Budget 2017-18 Highlights




1Relietsmall tapayers


(a) RebatundeSe87A:

With thobjectivoprovidinrelief to resident individuals in the lower incomslab i.e. total incomnoexceedinRs5,00,000sectio87A is proposed to bamendesas to increase thmaximuamounorebate available froexisting limit oRs.2,000 to Rs.5,000.


(b)  Maximum limit odeductioundesectio80GG increased :

Thmaximum limit odeductioundesectio80GG, in respecorenpaid by individuals whdnogeanhousrenallowance from themployeanwhdnoowanhouseproposed to be increased froRs2,00p.m to Rs5,00p.m.


(c)  Increase in threshold limit fopersonothethacompanies /LLhaving incomfrobusiness


In order to reduce thcompliancburdeof thsmall tapayerand facilitate theasodoinbusiness, the threshold limit foavailing thbenefit of presumptive taxatioschemproposed to be increased froRs. 1 crore to Rs. 2 crore, in respecoeligible businessesThe threshold limit proposed to be increased to brinrelief to largnumbeoassesses in thMicrSmall anMediuEnterprise(MSMEcategory.


(d) Presumptivtaxatioschemextendetprofessionals:

In order to rationalize thpresumptive taxatioschemand to reduce thcompliancburdeof thsmall tapayerhaving income froprofessioand to facilitate theasodoinbusiness, thpresumptive taxatioregimproposed to bextended to professionals havingrosreceipts noexceedinRs50 lakhs in thpreviouyeaat a suequal to 50osucgrosreceipts.


(e)Threshold limit increasefotaaudit fopersonhavinprofessional Income:

The threshold limit for taaudit undesectio44AB, fogettinaccounts auditeproposed to be increased froRs25 lakhs to Rs50 lakhs, in casopersoncarryinoprofession.






(i) ThCorporate Tarate waproposed to breduced fro30% to 25over a periodaccompaniebrationalizatioanremovaovarious taexemptionand incentivesThe followinarsomof the taexemptionand incentivewhicarproposed to bwithdrawn in phasemanner:


• Thacceleratedepreciatiounder Income-taAcwill be limited to 40% fro01.04.2017


• Thbenefits odeductions foResearcwould be limited to 150% fro01.04.201an100% fro01.04.2020


• Thbenefits oSectio10AA to neSEunits will bavailable to thosunits whiccommencactivity befor31.03.2020.


• WeighteDeductioundesectio35CCD foskill developmenwill continuup to 01.04.2020


(ii) Manufacturincompanies incorporateooafte1.03.201arproposed to bgiveaoption to be taxed

 a25plusurchargancesprovided thednoclaim profit linkeor investment linkedeductionando

 noavail of investmenallowancanacceleratedepreciation


(iii) Forelatively small enterprises i.e., companiewith turnovenot exceedinRs 5 cror(in the financiayeaendinMarc2015), thrate ocorporate tareduced fro30% to 29plusurchargancess, for thnext financiayear.


(ivTax Incentives to starupsWith a view to providinan impetus to start-upand facilitate their growth in the initiaphasof their business, a deductioo100of thprofits angainderivebaeligible start-up from a business involving innovatiodevelopment, deploymenocommercializatiooneproductsprocesseoservicedriveby technologor intellectuaproperty proposed to bprovidedSucbenefit would bavailable to aeligible start-uwhich is setubefor01.04.2019.


Thdeductiomayat thoptioof thassesseebclaimebhim foany threconsecutivassessmenyearouof fivyearbeginning from thyear in which theligible start-up is incorporatedMAwill apply in succaseanCapitaGainwill nobe taxed if invested in regulated/notifieFunoFundby individuals in notifiestartups, in which thehold majority shares.


(bConcessionaTaRegimfor incomfropatents:

In order to encourage indigenouresearch & developmenactivitieand to make India a global R & D hub, thGovernmenhadecided to put in place a concessional taxatioregime for income fropatents is proposed. A concessionarate o10proposed for taxing income froworld exploitatioopatents developeanregistered in India.



In order to encouragmore investment in AsseReconstructioCompanie(ARC), it is proposed to providcomplete pass througof income to securitization trust. Consequently, the incomwill be taxed in thhandof investors insteaof the trust. However the truswill be liable to deduct taasource.



Thdeterminatiooresidencof foreigcompanon thbasis oplacoeffectivmanagemen(POEM) is proposed to bdeferrebonyear.


