New financial year 2018 brings new challenges

Source: The Hitavada      Date: 04 Apr 2018 10:28:17


By CA Julfesh Shah,

New financial year, 2018 came up with lot many significant changes which will have a great impact on Indian economy as well as on everyone life directly or indirectly. Following are the highlights of some of the key changes which everyone should be aware of. We hope that knowledge of these changes will be helpful for an effective financial planning.

Long-Term Capital Gains @10%: After almost a gap of 14 years, Long-Term Capital Gains tax has been introduced. Investors will have to pay Long Term Capital Gains exceeding Rs 1 lakh at the rate of 10% without having the benefit of indexation. However, indexation benefit for computing tax liability on the sale of shares listed after January 31 will be available.

Applicability of E-way Bill (Inter-State movement): On transportation of goods worth over Rs 50,000 from one State to another will have to carry an electronic or E-way Bill. It was supposed to get implemented from February 1, 2018, but due to some technical glitches, it was deferred and was introduced on April 1, 2018.
Hike in Health & Education Cess: Due to increase in health and education cess (from 3% to 4%), taxpayers will pay a bit of more tax.

For salaried employees: There is a standard deduction of Rs 40,000 in lieu of transport allowance and medical reimbursement.
Corporate Tax @25%: Those companies whose turnover is up to Rs 250 crore, will now have to pay Corporate Tax at the rate of 25%.

Exemption of interest income for senior citizens: For senior citizens, exemption of interest income on bank deposits raised to Rs 50,000.
For senior and very senior citizens, the tax deduction for critical illness will be Rs 100,000 effective from April 1, 2018 as against the existing limit of Rs 60,000 for senior citizens and Rs 80,000 for very senior citizens.

Revision in toll rates: National Highways Authority of India
has revised its toll rates by 5 to 7 per cent.
Some of the major amendments in Income Tax must be remembered while filing ITR for FY 2017-18 i.e. AY 2018-19.

i. Tax exemption limit is Rs 2,50,000 (same as earlier). After that, up to Rs 5 lakh, tax rate is 5% (earlier it was 10%).
ii. Tax rebate is reduced to Rs 2,500 from Rs 5,000 per year for taxpayers with income up to Rs 3,50,000 (earlier it was Rs 5,00,000).

iii. Surcharge at 10 per cent of tax levied on rich taxpayers with income between Rs 50 lakh and Rs 1 crore. The rate for surcharge for the super-rich, with income above Rs 1 crore will remain 15%.
iv. Corporate Tax rate for the account year 2017-18 for companies with annual turnover up to Rs 50 crore (in account year 2015-16) is reduced to 25%. No change in tax rate of 30% in partnership firm.
v. Donation in cash made exceeding Rs 2,000 will be not be eligible for deduction under section 80G.

vi. Capital gain in respect of land and building period reduced from 3 years to 2 years and base year shifted from April 1, 1981 to April 1, 2001.
vii. Tax exemption will be available on reinvestment of capital gains in notified redeemable bonds (In addition to investment in NHAI and REC bonds).

viii. Limit for payment of expenses by cash (Both capital and revenue expenditure) reduced from Rs 20,000 to Rs 10,000 per day in aggregate per person.
ix. No person will receive an amount of Rs two lakh or more, by cash (Sec 269ST).
x. For below Rs 2 crore turnover cases - for non cash sales (through digital, on-line, cheque, bank etc.): Net profit will be taken as 6% of turnover/gross receipt. It is 8% for cash sales (Sec 44AD).

xi. For financial year 2017-18 (AY 2018-19), if return is not filed within due date, late fee of Rs 5,000 for delay up to December 31, and Rs 10,000 thereafter. Such fee will be restricted to Rs 1,000 for small taxpayers with income up to Rs 5 lakh.

xii. A simple one page tax return form is to be introduced for individual with taxable income up to Rs 5 lakh (excluding business income). Those filing returns for the first time in this category will generally not be subject to scrutiny.

xiii. It is mandatory to disclose the Aadhar number while filing IT return. Earlier it was optional to disclose Aadhar number. Generally the last date of filing Incomet-Tax return is July 31. Therefore, it is advisable for taxpayer to get their Aadhar number at the earliest.

(The author is member of PR and CSR Committee of ICAI, New Delhi and practising Chartered Accountant.)