Important Changes in Income Tax Provisions w.e.f. 1st April 2017

Compiled & Presented By:Anuj SharmaImportant Changes in Income Tax Provisions w.e.f. 1st April 2017For Private Circulation Only

Limits for Expenses Paid in CashLimits for expenses paid in cash (both Capital as well as Revenue) has been reduced from Rs. 20,000 to Rs. 10,000 per day in aggregate per person.

Capital expenses paid in cash beyond Rs. 10,000 will not be allowed for Depreciation purposes.

Cash payment limit for Lorry Freight remains the same at Rs. 35,000

Cash ReceiptsNo person shall receive an amount of Rs. 2,00,000 (Two Lakh) or more, by cash (Sec. 269ST)

a) in aggregate from a person in a day; orb) in respect of a single transaction; orc) in respect of transactions relating to one event or occasion.

The penalty for violation of above is to be a sum equal to the amount of such receipt.

Example:a) in aggregate from a person in a dayMr. A sells goods worth Rs. 3,00,000 to Mr. B and generates 3 different bills of Rs. 1,00,000 each and accepts cash in a single day at different times then Mr. A shall be found guilty of violation of Section 269ST(a) of Income Tax Act.

Example: b) in respect of a single transactionMr. A sells goods worth Rs. 3,00,000 to Mr. B and generates one single bill for Rs. 3,00,000. He then receives cash Rs. 1,50,000 on Day 1 and Rs. 1,50,000 on Day 2 then Mr. A shall be found guilty of violation of Section 269ST(b) of Income Tax Act.

Example: c) in respect of transactions relating to one event or occasionMr. A sells goods worth Rs. 2,05,000 to Mr. B and makes a cash Sale bill for Rs. 1,95,000 and another cash voucher for Rs. 10,000 as Freight Charges for the same goods sold then Mr. A shall be found guilty of violation of Section 269ST(c) of Income Tax Act. This will be true even if both cash amounts are received on different dates.

Mr. A books a wedding party at a Hotel & the Hotel makes a bill of Rs. 1,50,000 for Food and Rs. 1,00,000 for Hall Charges and accepts cash Rs. 2,50,000 from Mr. A then the hotel shall be found guilty of violation of Section 269ST(c) of Income Tax Act. Even if they are 2 different types of expense, but they are for the same wedding.Hotel Related Example: c) in respect of transactions relating to one event or occasion

Penalty ExplainedIf Mr. A sells his car for Rs. 3,00,000 and receives the entire amount in cash then he has to pay a total penalty of equivalent amount of cash received by him. Hence Penalty = Rs. 3,00,000

TCS Provision AbolishedEarlier 1 % TCS on cash sales exceeding Rs. 2 Lakhs (Rs. 5 Lakhs in case of jewellery) Now No need to collect TCS.Cash Sales exceeding Rs. 2 Lakhs will Straightaway attract Penalty Of Equivalent amount as previously explained.

Salary PaymentSalary or Bonus payments exceeding Rs. 10,000 have to be done by Cheque Compulsorily.

TDS on TransportCompulsory to deduct TDS on Transport charges and payment to be made by cheque only.

TDS on Rent PaymentsEarlier: No TDS on Rent Payments by Individuals or HUFsNow: Individuals & HUFs paying Rent more than Rs. 50,000 per month have to deduct TDS @ 5%

Tax Exemption LimitsSame as Earlier Rs. 2,50,000/annum

2,51,000 5,00,000 = 5% (Earlier 10%)

Maximum Tax Rebate under Section 87A Rs. 2,500 (Earlier Rs. 5,000) for total income up to Rs. 3,50,000 (Earlier Rs. 5,00,000)per annum.

Rebate ExplainedTotal IncomeTax Payable before CessRebate u/s 87ATax Payable + 3% Cess2,65,00075075002,70,0001,0001,00003,00,0002,5002,50003,50,0005,0002,5002,575 (Rs. 75 Cess)

Company & Firm Tax RatesCompanies with Annual Turnover up to Rs. 50 Crore 25% (Earlier 30%)

Firms (Partnership or LLP) 30% (Same as before)

Deemed Profit for Small FirmsIn case of Assessee being an Individual, or an HUF or a Partnership Firm (other than LLP) carrying on any business having a turnover of Rs 2 Crore or less.May not maintain any Books of Accounts.Earlier Deemed Net Profit was 8 % of Total Turnover as per section 44AD of IT Act.

Deemed Profit for Small FirmsNow Deemed net profit will be as under:Non Cash Sales (Receipts through Digital Wallets, Online Transfer, Cheques, NEFT, RTGS) Deemed Net Profit shall be 6% of Total Turnover or Gross Receipts.Cash Sales Deemed Profit shall be 8% of Total Turnover or Gross Receipts.To encourage non-cash payments through bank or digital channels.

Capital Gain on Land & BuildingPeriodicity for LTCG reduced from 3 years to 2 years.Base Year shifted from 1st April 1981 to 1st April 2001 for all assets including immovable property.Base Year Shift helps the investor as now prices are more realistically calculated accounting for inflation.

Donations 80GCash Donations exceeding Rs. 2,000 Not Eligible for deduction u/s 80GBank/Digital or any mode other than cash No limitTrusts accepting 80G donations Have To Advise their donors to give donations exceeding Rs. 2,000 vide cheque / RTGS / digital modes.

Value of Unquoted SharesValue of Unquoted Shares for example shares of Private Limited Companies to be taxed at Fair Market Value.

Penalty for Late Return FilingIT Return not filed within Due Date (31st July for Individuals & 30th September for Non-Individual Assessees)

Up To 31st December Rs. 5,000

After 31st December Rs. 10,000

Aadhar to be linked with PANEvery person eligible to obtain Aadhar has to quote Aadhar number in IT Return.Every person who has PAN Card must intimate Aadhar number to IT Dept failing which pan shall be deemed invalid.Aadhar PAN cannot be linked if name doesnt match perfectly in both the documents.

The New Mantra of TransactingAvoid Cash transactions as much as possible.Go Less-Cash Go DigitalAvoid Smart Evasive Tactics to subvert the laws. The Government knows more than you think it does!

DisclaimerInformation provided in this presentation is entirely based on My Personal Interpretation of the revised Income Tax Act.Please use your own discretion while transacting.Please consult your Chartered Accountant / Financial Advisor in case of any doubts or Clarifications.

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