Want to know how the Union Budget 2017 affects you, but haven’t had the time or inclination to plough through all the details? Not to worry – below is a quick summary on the specific provisions of this year’s budget that affect you and your pocket.
Income Tax – how do the new provisions affect you?
– If your total annual income is between Rs 2.5 - 5 lakhs, your tax rate is halved from 10% to 5%.
– If you earn less than Rs. 3 lakhs per annum, you will not pay any income tax (as a result of the changes in the tax rate and rebates).
– If your income is between 3-3.5 lakhs, your tax liability will only be Rs. 2500.
– If your income is Rs. 4.5 lakhs and you use the limit of Rs 1.5 lakh under Section 80C for investment fully, your tax would be zero.
– All the other categories of tax payers in the subsequent slabs will also get a uniform benefit of Rs 12,500 per person. So any which way, you will have a handy extra Rs. 12,500 in your pocket if you have an annual income of more than Rs. 5 lakhs!
– Those with an income between Rs. 50 lakhs – Rs. 1 crore will need to pay a surcharge of 10%.
– The definition of “long term’ holding period for immovable property is reduced from 3 to 2 years. This means immovable property held for only 2 years is taxed at the reduced rate of 20 per cent and eligible for various exemptions on reinvestment. You can avail of tax exemption on reinvestment of capital gains in notified redeemable bonds, in addition to investment in NHAI and REC bonds.
– Corporate tax rate reduced from 30% to 25% for MSME firms (those with a turnover of below Rs. 50 crores).
Filing IT returns – no scrutiny for first timers:
• In additional good news, there will be no tax scrutiny for first-time return filers with income of less than Rs 5 lakhs. You will only need to fill out a simple one page IT return form rather than the tedious paperwork even for small tax payers in the past.
• However, late filing of tax returns can incur fines between Rs 5000- Rs. 10,000 depending on how late you file – so make sure you have your taxes done on time. Those with an income of less than Rs. 5 lakhs will need to pay only Rs. 1000 for late filing.
Cash only for transactions below Rs. 3 lakhs
• Only transactions below Rs. 3 lakhs can be made by cash. Any amount above Rs. 3 lakhs has to be made by cheque/DD, bank transfer, and card payment.
• You can make cash donations to charities only up to Rs. 2000.
Home loan subsidies for first time buyers
• If you earn up to Rs 18 lakhs per annum, you will pay approximately Rs. 2.4 lakhs less to buy your house, as the government will subsidize a portion of the interest payment on your first home loan. Earlier this scheme was only available for those with an income of less than Rs. 6 lakhs.
House rent deduction capped
• Those paying more than Rs. 50,000 a month as rent, will have to deduct TDS at 5 per cent.
Cheaper train travel
• Train travel to get cheaper with withdrawal of service charge levied on tickets bought online through IRCTC portal.
Things that will get more expensive
• Bad news for habitual tobacco users. Cigarettes, bidis, ghutka, pan masala will get costlier with the excise duty revision. This might hit you quite hard if you are a heavy user of these products.
• Mobile phones and LED lights assembled in India will also be more expensive
• Imported cashew nuts
• Imported silver medallions and coins of 99.9 purity
Gifts above Rs. 50,000 to be taxed
• Money, immovable property or any other movable property / favors worth over Rs 50,000 received as gift is taxable in line with the new budget.
It is safe to say no budget can please every citizen. Overall, the 2017 Union Budget aims to streamline the tax regime, give relief to those in the lower income slabs, tighten up on late filing of taxes, and crack down on large cash transactions that are outside the tax net. The budget is a fillip to the housing market, and certain segments of first time home buyers stand to gain significantly from government subsidies.