New income tax rules formed: These are the things that you must know
Mumbai: The Finance Bill 2017 was approved by Parliament on March 30. Two days after a green signal from the Lower House, President Pranab Mukherjee gave his ‘historical’ assent to the bill thus turning it into a law.
The government tagged along the Finance Bill 2017 some 40 amendments in different acts and passed them under the “cover” of Money Bill to get a speedy clearance.
The Presidential assent was ‘historical’ as for the first time in India’s budgetary history all provisions related to taxation and government spending Finance Minister Arun Jaitley proposed in Union Budget 2017 have come into effect from April 1.
The Finance Bill 2017 was passed with some sweeping changes to country’s existing tax system. Here are a few things that you must know what you have to do when you file your tax returns and apply for important documents like PAN and Aadhaar cards.
1) Instead of raising income tax limit, the government opted for a reduction in income tax rate. This for the first time in recent years, the minimum valid rate of income tax was reduced from 10 per cent to 5 per cent. There will be only 5 per cent tax on an income from Rs 2.5 lakh to Rs 5 lakh.
2) The government has decided a 10 per cent surcharge for an income of Rs 50 lakh to Rs 1 crore. According to NDTV, there will be no change in present surcharge of 15 per cent for individuals whose income is more than Rs 1 crore.
3) Aadhaar, a unique identity handed out to all Indians, has been made compulsory for applying for a Permanent Account Number (PAN) card as well as filing for income tax returns. This has been mooted to avoid duplicity in filing of income tax.
4) The government has put a limit on cash transactions to prevent occurrence and recurrence of incidents of black money. From now on, a cap of Rs 2 lakh for cash transaction has been brought under amended rules in Finance Bill 2017.
5) Central Board of Direct Taxes (CBDT) has come up with new seven income tax return forms. Besides, the CBDT has further simplified ITR-1 form SAHAJ for individual taxpayers and Hindu Undivided Families.
6) Under the amended rules, Tax Commissioners have been enabled with sweeping powers. After this, they can now search a premise, seize assets and make an arrest also if circumstances require so.
7) The amended tax rules grant immense powers to tax authorities retrospectively. Taxmen can reopen a tax violation case dating as long back as 10 years if they found an undisclosed income of Rs 50 lakh on search and seizure, NDTV article said.
8) An individual taxpayer will have to minus a tax deducted at source (TDS) of 5 per cent on rental payment of more than Rs 50,000. The proposal was incorporated to tap taxpayers who receive high income from renting properties.
9) There lies a good news for pensioners. Under amended tax rules, there will be no tax on partial withdrawal of money from National Pension System funds. Those who put savings in NPS can withdraw 25 per cent of their total savings before retirement.
10) New rules clarify that a property will come under the purview of long-term gains only if the holding period for that property was two years. Earlier, the holding period was three years.