3Measurefomovintowards a pensionesociety


(a)  (i) Recogniseprovidenfunansuperannuatiofund:

In order to bringreateparity in tax treatmenodifferent typeopensioplans, it is proposed to provide in respecof thcontributionmadooafte1sApril 201baemployeparticipating in a recogniseprovident funansuperannuation fundupto 40of thaccumulatebalancattributable to succontributioowithdrawashall bexempt from tax. In effect, the

100exemptiohabeereduced to 40%.


(ii) AnnuitPlan:

Anpayments in commutatiooanannuity purchaseouocontributionmadooafter

1sdaoApril, 201whicexceed40of thannuity, to bchargeable to tax.


(iii) NationaPensioSystem:

It is alsproposed to providanpayment froNationaPensioSysteTrust to aemployeoaccounoclosurohis optinouof thpensioschemreferred to in Sectio80CCD, to

thextent it doenoexcee40of the totaamounpayable to him at the timoclosurohis optinouof thscheme, to bexempt from the tax.


Alsannuity funwhicgoes to the legaheir after thdeath opensionewill nobe taxable in all the threcase(i.e., (i)(ii) & (iii) above).


(ivMonetary limit foemployecontributiotEPF:

Also, a monetary limit focontributiooemployer in recognizeprovident funansuperannuation funoR1.5 lakpeannum for taking tabenefit is proposed.


4Measurefopromotinaffordable housing


(a) 100deductioothprofitoaassessedevelopinanbuildinaffordable housing


With a view to incentivisaffordable housinsectoas a parof largeobjectivof 'Housing foAll', it is proposed tha100deductioof thprofits would ballowed to aassessedevelopinanbuildinaffordable housinprojects, if thhousinproject is approveby thcompetenauthority before th31sMarch201ancompletewithin 3 yearoapproval.


(b)  Additionadeductioof interest“firshombuyers”:

In furtherancof thgoaof thGovernmenoproviding 'housing foall, it is proposed to incentivise first-hombuyeravailinhome loansbprovidinadditionadeductiooRs50,000 in respecof intereson loan taken foresidentiahousproperty froany financial institutionThis incentive is proposed to bavailable to a housproperty of a value less thaRs50 lakhs in respecowhich a loaoaamounnoexceedinRs35 lakhabeesanctioneduring thFinanciaYea2016-17Further, this benefit proposed to bextended till threpaymenof loacontinues.


(c) SPwould bexemptefroDividenDistributioTa(DDTodistributiomadtBusinesTrust:

In order to rationalize the taxatioregime fobusiness trusts (REITand InvITs) and their investors, it is proposed to provide a speciadispensatioanexemption from levodividendistribution taxAccordingly, thSPwould nobe liable to paDDon the incomdistributed to business trustsSucdividenreceiveby thbusiness trusand its investoshall nobe taxable in thhandof trusor investors.





(a)  GrosDividenwould btaxable in thhandorecipients:

The incombwaogrosdividend, to bchargeable to tax in thcasoan individual, Hindundivided family (HUFor a firmwho is resident in India @ 10%, if thsame is in excesoRs10 lakh


(b) Ratosurcharge increasefro12t15%:

Thsurchargrate to braised fro12% to 15opersonsother thacompanies, firmancooperativsocietiehaving incomabovRs. 1 crore.


(c)  ScopoTaCollectioaSource(TCSexpandeto includsale of luxurcaranothegoodanservices:

In order to reduce thquantuocash transaction in sale oangoodanserviceand focurbing the floounaccountemoney in the tradinsysteand to brinhigvalue transactionwithin the tanet, it is proposed to provide that thselleshall collect the tax @1% from thpurchaseosale omotovehicle of thvaluexceedinRs10 lakhansale in casoangood(other thabullioand jewellery)oprovidinoanservice(other thapayments owhich tax is deducteasourcundeChapteXVII-BexceedinRs. 2 lakhs.



(d) Equalisation levo6othnon-residentfroe-commerctransactions:

In order to tap taon incomaccruing froe-commerce transactions to non-residents from India, it is proposed that a persomakinpayment to a non-resident, whdoenohave a permanenestablishment, exceeding in aggregate Rs. 1 lakh in a yearaconsideration foonlinadvertisement, will withhold taa6ogrosamounpaidaEqualization levyThe levwill only apply to B2B transactions.



