Finance Minister, Mr.
Arun Jaitley, did not propose any change in the income-tax slab rates. However,
various changes have been proposed in the income-tax provisions which impact
the taxable income of an individual.
All relevant proposals made for an Individual are as under:
(1) Rate of surcharge shall be
increased to 15% from 12% if total income of an individual exceeds Rs. 1 crore.
(2) An additional tax at the rate of
10% of gross amount of dividend shall be paid by a resident individual, HUF or
a firm, if dividend received by them from a domestic company exceed Rs. 10
lakhs per annum. Dividend income is otherwise exempt under Section 10(34),
however, such exemption is proposed to be withdrawn in case of rich investors
receiving dividend exceeding Rs. 10 lakhs [Section 115BBDA].
(3) Relief under Section 87A is
proposed to be raised from Rs. 2,000 to Rs. 5,000 in order to provide relief to
small taxpayers. Relief under Section 87A is available to a resident individual
if his total income does not exceed Rs. 5,00,000. For Assessment Year 2017-18,
the relief shall be allowed up to income-tax liability or Rs. 5,000 whichever
is less.
(4)
Tax shall be collected at source at 1% in respect of following
[Section 206C]:
(a) Purchase of motor vehicle, if
value thereof exceeds Rs. 10 lakhs
(b)
Purchase of any good or service, if value thereof exceeds Rs. 2
lakhs and the payment thereof is made in cash.
(5) No tax on capital gain arising on
redemption of Sovereign Gold Bond issued by the RBI under Sovereign Gold Bond
Scheme, 2015 [Section 47]
(6)
Any benefit provided to an individual by way of allotment of
shares at free or at concessional price is taxable as income from other source
if value of such benefit exceeds Rs. 50,000. However, no tax shall be charged
if such allotment is made in:
(a) A scheme of business
re-organization of co-operative bank;
(b) In a scheme of demerger; and
(c)
In a scheme of amalgamation (if amalgamating company is an Indian
Company) [Section 56(2)(vii)]
(7)
Section 80EE proposes an additional deduction of up to Rs. 50,000
every year in respect of interest on housing loan. Such deduction shall be
allowed to the first time individual buyers of a residential house property,
if:
(a) Value of residential house
property does not exceed Rs. 50 lakh;
(b) Amount of loan does not exceed
Rs. 35 lakh; and
(c)
The loan is sanctioned between 01-04-2016 and 31-03-2017.
The proposed deduction shall be in addition to deduction of Rs.
2,00,000/- allowed under section 24 of the Act.
(8) Presumptive taxation scheme is
proposed for a resident individual engaged in the specified profession. The
presumptive scheme shall be available if the gross receipts from the profession
does not exceed Rs. 50,00,000. The presumptive income shall be 50% of the gross
receipts [Section 44ADA].
(9) The threshold limit for audit
under Section 44AB has been proposed to be increase to Rs. 50 lakhs in case of
specified professions [Section 44AB].
(10)
An individual can claim deduction under section 80GG if he is
paying house rent but not receiving any HRA from the employer. The least of
following is allowed as deduction:
(a) Rent paid in excess of 10% of
total income;
(b) Rs. 2,000 per month; or
(c)
25% of total income.
The existing limit of Rs. 2,000 per month is proposed to be
increase to Rs. 5,000 per month.
(11)
Section 54GB proposes that long term capital gains arising from
transfer of residential property of individual or HUF shall not be charged to
tax if such capital gain is invested in shares of an eligible start-up. Such
exemption shall be available if:
(a) Individual or HUF holds more than
50% shares of such start-up; and
(b)
Such investment is utilized by the start-up to purchase new assets
before due date of filing of return of investor.
(12) An assessee is allowed to claim
deduction of up to Rs. 2,00,000 in respect of interest on loan taken for
acquisition or construction of self-occupied house property, subject to certain
conditions, inter-alia, house property should be acquired or
constructed within a period of 3 years from the end of the financial year in
which loan was taken. In view of the fact that housing projects often take
longer time for completion, it is proposed that the deduction shall be
available if property is acquired or constructed within 5 years from the end of
the financial year in which capital was borrowed [24(b)]
(13) Section 197A provides that no tax
shall be deducted if the payee furnishes to the payer a self- declaration in
prescribed Form No. 15G/15H declaring that the tax on his estimated total
income would be nil.
At present, declaration under
section 197A could be furnished only when payee is in receipt of following
income:
(a) Premature withdrawal from
provident fund
(b) Interest
(c) Dividend
(d) Payment in respect of life
insurance policy
(e)
Payment in respect of deposit made in National Saving Scheme
It is proposed to amend section 197A to provide that a person who
is in receipt of rental income can also furnish self-declaration to the payer
for no deduction of tax at source if tax on his total income (including rental
income) is nil.
(14) Presently, any contribution made
by the employer to the provident fund account of an employee is not charged to
tax if it does not exceed 12% of salary. It is proposed that contribution in
excess of 12% of salary or Rs. 1,50,000, whichever is less shall now be charged
to tax in the hands of the employees as salary.
(15) Any amount contributed to
superannuation fund by an employer is treated as perquisite in hands of
employee and chargeable to tax if the amount of contribution exceeds Rs.
1,00,000. It is proposed to amend the said section so as to increase the limit
of employer's contribution from Rs. 1,00,000 to Rs. 1,50,000. [Section
17(2)(vii)]
(16) A new Section 54EE is inserted to
provide for exemption up to Rs. 50 lakhs for long term capital gains invested
in units of funds set up by Government to promote start-ups. Exemption shall be
reversed if amount invested is withdrawn within 3 years from date of making
investment in specified funds.
(17) Non-compete fee received by an
individual for not carrying out any profession is proposed to be charged to tax
under section 28.
(18) It is now mandatory for an
individual/HUF/AOP/BOI/ artificial juridical person to file return of income
even if their entire income is exempt from tax under Section 10(38). However,
in such case, the total income without giving effect to the provisions of
Section 10(38) should exceed the maximum exemption limit to require the
assessee to file the return of income. [139(1)]