Although it’s 1st April, a Prank day, but everything is not happier today. Government has applied various penalties, rules and regulations from today for the Financial year 2017-18.
The changes range from higher insurance premiums, lower savings scheme interest rates, penalties on late income tax returns filing, and more.
Here are 12 important changes applicable from today, 1st April 2017:
(1) Change in Tax slab: Central Government has reduced the tax rate by half to 5 percent from 10 percent for employees in the yearly income group between Rs 2.5 and Rs 5 lakh. The move is expected to help them save tax of up to Rs 12,500 a year.
(2) Simplified ITR Form: A simple one page form Sahaj is introduced for filing tax returns to tax payers with income up to Rs 50 lakh and excluding any business income. The I-T department will not scrutinize those who are filing their tax returns for the first time in this category.
(3) Penalty on delay in Return filing: Delay in filing tax return for this financial year (2017-18) will attract a penalty of Rs 5,000, if filed by 31 December, 2018, and the penalty will be higher if filed beyond this date. However, for small tax payers with income up to Rs five lakh, the penalty has been restricted to Rs 1,000.
(4) No benefit on RGESS scheme: For investment under Rajiv Gandhi Equity Saving Scheme, no deduction will be available from the assessment year 2018-19. The investor were earlier eligible to get a 50% deduction of the amount invested from the taxable income of that year u/s 80CCG. The previous UPA government had introduced this tax-saving scheme in the Union Budget for financial year 2012-13 with an aim to encourage first-time investors in the securities market.
(5) Change in LTCG: Long-term holding period for an immovable property has been reduced to two years from three earlier. Hence, the new law coming in place will ensure that an immovable property held over for two years will be taxed at a reduced rate of 20 percent.
(6) New Base year for Indexation in Capital Gains: Looking to cash in on long term capital gains tax may not be fruitfull as beneficial amaentments would result in lower profits on sales. The goverment has changed the base year for indexation of cost to 1 April, 2001 from 1 April, 1981.
(7) Benefits on Redeemable Bonds: Tax exemption on reinvestment of capital gains in notified redeemable bonds will be available for individuals in addition to investment in NHAI and REC bonds.
(8) TDS on Rental Payment: For rental payments in excess of Rs 50,000 a month, individuals will have to deduct a five percent TDS (tax deducted at source). This will come into effect from 1 June, 2017.
(9) Aadhar compulsory for PAN: The government has also made Aadhaar compulsory while applying for PAN and filing income tax returns from 1 July. In fact, the Centre in a bid to curb black money from the system has limited cash transactions at Rs two lakh against the originally proposed cap at Rs three lakh.
(10) Withdrawal from NPS: Individuals will not have to pay any tax in case of partial withdrawals from National Pension System (NPS). The proposed changes allows NPS subscribers to withdraw 25 percent of their contribution to the corpus for emergencies before retirement. Remember that withdrawal of 40 percent of the corpus is tax-free on retirement, the NDTVreport says.
(11) Higher Insurance Premium: Individuals will have to brace for higher insurance premium starting today on cars, motorcycles and health insurance beginning this financial year, as the regulator IRDAI has given its nod for insurers to revise commission of the agents. The increase will be in addition to the enhanced third party motor insurance rates, which too will come into effect from today.
(12) Penalty on Withdrawal: For lakhs of customers of India’s largest commercial bank State Bank of India, penalty will be charged starting today, if a minimum balance of Rs 5,000 is not maintained every month. In metro cities, there will be a charge of Rs 100 plus service tax, if the balance falls below 75 percent of the MAB of Rs 5,000. If the shortfall is 50 percent or less of the MAB, then the bank will charge Rs 50 plus service tax.