6Reducing litigatioanprovidincertainty in taxation


(a)LimiteperioCompliancWindotbe introduced:

Fodomestic taxpayers to declarundisclosed incomor incomrepresented in the foroanasseancleaup their past tax transgressions, the IncomDeclaratioScheme201proposed to be introduceas limiteperiocompliancwindow for taxinsucundisclosed incompaying @ 30%plusurcharga7.5anpenalty a7.5%which is a totao45of thundisclosed incomeTherwill bnscrutinoenquirregarding incomdeclared in thesdeclarationunder the Income-taAct, 196or thWealth-taAct, 195and thdeclarants will have immunity froprosecution.


(bThDirecTaDisputResolutioScheme2016 :

In order to reduce thhugbackloocaseand to enable thGovernment to realise its dueexpeditiously, thDirecTaDispute ResolutioScheme201proposed to be introduced in relation to taarrears anspecified taxUnder this scheme, thdeclaranwould brequired to pay taat thapplicable rate plus interesupto thdate oassessmenannpenalty would be leviable fodisputed taupto Rs10 lakhsHowever, in casodisputed taexceedinRs10 lakhs25of thminimupenalty leviable shall alsbrequired to bpaid.


Under thDirecTaDispute ResolutioScheme2016persomaalsmake a declaration in respecoany tadetermined in consequencoor is validatebaamendmenmadwith retrospectiveffect in the

Income-taAct, 196oWealth-taAct, 1957as thcasmabe, for a perioprior to thdate oenactmenosucamendmenand a dispute in respecowhich is pendinao29.02.2016subject to their agreeing to withdraanpendincase lying in anCouroTribunaoanproceeding foarbitrationmediatioetc.. Consequently, thecasettle thcasbpayinonly the taarrears in whiccase liability of the interesanpenalty shall bwaived.


(d)   Penalty leviable foconcealmenof incomrationalised:

Thentirschemopenalty proposed to bmodifiebprovidindifferencategorieomisdemeanouwith gradepenalty and therebsubstantially reducing thdiscretionarpoweof the taofficersThpenalty ratewill nob50of tax in casounderreportinof incoman200of tawhere there is misreportinof facts.




(a)  ExemptiofrorequiremenofurnishinPAundesectio206Atcertain non-resident :

In order to reduccompliancburdensectio206Aproposed to bamendesas to provide that thprovisionof this sectioshall noapply to a non-resident, on furnishinoalternativdocumentssubject to succonditionamabprescribed.


(b)  RationalizatiootadeductioaSourc(TDSprovisions:

In order to rationalise thrateanbase foTDprovisions, thexisting threshold limit fodeductioof taasourcand thrateoeducatioof taasourcarproposed to brevised in thcasoWinnings froHorsRacePayments to Contractors,

InsuranccommissionCommissioosale of lottery tickets etcThis would improvcash floosmall tapayers.





(a) Scopfoe-assessmenproposetbexpanded:

Expansion in thscopoe-assessments to all assesses in 7 megcities in thcominyearsreducing face to faccontacwith thassesses.


(b) Ratof interesorefundtbe increased:

Thrate of intereson threfunds to be increased fro6% p.a. to 9p.a., in case there is delay in givineffect to Appellate ordebeyonninety days.


(c) E-sahyoprojectbexpanded:

Income-taDepartmen(ITDwill fully expand thpilot initiativof ‘eSahyog’ with a view to reduccomplianccost, especially fosmall tapayersThe-Sahyog’ piloproject is to providaonlinmechanism to resolvmismatches in income-tareturnwithourequiring taxpayers to attend the Income-taoffice.


TDS limits increaseaFollows:




Increased in Rs


Paymenoaccumulatebalancdue to aemploye 

Fro30,000 to 50,000


Winnings froHorsRace

FroRs5,000 to Rs10,000


Payments to Contractors

FroAggregate annual limit of Rs.75,000 to Rs. 1,00,000


PaymenoCompensatiooacquisitioocertain Immovable Property

Fro2,00,000 to Rs.2,50,000



FroRs20,000 to 15,000


Commissioosale of lottery tickets

Fro1,000 to 15,000



FroRs5,000 to 15,000

 Revised TDS rates are aFollows:




Change in %


Payment in respecoLife InsurancPolicy

Fro2% to 1%


Payments in respecoNSDeposits

From 20% to 10% w.e.f 1 Jun2016



From 10% to 5%


Commissioosale of lottery tickets

Fro10% to 5%



For10% to 5%.


Income in respecoUnits

to bomittew.e.f 1 Jun2016



to bomittew.e.f 1 Jun2016




                                                                                                      Source-Institute of Chartered Accountants of India

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