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).

GST impact: Transport sector

Transport sector saw the largest drop in tax rate at 23.2%, agriculture lowest at 0.09%

The goods and services tax (GST), took off on 1 July, 2017, cut marginal tax rates – the genuine, successful expense a business pays, actually the distinction between the pre-duty and post-duty rate of profit for an investment – on organizations in India in all parts, with the exception of electricity, which is absolved from the new tax regime, as per another study.

Gst impact in transport sector

Transport sector and GST

The fall in marginal tax rates was in the scope of 1-23 % rate focuses crosswise over divisions, as indicated by Gaurav S. Ghosh, senior administrator, EY, a global consultancy, and Jack Mintz, chief of the school of public policy at the University of Calgary, Canada.

Minimal tax is the rate organizations wind up paying for each new unit of the venture in the wake of considering the impact of all statutory expenses imposed. A higher minor expense rate implies organizations have brought down motivations for expanding venture and the other way around, the creators clarified.

At 23.2 percent, the transport area saw the biggest drop in peripheral expense rate. At 0.9 percent, horticulture saw the most reduced drop.

By and large, peripheral duty rate fell by five rate focuses to 22 percent from 27 percent.

Blog Credit: Firstpost.com

 

GST Transitional Claims

GST Transitional Claims of Over Rs 1 Cr to be Scrutinised

While tax collections in July were Rs 95,000 cr, transitional credit claims are Rs 65,000 cr

As much as Rs 65,000 crore out of the nearly Rs 95,000 crore tax collections in July -the first month of GST -have been claimed as transitional credit by taxpayers, prompting the apex indirect taxes body the Central Board of Excise and Customs to order a scrutiny of all cases above Rs 1 crore.

The Goods and Services Tax (GST) regime, which kicked in from July 1, allows tax credit on stock purchased during the previous tax regime. This facility is available only up to six months from the date of GST rollout.

Central Board of Excise and Customs (CBEC)

The Central Board of Excise and Customs (CBEC), the body which deals with formulation and implementation of policy concerning the levy and collection of indirect taxes, in a letter dated September 11 has asked tax officials to verify GST transitional credit claims of over `1 crore. In the transitional credit form TRAN-1  filed by taxpayers along with their maiden returns for July, businesses have claimed a credit of over Rs 65,000 crore for excise, service tax or VAT paid before the GST was implemented from July 1.

As per the GST law, carry forward of transitional credit is permitted only when such credit is permissible under the law.

“The possibility of claiming ineligible credit due to mistake or confusion cannot be ruled out… It is de sired that the claims of ITC (input tax credit) of more than Rs 1 crore may be verified in a time-bound manner,“ the CBEC emphasised. It asked the chief commissioners to send a report to the CBEC by September 20 on the claims made by these companies.

CBEC

To ensure only eligible credit is carried forward in the GST regime, the CBEC has asked field offices to match the credit claimed with closing balance in returns filed under the earlier law. They are also required to check if the credit is eligible under the GST laws.

Till last week, as many as 70 % of 59.57 lakh taxpayers had filed returns for July, amounting to maiden revenue of Rs 95,000 crore under the GST regime.

However, out of this, the input tax credit (ITC) data for Central GST (CGST) claimed in TRAN-1 has shown that registered businesses have claimed over Rs 65,000 crore as transitional credit.

The government, in late August, had come out with form TRAN-1for businesses to claim credit for taxes paid on transition stock.

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