Budget 2017 Highlights

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

There is a slight change in Income Tax Slab Rates for FY 2017-18 or AY 2018-19. They are as below.

Therefore now the surcharges are as below for super rich individuals.
  • If the total income exceeds Rs.50 lakhs but below Rs.1 Cr0re, a surcharge of 10% will be levied.
  • 15% surcharge on income tax if the total income is over and above Rs.1 Crore.

3) Rebate under Sec.87A reduced to Rs.2,500

An individual who is resident Indian and whose total income does not exceed Rs. 3,50,000 is entitled to claim rebate under section 87A.
Hence, HUF or NRIs are not eligible for this rebate. Also, do remember that this rebate is not available for super senior citizens.
Earlier the rebate was Rs.5,000 for those whose income is up to Rs.5,00,000. However, from FY 2017-18 it is now reduced to Rs.2,500 and income range to Rs.3,50,000.
Hence, now let us an individual earning’s taxable income is Rs.3,00,000. Now the tax on this at 5% will be Rs.2,500. He can easily claim rebate under Sec.87A and reduce his tax liability to ZERO.

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4) Holding period of immovable property for long term capital gain reduced

Earlier holding period of immovable property for long term capital tax was 3 years. Now it reduced to 2 years. Hence, this is the biggest boost to property holders.
Because if you buy today and sell after 2 years, then it will be considered as long term holding and taxed accordingly. I think this is a bit a relief to all real estate owners.

5) The base year for indexation calculation is changed from 1st April 1981 to 1st April 2001

For calculation of taxation on capital gains like debt funds or immovable properties, we consider indexation benefit. For this, earlier the base year was 1st April 1981. But not the base year changed to 1st April 2001.
This is one more good news to all those who have to pay tax based on indexation benefits. It will dramatically reduce the tax liability.

6) You can’t transact more than Rs.3,00,000 in cash

To promote the digital economy and also to curb black money, Government decided to bring in the new law where you are not allowed to transact above Rs.3 lakh in cash.
For this purpose, a new IT Section was introduced. This is Section.269ST. The highlights of IT Section.269ST are as below.
  • This Rs.3,00,000 limit is per person and per day.
  • Also, this is related to a single transaction.
  • Provisions of this section will not apply to in case of receipt of money by Government, any banking company, post office savings bank or co-operative bank.

7) One-page Income Tax Return Form

In order to promote tax filing from all individuals, Government will introduce the one-page income tax return form. This form can be used by those whose income is less than Rs.5 lakh and also they must have other than business income.
Also, a person of this category who files income tax return for the first time would not be subjected to any scrutiny in the first year unless there is specific information available with the Department regarding his high-value transaction.

8) Changes in National Pension Scheme from Budget 2017

If your NPS account is at least 10 years old, then you will be eligible for withdrawing 25% of contributions (without accrued income earned thereon). Employer contributions cannot be withdrawn. This 25% is tax-free during withdrawal but will be within the 40% overall tax tax-free withdrawal limit.

9) Service Charge on e-tickets booked through IRCTC removed

Earlier the service tax on e-tickets booked through IRCTC was removed after the demonetization. However, now this is permanently removed to improve the cashless economy.
The service tax was Rs.20 on Sleeper and Rs.40 on AC classes for booking tickets through IRCTC.

10) Limit in set off of loss from “Income from House Property”

In respect of any assessment year, the net result of the computation under the head “Income from house property” is a loss and the assessee has income assessable under any other head of income, the assessee shall not be entitled to set off such loss, to the extent the amount of the loss exceeds Rs.2 lakhs, against income under the other head.
Earlier there was no such set-off limit. This I think the negative news for real estate owners (especially those who have more than one home).
These are the major points which I saw as Budget 2017 Highlights.

The biggest expectation of an increase in Sec.80 limit has not happened. The only good thing that we can say is 5% reduced in income tax rate.