Union Budget for the year of 2017-18 was finalized on Wednesday
New Delhi: Softening the demonetization blow, the Budget for 2017-18 on Wednesday share out the tax to five per cent on incomes up to Rs 5 lakh but recommended a new surcharge of 10 per cent on incomes among Rs 50 lakh and Rs 1 crore and raised up duties on cigarettes and pan masala while stepping up allocations for infrastructure, rural, cultivation and social sectors.
While the additional charge alone would net Rs 2,700 crore a year, the finance minister’s give-away on straight tax schemes will result in a loss of Rs 15,500 crore.
The change in the individual income tax rate for individual assesses among Rs 2.5 lakh and Rs 5 lakh income would decrease the tax liability of all persons below Rs 5 lakh to either to zero (with rebate) or 50 per cent of their existing liability. Against the background of demonetization, the Budget has also striped transaction in cash above Rs 3 lakh.
Small taxpayer gets tax relief
He planned to levy an extra charge of 10 percent on persons whose yearly taxable income is among Rs 50 lakhs and Rs 1 crore. The current surcharge of 15 per cent of tax on people receiving more than Rs 1 crore will continue.
However, the financial plan has planned a fee for delayed filing of income tax return. A fee of Rs 5,000 shall be payable, if the return is equipped after the due date but before the December 31 of the assessment year. A fee of Rs 10,000 shall be payable in any other case. But, in a case where the total income does not exceed Rs 5 lakh, the budget planned that the fee amount shall not exceed Rs 1,000.
Arun Jaitley said that his application to slash individual income tax to 5 percent on those with income of Rs 5 lakh would decrease their tax liability either to zero (with rebate) or 50 percent of their current liability.
“These measures will mean that there would be zero tax liability for people receiving revenue up to Rs 3 lakhs per annum and the tax liability will be only Rs 2,500 for people with income among Rs 3 and Rs 3.5 lakhs. If the limit of Rs 1.5 lakh under Section 80C for investment is used completely the tax would be zero for people with income of Rs 4.5 lakhs,” said the finance minister.
He pointed out that all the other classes of taxpayers above Rs 5 lakh will also get a uniform benefit of Rs 12,500 per individual.
“The new levy of an additional charge of 10% on revenue stages among Rs 50 lakh and Rs 1 crore will result in extra tax liability by almost Rs 2.77 lakh at the top end of this revenue range. For such taxpayers, the increase in tax liability for 2017-18 will be approximately 9.5% over their yearly tax liability under the existing tax charges,” said Alok Agrawal, Senior Director, Deloitte Haskins & Sells.
Mr. Jaitley said there will be no analysis of assesses filing income tax returns for the first time. Individuals consuming taxable income up to Rs 5 lakh can just fill up a simple one-page form for filing their tax returns. Meanwhile, income tax officers can now reopen tax cases for up to 10 years if search operations reveal unidentified revenue and assets of over Rs 50 lakh. Presently, I-T officers can go back up to 6 years to scrutinize the books of accounts of assesses.