The budget of 2017 which was released lately is more reasonable for employees drawing an income for up to 50 lakhs. It was a great relief for people earning up to 50 lakhs.
KEY POINTS: Let us look at the key points in detail.
- 5% tax (instead of current 10%) for those earning 2.5 lakhs to 5 lakhs per annum
- After rebates, zero tax liability for people with income of 3 lakhs
- 10% surcharge on those earning 50 lakhs to 1 crore
- For people earning more than 1 crore an existing surcharge of 15%
While 76 lakh Indians showed an income of over 5 lakh rupees, 56 lakh Indians are in the salaried class. Some of the advantages of this move are as follows.
- People earning below Rs.5 lakh can save Rs. 3000 in taxes.
- Bank accounts can be easily opened.
- Electronic and mobile-based money transactions have been widely enabled
- GST will be collected on an automated technology platform
- Undisclosed cash that comes into bank accounts will enable the income tax department to collect taxes.
- Taxpayers who have drawn cash, can deposit it all back as long as it is within the amounts they legitimately earned and paid taxes on.
- Law Breakers will pay taxes on what they bring into the bank.
The other measures that the government has undertaken are
- Launch of Swayam Platform with at least 350 online courses to enable students to attend virtual courses
- Pradhan manthri Kaushal Kendra’s to be extended to more than 600 districts
- Scheme to create employment in leather and footwear industries to be implemented
TAX LAWS 2017: Given below are the exact statistics given by the government about the changes in tax laws.
1) Mr. Jaitley reduced income tax rate on income between Rs. 2.5 lakh and Rs. 5 lakh to 5 per cent from 10 per cent. However, he reduced Section 87A rebate from Rs. 5,000 to Rs. 2,500. And no rebate will be applicable for taxpayers having an income above Rs. 3.5 lakh.
2) This means tax savings of up to Rs. 7,700 for people with taxable income between Rs. 3 lakh and Rs. 5 lakh. And for persons with taxable income between 5 lakh and Rs. 50 lakh, tax savings of Rs. 12,900. A 10 per cent surcharge has been proposed for individuals having income ranging from Rs. 50 lakh to Rs. 1 crore. (Existing surcharge of 15 per cent will remain same for individuals having income above Rs. 1 crore.)
3) A simple one-page form will be introduced for filing tax return for individuals having taxable income up to Rs. 5 lakh other than business income. The finance minister also said that a person in this category who files income tax return for the first time would not be subjected to any scrutiny in the first year unless there is specific information available with the tax department regarding his high value transaction.
4) No deduction will be allowed for investment in Rajiv Gandhi Equity Saving Scheme from Assessment Year 2018-19. This tax-saving scheme, announced in the Union Budget for financial year 2012-13, was designed exclusively for the first-time individual investors in the securities market with gross total income below a certain limit.
5) Income tax officials can now reopen tax cases for up to 10 years if search operations reveal undisclosed income and assets of over Rs. 50 lakh. Currently, tax officers can go back up to six years to scrutinize the books of accounts of assesses. The amendment to the Income Tax Act will take effect from April 1, 2017. This means that the books of accounts of an assesse can be reopened by the taxman back till 2007.
6) Taxpayers who do not file their returns on time will have to shell out a penalty of up to Rs. 10,000 from Assessment Year 2018-19. However, if the total income of the person does not exceed Rs. 5 lakh, the fee payable under this section shall not exceed Rs. 1,000.
9) Individuals will be now required to deduct a 5 per cent TDS (tax deducted at source) for rental payments above Rs. 50,000 per month. Tax experts say that the move will ensure that persons who get large rental income come into the tax net. It will be effective from June 1, 2017.
10) Partial withdrawals from National Pension System (NPS) will not attract tax. According to the proposed changes, an NPS subscriber can withdraw 25 per cent of his/her contribution to the corpus for emergencies before retirement. Remember that withdrawal of 40 per cent of the corpus is tax-free on retirement.