New Delhi: With the passage of Budget by Parliament new sets of Income Tax rules come into effect from April 1. Let’s look at the 10 important changes in the Income Tax rules that will affect you
1. Tax saving of Rs 12,500 for total income between Rs 2.5 lakh and Rs 5 lakh and Rs 14,806 (including surcharge and cess) for those with income above Rs 1 crore. This followscut in tax rate from 10 per cent to 5 per cent in the Budget.
2. Tax rebate cut to Rs 2,500 from Rs 5,000 per year for taxpayers with income up to Rs 3.5 lakh (earlier Rs 5 lakh). Combined effect of change in tax rate and rebate means somebody with taxable income of Rs 3.5 lakh will now pay Rs 2,575 tax instead of Rs 5,150 earlier.
3.10 per cent of tax levied as surcharge on rich taxpayers,with income between Rs 50 lakh and Rs 1 crore. While 15% surcharge for those with income above Rs 1 crore, continues.
4. For the purpose long term capital gain, holding period for immovable property reduced to 2 years from 3 years. This ensures immovable property held beyond 2 years is taxed at reduced rate of 20 per cent and eligible for various exemptions on reinvestment.
5. Long term capital gains tax will result in a lower payout owing to beneficial amendments. The base year for indexation of cost (adjustment of inflation) shifted to April 1, 2001 from April 1, 1981. This means lower profits on sale.
6. Tax exemption on reinvestment of capital gains in notified redeemable bonds (in addition to investment in NHAI and REC bonds).
7. Simple one-page IT return form for people with taxable income up to Rs 5 lakh (excluding business income). First time return filers will generally not be subject to scrutiny.
8. Delay in filing tax return for 2017-18 will attract penalty of Rs 5,000 if filed by Dec 31, 2018 and Rs 10,000 if filed later. Such fee will be restricted to Rs 1,000 for small taxpayers with income up to Rs 5 lakh.
9. Aadhar,is mandatory for IT returns
10. Tax deductions withdrawn for Rajiv Gandhi Equity Savings Scheme.If somebody has already claimed deduction under this scheme before April 1, 2017, he/she shall be allowed to avail a deduction for the next two years.
11 Time period for revision of tax return reduced to one year (from 2 years) from the end of the relevant fiscal year or before completion of assessment, whichever is earlier.