Income tax rates for individuals has been halved in the India’s Union Budget 2017. In his Budget speech, Finance Minister Arun Jaitley announced that income tax rate for individuals with taxable income between Rs. 2.5 lakh and Rs 5 lakh will be reduced to 5% instead of the existing 10%.
Income tax rates for individuals in all other income slabs have been left unchanged at 20% & 30%. All individuals with annual income more than Rs 5 lakh will get a uniform tax benefit of Rs 12,500.
However, Indians with higher income will be taxed more. The government has announced a surcharge of 10% for individuals with income between Rs 50 lakh and Rs 1 crore.
Income Tax Slabs for Financial Year 2017-18 – India Budget 2017
- Income tax rate for individuals with annual income between Rs 2.5 lakh and Rs 5 lakh reduced to 5%.
- Income tax surcharge of 10% for individuals with annual income between Rs 50 lakh and Rs 1 crore.
- All other income groups will get a uniform benefit of Rs 12,500.
- Surcharge on the individual annual income of Rs 1 crore or more remains unchanged at 15%.
- Corporate tax for Micro, Small and Medium Enterprises (MSMEs) with annual turnover up to Rs 50 crore reduced to 25% from the existing 30%.
- No cash transaction above Rs 3 lakh.
In taxation, the time period for revising an income tax return is being reduced to 12 months from completion of financial year, at par with the time period for filing of return. Also, the time for completion of scrutiny assessments is being reduced from 21 months to 18 months for Assessment Year 2018-19 (Financial Year 2017-18). From Assessment Year 2019-20 (Financial Year 2017-18) and beyond, the scrutiny of income tax returns will have to be completed within 12 months of filing of returns.
Commission payable to individual insurance agents has been exempted from the requirement of TDS (Tax Deduction at Source), subject to their filing a self-declaration that their income is below taxable limit. Under scheme for presumptive taxation for professionals with receipt up to Rs 50 lakh per year, advance tax can be paid as a lump-sum, instead of four installments.
The threshold limit for audit of business entities who opt for presumptive business income scheme has been increased from Rs 1 crore to Rs 2 crores. Similarly, the threshold for maintenance of books (accounts) for individuals and HUF (Hindu Undivided Families) increased from turnover of Rs 10 lakh to Rs 25 lakh, or income from Rs 1.2 lakh to Rs 2.5 lakh.
Under the scheme of presumptive income for small and medium tax payers whose turnover is up to Rs 2 crore, the presumptive income will be calculated at 6% of the turnover through non-cash payments, instead of 8% of the turnover.