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

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Simple and easy to understand Summary of important changes in Income Tax Act applicable from 1st April 2017 with special reference to cash transactions.

Please note that this is not an exhaustive list of changes. I have included only those changes which I believe are applicable to all of us in general and especially to Small & Medium Scale Businesses.

Publié dans : Économie & finance
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Important Changes in Income Tax Provisions w.e.f. 1st April 2017

  1. 1. Compiled & Presented By: Anuj Sharma Important Changes in Income Tax Provisions w.e.f. 1st April 2017 For Private Circulation Only
  2. 2. Limits for Expenses Paid in Cash  Limits 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
  3. 3. Cash Receipts  No 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; or b) in respect of a single transaction; or c) 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.
  4. 4. Example: a) in aggregate from a person in a day  Mr. 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.
  5. 5. Example: b) in respect of a single transaction  Mr. 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.
  6. 6. Example: c) in respect of transactions relating to one event or occasion  Mr. 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.
  7. 7. 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
  8. 8. Penalty Explained If 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
  9. 9. TCS Provision Abolished  Earlier – 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.
  10. 10. Salary Payment Salary or Bonus payments exceeding Rs. 10,000 have to be done by Cheque Compulsorily.
  11. 11. TDS on Transport Compulsory to deduct TDS on Transport charges and payment to be made by cheque only.
  12. 12. TDS on Rent Payments  Earlier: No TDS on Rent Payments by Individuals or HUFs  Now: Individuals & HUFs paying Rent more than Rs. 50,000 per month have to deduct TDS @ 5%
  13. 13. Tax Exemption Limits  Same 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.
  14. 14. Rebate Explained Total Income Tax Payable before Cess Rebate u/s 87A Tax Payable + 3% Cess 2,65,000 750 750 0 2,70,000 1,000 1,000 0 3,00,000 2,500 2,500 0 3,50,000 5,000 2,500 2,575 (Rs. 75 Cess)
  15. 15. Company & Firm Tax Rates  Companies with Annual Turnover up to Rs. 50 Crore – 25% (Earlier 30%)  Firms (Partnership or LLP) – 30% (Same as before)
  16. 16. Deemed Profit for Small Firms  In 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.
  17. 17. Deemed Profit for Small Firms  Now 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.
  18. 18. Capital Gain on Land & Building  Periodicity 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.
  19. 19. Donations – 80G  Cash Donations exceeding Rs. 2,000 – Not Eligible for deduction u/s 80G  Bank/Digital or any mode other than cash – No limit  Trusts accepting 80G donations Have To Advise their donors to give donations exceeding Rs. 2,000 vide cheque / RTGS / digital modes.
  20. 20. Value of Unquoted Shares  Value of Unquoted Shares for example shares of Private Limited Companies to be taxed at Fair Market Value.
  21. 21. Penalty for Late Return Filing  IT 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
  22. 22. Aadhar to be linked with PAN  Every 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 doesn’t match perfectly in both the documents.
  23. 23. The New Mantra of Transacting  Avoid Cash transactions as much as possible.  Go Less-Cash  Go Digital  Avoid “Smart” Evasive Tactics to subvert the laws.  The Government knows more than you think it does!
  24. 24. Disclaimer  Information 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.
  25. 25. Thank You!!!  Grazie  Gracias  Domo Arigato  Merci  Danke  Obrigado  Mahalo  शुक्रिया

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