10 Income Tax Rules That Will Change From April 1

? Rs 40,000 standard deduction introduced: This additional deduction has been proposed in place of existing deductions of Rs. 19,200 for transport allowance and Rs. 15,000 for medical reimbursement.

This will benefit 2.5 crore salaried employees. Pensioners, who normally do not enjoy any allowance for transport and medical expenses, will also benefit from it.

After the introduction of standard deduction, the salaried class will enjoy a flat deduction of Rs 40,000 from their taxable income. Standard deduction was earlier available for salaried individuals previously, till it was abolished with effect from assessment year 2006-07.  The benefits arising from standard deduction depends on the tax bracket a salaried individual falls in.

? Higher cess: The finance minister also raised cess on income tax to 4 per cent from 3 per cent for individual taxpayers on the amount of income tax payable.

? Introduction of long-term capital gains tax on equity investments:  A new 10 per cent tax (cess extra) will be applicable on capital gains exceeding Rs 1,00,000 upon sale of equity share or units of equity oriented funds. However, for the benefit of tax payers, the gains till January 31, 2018, are being grandfathered. This means that only gains over January 31, 2018, prices will be taxed.

? Tax on dividend income from equity mutual funds:  A tax at the rate of 10 per cent will be levied on dividend distributed by equity-oriented mutual funds.

? More income tax benefits on single premium health insurance policies: Health insurers typically provide some discount if you pay premium for a few years upfront. But earlier, an individual could claim deduction only up to Rs. 25,000.

Under the proposed changes in Budget 2018, in case of single premium health insurance policies having cover of more than one year, deduction will be allowed on a proportionate basis for the number of years for which health insurance cover is provided, subject to the specified limit. For example, your insurer is offering a 10 per cent discount on health insurance premium if you pay Rs. 40,000 for the two-year cover. Under the proposed changes, the individual can claim Rs. 20,000 in both years.

? Income tax benefit on NPS withdrawal: The government has proposed an extension to the benefit of tax-free withdrawal from NPS (National Pension System) to non-employee subscribers.

Currently, an employee contributing to the NPS is allowed an exemption in respect of 40 per cent of the total amount payable to him or her on closure of account or on opting out. This exemption is currently not available to non-employee subscribers. The extension of tax-free withdrawal to non-employee subscribers will be available from financial year 2018-19.

EMPOWERING SENIOR CITIZENS

? Deduction in respect of interest income to senior citizens:

Senior citizens will get higher interest income exemption limit on deposits in banks and post offices, including recurring deposits.  Currently, a deduction up to Rs 10,000 is allowed under Section 80TTA of the Income Tax Act to an individual in respect of interest income from a savings account.

Under the tax laws, a new Section 80TTB is proposed to be inserted to allow a deduction up to Rs 50,000 in respect of interest income from deposits held by senior citizens. However, no deduction under Section 80TTA shall be allowed for senior citizens.

The government also proposed to increase the investment limit in Pradhan Mantri Vaya Vandana Yojana or PMVVY to Rs. 15 lakh from Rs. 7.5 lakh. It also proposed to extend the Pradhan Mantri Vaya Vandana (PMVVY) scheme till March 2020. Pradhan Mantri Vaya Vandana Yojana, a scheme meant for senior citizens, offers a guaranteed interest rate of 8 per cent.

? Higher TDS or tax deducted limit for senior citizens: The threshold for deduction of tax at source on interest income for senior citizens is proposed to be hiked from Rs 10,000 to Rs 50,000.

? Higher deduction limit under Section 80D of the Income Tax Act for senior citizens: In Budget 2018, the government proposes to increase the deduction for senior citizens on payment of health insurance premiums. The limit is set to go up from Rs 30,000 Rs 50,000. For individuals below 60 years of age, the deduction under Section 80D continues to be Rs 25,000. But if their parents are senior citizens, above 60 years, they can claim an additional deduction of up to Rs 50,000-taking the total deduction to Rs 75,000 (Rs 25,000 + Rs 50,000), higher than the current limit of Rs 55,000.

? Higher income tax deduction for senior citizens for medical treatment of specified diseases:  The deduction available payment towards medical treatment of specified disease is proposed to be hiked to Rs 1 lakh for very senior citizen (earlier Rs 80,000) and senior citizen (earlier Rs 60,000).

Exporter’s Order Books

GST squeezes exporters’ order books

exporter and GST

15% drop crosswise over industries and product categories till Oct: FIEO

Two months after the usage of the goods and services tax (GST), the order books of exporters are said to have endured a shot, with gauges pegging the effect by up to 15 for each penny crosswise over businesses and item classifications. The effect could be seen even as fares saw twofold digit ascend in August year-on-year (y-o-y).

As indicated by an appraisal by the Federation of Indian Export Organizations (FIEO), the substantial drop was found in trade arranges that were intended to be conveyed until October.

The plunge enrolled over a time of two months since July (when the GST was presented), was to a great extent by virtue of exporters not satisfying requests because of the absence of credit.

The liquidity crunch had constrained many to utilize accessible assets to oversee existing business operations instead of satisfying requests from abroad.

The liquidity crunch had constrained many to utilize accessible assets to oversee existing business operations instead of satisfying requests from abroad.

