Education
Cess:
1) Education cess and Secondary and
Higher Education Cess will be discontinued which was 2% and 1% respectively.
However,
a new cess, by the name of “Health and Education Cess” shall be levied at the
rate of 4%.
2) Slab
of taxation:
For
Every Individual, HUF, AOP, BOI and Artificial Judicial person
Upto
Rs. 2,50,000 Nil
Rs.
2,50,001 to Rs. 5,00,000 5
%
Rs.
5,00,001 to Rs. 10,00,000 20 %
Above
Rs. 10,00,000 30
%
For
Senior Citizen:
Upto
Rs.3,00,000 Nil
Rs.
3,00,001 to Rs. 5,00,000 5 %
Rs.
5,00,001 to Rs. 10,00,000 20
%
Above
Rs. 10,00,000 30
%
For
Super Senior Citizen:
Upto
Rs. 5,00,000 Nil Rs.
5,00,001 to Rs. 10,00,000 20
%
Above Rs.
10,00,000 30
%
3)
For
Partnership firm, no change in the rates of taxation.
4)
For
Companies:
- In
case of domestic company, the rate of income-tax shall be 25%. of the total
income if the total turnover or gross receipts of the previous year 2016-17
does not exceed 250 Crore rupees
- In
all other cases the rate of Income-tax shall be 30 % of the total income.
- In
the case of company other than domestic company, the rates of tax are the same
as those specified for the financial year 2017-18
5)
Surcharge
– Same as specified
for Financial Year 2017-18.
6)
Entities
to apply for Permanent Account Number in certain cases
In
order to use PAN as Unique Entity Number (UEN) for non-individual entities, it
is proposed that every person, not being an individual, which enters into a
financial transaction of an amount aggregating to two lakh and fifty thousand
rupees or more in a financial year shall be required to apply to the Assessing
Officer for allotment of PAN.
In
order to link the financial transactions with the natural persons, it is also
proposed that the managing director, director, partner, trustee, author,
founder, karta, chief executive officer, principal officer or office bearer or
any person competent to act on behalf of such entities shall also apply to the
Assessing Officer for allotment of PAN.
7)
Dividend
Distribution Tax to Deemed Dividend
At
present dividend distributed by a domestic company is subject to dividend
distribution tax payable by such company.
However, Deemed dividend as defined under Section
2(22)(e) of the Income Tax, 1961 is taxable in the hands of the recipient.
In order to avoid litigation, it has been provided
that the DDT will also be applicable on deemed dividends.
Further, such deemed dividend is proposed to be
taxed at the rate of 30% (without grossing up) in order to prevent camouflaging
dividend in various ways such as loans and advances.
8)
New
regime for taxation of long-term capital gains on sale of equity shares etc.
Under
the existing regime, long term capital gains arising from transfer of long term
capital assets, being equity shares of a company or an unit of equity oriented
fund or an unit of business trusts , is exempt from income-tax under clause
(38) of section 10 of the Act.
It
is proposed to withdraw the exemption under clause (38) of section 10 and to
introduce a new section 112A in the Act to provide that long term capital gains
arising from transfer of a long term capital asset being an equity share in a
company or a unit of an equity oriented fund or a unit of a business trust shall
be taxed at 10% of such capital gains exceeding 1 Lac rupees
Further, it
provides that:
The
long term capital gains will be computed without giving effect to the first and
second provisos to section 48, i.e. inflation indexation in respect of cost of
acquisitions and cost of improvement.
Further,
the cost of acquisitions in respect of the long term capital asset acquired by
the assessee before the 1st day of February, 2018, shall be deemed to be the
higher of –
a) the
actual cost of acquisition of such asset; and
b) the
lower of –
(I)
the
fair market value of such asset; and
(II)
the
full value of consideration received or accruing as a result of the transfer of
the capital asset.
9) Dividend
distribution tax on dividend pay outs to unit holders in an equity oriented
fund
It
is proposed to provide that where any income is distributed by a Mutual Fund
being, an equity oriented fund, the mutual fund shall be liable to pay
additional income tax at the rate of ten per cent on income so distributed.
10) Extending
the Scope of TDS and Restriction of Cash payment by charitable or religious
trusts or institutions:
At
present, there are no restrictions on payments made in cash by charitable or
religious trusts or institutions.
There
are also no checks on whether such trusts or institutions follow the provisions
of TDS.
In
order to encourage a less cash economy and to reduce the generation and
circulation of black money, it is proposed to insert a new Explanation to the
section 11 to provide that for the purposes of determining the application of
income under the provisions of sub-section (1) of the said section, the
provisions of sub-clause (ia) of clause (a) of section 40, and of sub-sections
(3) and (3A) of section 40A, shall, mutatis mutandis, apply as they apply in
computing the income chargeable under the head “Profits and gains of business
or profession”.
11) Presumptive
income under section 44AE in case of goods carriage
Section
44AE, inter alia provides that, the profits and gains shall be deemed to be an
amount equal to Rs. 7500/- per month or part of a month for each goods carriage
or the amount claimed to be actually earned by the assessee, whichever is
higher.
The
current presumptive income scheme is applicable uniformly to all classes of
goods carriages irrespective of their tonnage capacity.
It is
proposed to amend the section 44AE of the Act to provide that, in the case of
heavy goods vehicle (more than 12MT gross vehicle weight), the income would
deemed to be an amount equal to Rs.1000/- per ton of gross vehicle weight or
unladen weight, as the case may be, per month or part of a month for each goods
vehicle or the amount claimed to be actually earned by the assessee, whichever
is higher.
