Property

  • Interest deduction on rented property capped at Rs 2 Lakh.Tax break due to interest paid on rented homes (whether first or second) will now be capped at 2 lakh. This is likely to impact investment in real estate

  • Professionals, salaried employees and smaller businessmen paying more than 50,000 a month as rent will have to deduct tax at source at 5%
  • Reduced tax rate of 25% on firms with turnovers upto 50 cr in FY 2015-16 Period for carry-forward and use of MAT credit in creased from 10 to 15 years
  • Beneficial withholding tax rate of 5% on interest on ECBs of Indian firms extended by three yrs till June 2020. Also extended to their rupee-denominated bonds
  • Tax holiday to start-ups now available for 3 out of 7 yrs instead of existing 3 out of 5 yrs

Income Tax Slab Rates for FY 2017-18 or AY 2018-19

In AY 2017-18 or FY 2016-17,  there were three slabs — 10 percent income tax for annual income between Rs 2.5 lakh and Rs 5 lakh, 20 percent on annual income from Rs 5 lakh to Rs 10 lakh, and 30 percent on income above Rs 10 lakh. This will be applicable, if passed, from 1 Apr 2017 to 31 Mar 2018.
     TAX Rate
    MEN and WOMEN below 60 years
     SENIOR CITIZEN(Between 60 yrs to 80 yrs)
For Very Senior Citizens(Above 80 years)
Basic Exemption
250000
300000
500000
5% tax
250001 to 300000
–
–
5% tax
300001 to 500000
300001 to 500000
–
20% tax
500001 to 1000000
500001 to 1000000
500001 to 1000000
30% tax
above 1000000
above 1000000
above 1000000
      ·                                 Surcharge:
     ·                                                         10% surcharge on income tax if the total income exceeds Rs 50 Lakhs but below Rs 1 crore
    ·                                                         15% surcharge on income tax if the total income exceeds Rs 1 crore
    ·                                 Education Cess: 2% cess on income tax including surcharge
    ·                                 Secondary and Higher Education Cess: 1% cess on income tax including surcharge
   ·                                 Rebate under Section 87A: Rs 2,500 or 100% of income tax (whichever is lower) for individuals with income below Rs 3.5 Lakhs