budget 2017 on taxation

BUDGET ANALYSIS ON

TAX REFORMS

ByCh. Meher PranavB.Bhargav NaiduMBA (First year)

INTRODUCTION

• WHAT IS BUDGET ?• WHAT IS TAX?• WHAT ARE TYPES OF TAXES?• HOW DOES TAX PLAY A KEY ROLE IN BUDGET?

An overview on Direct Taxes

• Up to Rs.2,50,000-No tax• Rs.2,50,000 to Rs.5,00,000-5%• Rs.5,00,000 to Rs.10,00,000-20%• Over Rs.10,00,000-30%

• Lesser tax for middle class : There is a Rs 12500 rebate for all the people in the slab .

• More tax for the rich : There is a additional 10% surcharge to all those whose income lies between ₹50 lakh to ₹1crore

• 15% surcharge for people having income above ₹1 crore

No scrutiny for first-time filers and one-page form

• People filing returns for the first time will not be subject to IT scrutiny unless there is a clear indication of cash deposits under demonetisation. Also, people with income under Rs 5 lakh (without any business income) will now file a simplified one-page return. This will encourage people to file returns and get all the benefits of filing like easier access to home loans, bank accounts, and more.

Lesser time to revise returns

• The time period for revising a tax return is being reduced to 12 months

Capital gains — changes

• Long-term holding has been reduced to two years, and the base year for indexation will now be 2001 instead of 1982. This will bring down the capital gains liability significantly

Service charge on railway tickets removed

• Service charge on e-tickets booked through IRCTC has been withdrawn to bring rail tickets at affordable prices to the general public.

Housing income

• Bad news for first-time home buyers — the additional Rs 2 lakh deduction on home loan interest (sec 80EE) given in 2016 has now been withdrawn

Lower taxes for small businesses• Small companies with annual turnover up to

Rs 50 crore will now only pay income tax at 25 percent. As the honourable finance minister says, this will cover 96 percent of the Indian companies and thus boost Indian business. It will also encourage many businesses to adopt legal company structures.

Stricter policy on cash transactions

• Cash transactions have been restricted, with only Rs 10,000 cash expenses now allowed as deduction for businesses. Cash donations to charitable organisations and political parties will be limited to Rs 2,000 per source

Cost of cigarettes, tobacco to increase

• In the interest of public health, the government has increased the excise duty levy on cigars, cigarettes, and other tobacco substitutes. This levy has been increased from Rs 3,755 per 1,000 to Rs 4,006 per 1,000

Dividend Tax Shocker for family trusts

• Promoters holding shares through private trusts will now have to pay 10% tax on dividend income above Rs10lakh

• This move could hit succession planning of many corporate houses

Start-ups enjoy tax holidays

• Tax rebates extended for 3 out of first 7 years

No significant changes in indirect taxes

• The indirect tax scene has not changed significantly as GST is expected to be rolled out on July 1, 2017, subsuming all the current indirect taxes.

Our Suggestions

• If exemption has increased it gives more power to consumerism.

• It can act as a booster to Indian economy.• India could also embrace concept of joint filing

of tax return by a married couple.