INCOME TAX

Finance Minister Arun Jaitley in Union Budget announced the reduction of the existing rate of tax for individuals with income ranging between Rs.2.5 lakh to Rs.5 lakhs. There will be a surcharge of 10% for those whose annual income is Rs.50 lakh to Rs.1 crore. Additionally, the 15% surcharge on Rs.1 crore or more remain unchanged. This means the overall tax rate will come down for those who have income up to Rs.5 lakhs. In fact even, those who have income above Rs.5 lakhs will benefit slightly.

While the taxation liability of people with income upto Rs.5 lakhs is reduced to half, all the other categories of tax payers in the subsequent slabs will also get a uniform benefit of Rs.12,875/- per person.

INCOME TAX RETURN

Simple one page form to be filed as income tax return for the category of individuals having taxable income up to Rs.5 lakhs other than business income.This is the year where a lot of people going to file their income tax return for the first time.

Any delay in filing of income tax will also attract a penalty Rs.5,000 or Rs.10,000. The budget also proposes to grant interest in case of refund of excess payment of TDS. The person who is not having more than Rs.5 lakh, the fee payable under this section will not be in excess of Rs.1,000. It will increase the Indian tax payer base. Income tax officials can now regenerate tax cases for up to 10 years if search operations make known undisclosed income and assets of over Rs. 50 lakhs. The amendment to the income tax will come into effect from April 1, 2017.

Rajiv Gandhi scheme

This scheme provides tax deduction under the section 80 CCG of the income tax Act ,1961. This deduction is over and above the deduction of Rs.1.5 lakhs under the familiar section 80c, and is exclusively for investments in RGESS. This scheme is available to those who were first –time equity investors and had income upto Rs. 10 lakhs a year in specific RGESS.

Property Sale

Any profit booked after three years of buying the property is considered a long term gain. The calculation is same as that for short-term gain, except that the cost of acquisition and improvement is adjusted for inflation .I f the current year’s capital gain is inadequate, the net capital loss can be carried forward for eight financial years for adjusting against any gain.

Under section 8oc of the income tax act deduction of tax available only for self occupied property and purchase or construction of residential property. If any amount paid towards partial or full prepayment of loan is also eligible to be included for benefit .

Individual renting property will now be required to deduct a 5 % TDS (tax deducted at source) for rental payments more than Rs.50,000 per month.

NPS – Tax Exemption

A withdrawal of 40% of the corpus is tax free on retirement. An exemption on partial withdrawal not exceeding 25% of the contribution made by an employee in accordance with the terms and conditions specified under pension fund Regulatory and Development Authority act and it will be effective on partial withdrawal made by the subscriber after April.