Tax relief isn’t for all. Accountants, you have reasons to fear.
Budget is not exactly what finance minister reads in the house. Sometimes the real budget is hidden behind the data and the provisions made in the budget. Let’s take you through what the Union finance minister Arun Jaitley did not tell you, but should have about Budget 2017.
1. Tax relief is not for all
Jaitley declared in his Budget speech that the tax burden of people earning up to Rs 5 lakh would be reduced by five per cent from assessment year 2017-2018 onwards.
However, he did not point out that such reduction in tax rate was restricted to only the salaried taxpayers. Self-employed/contractors/professional, among others, were not going to be a part of this benefit.
2. TDS on rent
In order to widen the scope of tax deduction at source (TDS), the Budget proposed that any rent payment of more than Rs 50,000 would attract 5 per cent income tax to be deducted at the source. As common people have to deduct the tax, they will not be required to take TAN (TDS Identification) number. They will deduct this tax once in a year from the entire years of rent. The landlord will get benefit of this TDS in his income.
|Jaitley declared in his Budget speech that the tax burden of people earning up to Rs 5 lakh would be reduced by 5 per cent.|
3. Restrictions on daily cash transactions
The 2017 Budget has proposed that no person shall receive an amount of Rs 3 lakh or more in aggregate form from a person in a day. Limits will also apply on single transaction and transaction related to one event.
A new section (271DA) is being added to the Income Tax Act and penalty of equal amount will be levied in case of breach.
However, the said penalty shall not be levied if person proves that there were good reasons for doing large cash transaction.
Therefore, the onus to determine penalty and waiver shall rest with the joint commissioner of income tax. This is the return of a new inspector raj under the clamour of “less cash” economy.
4. Penalty on delay in tax return filing
The 2017 Budget has come up with a new provision to levy fees (penalty) if one delays on furnishing returns.
– A fee of Rs 5,000 shall be payable, if the return is furnished after the due date but on or before December 31 of the assessment year.
– A fee of Rs 10,000 shall be payable in any other case.
– However, if the total income does not exceed Rs 5 lakh, the fee amount shall not exceed Rs 1,000.
These amendments will take effect from April 1, 2018 and will, accordingly, apply in relation to assessment year 2018-19 and subsequent years.
5. Go for less cash in Business
Businessmen indulging in cash transactions will invite reduced tax benefits. If any business makes payment for land or financial instrument (capital expenditure) of more than Rs 10,000 in a day, then he shall not be eligible for tax exemptions under depreciation and Capex rules.
Similarly, any payment in cash above Rs 10,000 to a person in a day, shall not be allowed as deduction in computation of income from “profits and gains of business or profession”.
6. Tough PAN rules
The 2017 Budget proposed to insert a new section in the Income Rax Act to strengthen the PAN mechanism. Now, all such payments that invite TDS will have to mandatorily state the PAN. If the payment is not accompanied with PAN, a double TDS will we charged.
7. Penalty on accountants
The Budget proposed a penalty on the accountant, the registered valuer and merchant banker for furnishing incorrect information.