Amendments to several government rules and regulations will come into force on 1 April 2017, the start of the new financial year.
The Income Tax Regulations that will come into effect can be broadly divided into two parts. First, the rules for filing I-T returns and second, the rules for calculating I-T.
3 Things To Remember While Filing I-T Returns
1. It is now mandatory to disclose the Aadhaar number while filing I-T returns. This is the most important amendment in the rules for filing I-T. Until last year, it was optional to disclose the Aadhaar number while filing the returns.
The last date for filing I-T returns is 31 July. Therefore, it is advisable for taxpayers to get their Aadhaar number at the earliest.
2. Another important amendment that comes into effect from the financial year 2017-18 is the provision of penalty in case the return is filed late. According to this provision, if the return is not filed until 31 December, the taxpayer has to pay the penalty of Rs 5,000. If the taxpayer files the return after 31 December, a penalty of Rs 10,000 will be imposed.
However, the penalty has been restricted to Rs 1,000 for income of up to Rs 5 lakh.
3. Only a one-page tax return form will be provided for salaried taxpayers with income up to Rs 50 lakh. The source of their income can be their salary and rental income from only one house.
If the taxpayer has more sources of income, he cannot file his return through a one-page tax return form. Those earning up to Rs 5 lakh and filing return for the first time will be free from scrutiny.
7 Things To Remember While Calculating I-T
1. Income tax for those earning between Rs 2.5 lakh to Rs 5 lakh has been slashed to 5 percent. This will result in an annual saving of up to Rs 12,500 for the maximum number of taxpayers.
However, this saving will rise to Rs 15,000 for taxpayers who earn Rs 1 crore or more annually, if the surcharge and cess are added.
2. After having executed the amendments in the tax rebate rules, under section 87 A, only taxpayers with an annual income of Rs 3.5 lakh will be benefitted.
Up till now, tax rebate benefit of up to Rs 5,000 was allowed for taxpayers with an annual income of Rs 5 lakh. The rebate has also been reduced to Rs 2,500.
3. Those having an annual income between Rs 50 lakh to Rs 1 crore will have to pay 10 percent additional surcharge on the tax.
Those who earn over Rs 1 crore will have to pay 15 percent surcharge.
4. Investors in the property will enjoy more tax rebate with effect from the new financial year. The holding period for gains to qualify as long-term in the case of immovable property has been brought down to two years.
Under the new rules on the sale of property that is older than two years, the taxpayer has to pay at the rate of 20 percent in addition to indexation. However, if the capital gain is invested again, the rebate on this can be availed.
5. The government has made 1 April 2001 the base year for indexation. In the past, it was it was 1 April 1981. Due to this, change capital gain will be reduced, a move that will significantly reduce tax liability.
6. No deduction for first-time investors in the Rajiv Gandhi Equity Savings Scheme from 2017-18. Individuals who have claimed deduction before 1 April 2017 shall be allowed to avail a deduction for the next two years.
7. From the new year on, you can show the loss of Rs 2 lakh on house property if you have more than one house. In the past, there was no ceiling on this loss.