The Union budget was presented to the Parliament on 1 February 2018 by the Finance Minister Arun Jaitley. It was highly anticipated, since it was the first budget after the implementation of Goods and Service Tax (GST) in India. The budget included the annual financial statement and the finance bill of India for the financial year 2018-19.
- Direct Tax Collections for FY 2017-18 are at Rs 6.56 lakh, which shows a growth of 18.2% up to December, 2017. As many as 85.51 lakh new taxpayers filed their tax returns in 2016-17, as against 66.26 lakhs in 2015-16. The number has increased from 6.47 crore in FY 2014-15 to 8.27 crore by FY 2016-17.
- Rebates in presumptive income schemes for small businesses with income below Rs 2 crore and similar schemes for professionals with income below Rs 50 lakh were proposed by the Finance Minister. There was additional income tax collection of Rs 90,000 crore in 2016-17 and 2017-18.
- In order to boost the MSME sector, the corporate tax for companies with turnover up to Rs 250 crore was reduced to 25 %, decrease of 5%.
- The emoluments were proposed to be revised for President of India at Rs 5 lakh from Rs 1.50 lakh per month, Rs 4 lakh for vice president from Rs 1.25 lakh per month and Rs 3.5 lakh for governors from Rs 1.10 lakh per month.
- For salaried taxpayers standard deduction of Rs 40,000 was announced. It has substituted transport allowance of Rs 19,200 and medical allowance of Rs 15000. The income tax slabs remain unchanged.
- In regards to capital gains tax, long-term capital gains are proposed to be taxed at 10 % on gains arising from the transfer of listed equity shares over Rs 1 lakh, without the allowance for indexation benefit. Short term capital gains tax remains unaltered at 15 %.
- Exemption in interest income on bank deposits was also raised to Rs 50,000 for Senior citizens, along with income from Bank FDs and post offices which previously had Rs 10,000 exemption. Hence, TDS shall not be required to be deducted under section 194A. This will be applicable on all fixed deposit schemes and recurring deposit schemes.
- The budget also proposes 10 % dividend distribution tax on income by equity-oriented mutual funds as well as 100 % deductions for cooperative societies that earn income from fishing, cottage industries, sale of agricultural harvest, cottage industries and milk supplied by the members to milk cooperative societies under Section 80P.
- No adjustment would be required for transactions in immovable property where Circle Rate value does not exceed 5% of the consideration. This would benefit the Real estate sector.
- PAN number is mandatory for any entity entering into a financial transaction of Rs 2.5 lakh or more. From April 1 onwards PAN will be used as Unique Entity Number for non-individuals.
- It is also proposed to amend Employees PF Act to reduce contribution of women joining the workforce for the first time to 8% from 12% or 10% (as applicable) for the first three year. There will be no change in employer’s contribution. This will encourage more women to find employment.
- Government announced 8.33% contribution to EPF for new employees for three years and 12% government contribution to EPF in sectors employing large number of people.
- The Pradhanmantri Vaya Vandana Yojana (PMVVY) scheme has been extended until March, 2020. The current investment limit of Rs 7.5 lakh per senior citizen is also proposed to be increased to Rs 15 lakh.
- Under section 80DDB, the deduction limit for medical expenditure for certain critical illness was increased from Rs 60,000 in case of senior citizens and Rs 80,000 in case of very senior citizens, to Rs 1 lakh.
- Custom duty on mobile phones is proposed to increase from 15 % to 20 %, to 15% on some of their parts and accessories and also on certain parts of televisions.
- Cess on Income tax has been proposed to be increased by 1% to 4%, increasing the tax payable by all categories of tax payers.
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