Two-Three Months to be Sourced, Handled, and Delivered

In spite of the fact that fare development quickened in August, it is to a great extent y-o-y. For example, sends out declined to Rs 22.54 billion in July from Rs 23.56 in June. In August, these marginally resuscitated to $23.81 billion, however not to the degree of the levels found in April and May. Fares were $24.63 billion in April and Rs 24.01 billion in May.

EEPC  confirmed this by saying the rate hit was higher for exporters taking care of items with a more extended incubation period.

Dealer exporters, and also those whose items require two-three months to be sourced, handled, and delivered, have been hit hard inferable from their capital being tied up longer.

Exporters were prior permitted dutyfree import of merchandise that is utilized for the assembling of fare items. Be that as it may, under the GST, they would need to pay the obligation forthright and apply for discounts later.

EAPC

The issue of a liquidity mash under the new GST administration was hailed by exporters as the most difficult issue. Their expenses have ascended by up to 1.25 for every penny (cargo on board esteem) following the execution of the new duty administration, as per gauges.

The figure is ascending, as late discounts squeeze littler players hard, while bigger elements confront trouble in streamlining operations, say specialists.

The filing of documents for GSTR-1, GSTR-2, and GSTR-3 has been extended to July 10, October 31 and November 10, respectively

Moreover, exporters have kept on pointing out the trouble in getting discounts have not facilitated. This is for the most part on the grounds that the discount procedure has been deferred, in light of the fact that the date of recording the discount reports has been stretched out by the administration. The recording of archives for GSTR-1, GSTR-2, and GSTR-3 have been reached out to July 10, October 31 and November 10, separately, the EEPC said.

This augmentation successfully implies the July discounts may be accessible in the third seven-day stretch of November, at the most punctual, the EEPC said. Essentially, send out discounts for the long stretch of August will be pushed back to December and this is relied upon to have a falling effect on the September discounts.

Additionally, exporters have charged that since the GST take off, discounts from state governments for charges paid under the Duty Drawback Scheme have halted.

A comparable issue is playing out finished obligation scrips: Its extension has been diminished as an expense paying the instrument. In August, the administration had found a 12 for each penny assess on the offer of scrips got for motivator plans, for example, the Merchandise Export from India Scheme (MEIS), interestingly. Scrips got by exporters under the Services Exports from India Scheme and the Incremental Export Incentivisation Scheme, aside from the MEIS, will likewise be burdened.

The administration’s expense move was pummeled by exporters, who said this had no legitimization and would hit their shipments. Along these lines, the GST Council declared a week ago this was being lessened to four for each penny. Be that as it may, while scripts were permitted to be used for the installment of extract, benefit impose and value added assess in the pre-GST period, this may now just be material for the installment of fundamental Customs obligation.

Threshold Limit

Tax audit

Threshold Limit for Tax Audit for the AY 2017-18

Yet tax audits for the AY 2016-17 are on their way and to finish before 30.09.2016 but we need to also keep in mind threshold limit applicable for the AY 2017-18 for compliance and planning purposes. The Finance Act 2016 (applicable for the AY 2017-18) has enhanced the turnover limit from Rs. 1 crore to Rs. 2 crores for assessee’s claiming presumptive taxation benefit under section (u/s) 44AD of the Income Tax Act 1961 (the Act).

This, therefore, created a doubt whether tax audit limit u/s 44AB of the Act is simultaneously increased from Rs. 1 crore to 2 crores or not.

The dust is set at rest by CBDT press release dated 20.06.2016 clarifying that higher threshold limit for non-audit of accounts has been given only to assesses opting for presumptive taxation scheme u/s 44AD of the Act. In other words, it means that turnover / total sales / gross receipt level fixed to be greater than Rs.1 crore attracting tax audit provisions u/s 44AB of the Act still prevails but assesses who claim benefit of section 44AD of the Act can avoid tax audit up to the total turnover limit of Rs. 2 crores even.

Above arrangements can be comprehended with the assistance of following cases even:

 

  • Alpha Pvt. Ltd. having a total turnover of Rs. 125 lacs for the FY 2016-17 needs to get its books audited u/s 44AB of the Act as turnover has exceeded Rs. 1 crore. We all know that company assessee can’t avail benefit u/s 44AD of the Act thus threshold limit of Rs. 1 crore applicable as above.
  • Mohanty and Co. (an organization firm) occupied with exchanging of electronic merchandise having a turnover of Rs. 165 lacs for the FY 2016-17 require not to get its records reviewed u/s 44AB of the Act as its turnover has not surpassed Rs. 2 crores (expecting that firm will offer business salary u/s 44AD of the Act). Be that as it may if the firm selects to be out of possible tax collection conspire u/s 44AD of the Act it needs to get books evaluated u/s 44AB of the Act.

Read More: GST Audit Limit Guide for Taxpayers with Turnover Above 2 Crores

  • Mr. Girraj Malpani, proprietor of Goverdhan Associates having receipts of 137 lacs from commission by way of sourcing insurance and lending arrangements during the FY 2016-17 will need to get his accounts audited u/s 44AB of the Act because assesses earning commission income can’t avail benefit of section 44AD of the Act thus threshold limit of Rs. 1 crore shall be applicable. 
  • Credits:  Anoop Bhatia

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