12) Increase
in Section 80D Limit for Senior Citizens:
The
limit has been increased to Rs. 50,000/- from present limit of Rs. 30,000/-.
13) Increase
in Section 80DDB Limit for Senior Citizens:
It is
proposed to amend the provisions of section 80DDB of the Act so as to raise
this monetary limit of deduction to Rs 1,00,000/- for both senior citizens and
very senior citizens.
14) Deduction
in respect of interest income
At
present, a deduction upto Rs 10,000/- is allowed under section 80TTA to an
assessee in respect of interest income from savings account. It is proposed to
insert a new section 80TTB so as to allow a deduction upto Rs 50,000/- in
respect of interest
income
from deposits held by senior citizens.
However,
no deduction under section 80TTA shall be allowed in these cases.
15) Standard
deduction on salary income:
It is
proposed to allow a standard deduction up to Rs 40,000/- or the amount of
salary received, whichever is less.
Consequently
the present exemption in respect of Transport Allowance (except in case of
differently abled persons) and reimbursement of medical expenses is proposed to
be withdrawn.
16) Deduction
in respect of income of Farm Producer Companies:
Section
80P provides for 100 percent deduction in respect of profit of cooperative society
which provide assistance to its members engaged in primary agricultural
activities.
It is
proposed to extend similar benefit to Farm Producer Companies (FPC), having a
total turnover up to Rs 100 Crore, whose gross total income includes any income
from-
(i)
the
marketing of agricultural produce grown by its members, or
(ii)
the
purchase of agricultural implements, seeds, livestock or other articles
intended for agriculture for the purpose of supplying them to its members, or
(iii)
the
processing of the agricultural produce of its members
The
benefit shall be available for a period of five years from the financial year
2018-19.
17) Incentive
for Employment Generation:
At
present, under section 80-JJAA of the Act, a deduction of 30% is allowed in
addition to normal deduction of 100% in respect of emoluments paid to eligible
new employees who have been employed for a minimum period of 240 days during
the year.
However,
the minimum period of employment is relaxed to 150 days in the case of apparel
industry. In order to encourage creation of new employment, it is proposed to
extend this relaxation to footwear and leather industry.
Further,
it is also proposed to rationalize this deduction of 30% by allowing the
benefit for a new employee who is employed for less than the minimum period
during the first year but continues to remain employed for the minimum period
in subsequent year.
18) Incentive
for Start Up:
In
order to improve the effectiveness of the scheme for promoting start ups in
India, it is proposed to make following changes in the taxation regime for the
start ups:—
(i)
The
benefit would also be available to start ups incorporated on or after the 1st
day of April 2019 but before the 1st day of April, 2021;
(ii)
The
requirement of the turnover not exceeding Rs 25 Crore would apply to seven
previous years commencing from the date of incorporation;
(iii)
The
definition of eligible business has been expanded to provide that the benefit
would be available if it is engaged in innovation, development or improvement
of products or processes or services, or a scalable business model with a high
potential of employment generation or wealth creation.
19) Tax
treatment of transactions in respect of trading in agricultural commodity
derivatives
In
order to encourage participation in trading of agricultural commodity
derivatives, it is proposed to amend the provisions of clause (5) of section 43
to provide that a transaction in respect of trading of agricultural commodity
derivatives, which is not chargeable to CTT, in a registered stock exchange or
registered association, will be treated as non-speculative transaction.
20) New
scheme for scrutiny assessment
It is
proposed to prescribe a new scheme for the purpose of making assessments so as
to impart greater transparency and accountability, by eliminating the interface
between the Assessing Officer and the assessee, optimal utilization of the
resources, and introduction of team-based assessment.
Therefore,
it is proposed to amend the section 143, by inserting a new sub-section (3A),
after sub-section (3), enabling the Central Government to prescribe the
aforementioned new scheme for scrutiny assessments, by way of notification in
the Official Gazette.
21) Rationalisation
of prima-facie adjustments during processing of return of income
With
a view to restrict the scope of adjustments, it is proposed to insert a new
proviso to the said clause to provide that no adjustment under sub-clause (vi)
of the said clause shall be made in respect of any return furnished on or after
the assessment year commencing on the first day of April, 2018.
22) Extending
the benefit of tax-free withdrawal from NPS to non-employee subscribers
Under
the existing provisions of the clause (12A) of section 10 of the Act, an
employee contributing to the NPS is allowed an exemption in respect of 40% of
the total amount payable to him on closure of his account or on his opting out.
This exemption is not available to non-employee subscribers. In order to
provide a level playing field, it is proposed to amend clause (12A) of section
10 of the Act to extend the said benefit to all subscribers.
23) Rationalization
of section 43CA, section 50C and section 56
At
present, while taxing income from capital gains (section 50C), business profits
(section 43CA) and other sources (section 56) arising out of transactions in
immovable property, the sale consideration or stamp duty value, whichever is
higher is adopted.
The
difference is taxed as income both in the hands of the purchaser and the
seller.
It has
been pointed out that this variation can occur in respect of similar properties
in the same area because of a variety of factors, including shape of the plot
or location. In order to minimize hardship in case of genuine transactions in
the real estate sector,
It is
proposed to provide that no adjustments shall be made in a case where the variation
between stamp duty value and the sale consideration is not more than five
percent of the sale consideration.
24) Amendments
related to ICDS (Income Computation and Disclosure Standards)
It
is proposed to bring the notified amendments retrospectively with effect from
1st April, 2017 i,e the date on which the ICDS was mad effective and will,
accordingly, apply in relation to assessment year 2017-18 and subsequent
assessment years
