The impact of budget 2017 on your personal finances and investments:
1. Reduction in the rate of income tax: Earlier, the earnings between Rs. 2.5 to 5.0 lakhs were charged @ 10%. This has been reduced to 5%.
2. Tax rebate under section 87A reduced: Earlier, a person earning up to Rs. 5.0 lakhs was entitled to a tax rebate of up to Rs. 5000. Henceforth, a person earning up to Rs. 3.5 lakhs would be entitled to a tax rebate of up to Rs. 2500.
3. Surcharge on income between Rs. 50 lakhs to Rs. 1 crore: Earlier, only people earning above Rs. 1 crore were liable to pay a surcharge @ 15%. Now those earning between 50 lakhs and 1 crore will be paying surcharge @ 10%.
4. Restrictions on cash transactions: Henceforth, no person can receive in cash an amount of Rs. 3 lakhs or more per day per person either for one transaction or for multiple transactions relating to one event or occasion. Penalty for not complying with this provision will be equal to such amount received.
5. Condition for long term capital gain tax relaxed: Now the profit on sale of immoveable property will be considered as long term capital gain if the property is held for 24 months instead of 36 months as was the case earlier.
6. Restrictions on set off of loss from house property: Henceforth the benefit of setting off loss from house property against any other income would be limited to Rs. 2.0 lakhs only i.e. same as the self occupied property. Earlier there was no limit to set off this loss.
7. Change of base year to calculate capital gains: Budget has decided to take fair market value as on April 1, 2001 as the cost of acquisition. New base year would be 2001-2002.
8. More bonds will be notified which are eligible to provide benefits under section 54EC. Presently, only bonds issued by NHAI and REC qualify to reinvest capital gains upto Rs. 50 lakhs.
9. Restrictions on cash donations: Now onwards, only up to Rs. 2000 in cash as donation would be allowed as deduction under section 80G.
10. From FY 2017-18 Rajiv Gandhi Equity Saving Scheme will be phased out.
11. For people having taxable income up to Rs. 5 lakhs other than business income, the government will introduce a simple one page form for filing their tax returns.
12. Henceforth, partial withdrawals from NPS too shall be exempt from tax for an amount not exceeding 25℅ of the employee’s contribution.
13. The long term capital gains on equity shares or equity oriented mutual funds would be exempt from tax, if STT was chargeable even at the time of acquisition of such shares or units.
14. Higher penalty for delay in filing Income tax returns: In order to improve tax compliance, non filing of the income tax returns in time would be penalized as under:
A. Rs. 5000 would be the penalty if return are filed after the due date but on or before December 31st of the assessment year.
B. For any other case, the penalty would be Rs. 10000.