15 things you should know to manage your taxes better!

Income tax 2017-18

Hope you all had a successful financial year and looking forward to an even better one. As we are aware that our robust government has come up with several measures to attain more transparency, better governance and curb black money. Demonetisation proved to be a highly successful and thoroughly appreciated step. Our Finance Minister while presenting his third fiscal budget, enlisted a series of amendments in the Income Tax Act, 1961 that would be applicable in the current year.

Though, keeping in sync with all the updates would be a herculean task, so here I have tried to enlist the major amendments to have a hassle-free and tax-compliant fiscal ahead:

  1. Section 269ST: Major amendment has taken place in this section. It provides that no person shall receive an amount of Rs 2 lakhs and above in the form of cash-
  • in aggregate from a person in a day; or
  • in respect of a single transaction; or
  • in respect of transactions relating to one event or occasion.

In case of contravention of this section, penalty u/s 271DA equal to 100% of the said amount will be levied.

  1. Section 44AA: Maintenance of book of accounts is mandatory in case of individual/ HUF if:
  • Turnover>25 Lakhs or
  • Income>2.5 Lakhs
  1. Section 44AB: Get ready for tax audit if your turnover from business/ profession exceeds 1crore and 50Lakhs respectively.
  2. Section 40A(3): Revenue expenditure in cash to be disallowed if exceeds Rs. 10,000. Earlier, the amount allowed was Rs. 20,000.
  3. Capital expenditure exceeding Rs 10,000 cannot be made in cash. No claim of depreciation, actual cost as per section 43 or benefit of section 35AD will be allowed.
  4. Section 44AD:
  • Eligible businesses can adopt presumptive taxation up to a turnover of Rs 2crores.
  • In case the entire turnover is received in modes other than Cash, a rebate of 2% is allowed in case of presumptive 6% instead of 8%.
  1. Section 44ADA:
  • Professionals can adopt presumptive taxation up to a gross receipt of Rs 50lakhs.
  • Tax has to be paid on 50% of the Gross Receipt.
  • If declared net profit is lesser than 50%, there is a need to get the accounts audited.
  1. Donation:
  • Maximum amount of cash donation to political parties from one source cannot exceed Rs. 2,000.
  • Cash donation received by charitable trusts cannot exceed Rs. 2,000.
  1. Capital Gain:
  • In case of immovable property being land or building or both, the period for computing LTCG is reduced to two years.
  • Base year for Indexation changed to 1.4.2001 from 1.4.1981
  • Conversion of preference shares into equity will not be regarded as transfer.
  • Exemption u/s 10(38) available only if STT was paid on acquisition of shares.
  1. TCS provision: TCS rate will be twice of the normal rate or 5% whichever is higher, in case of absence of PAN of the buyer of specified goods.
  2. TDS Provisions:
  • TDS u/s 194IB @ 5% has to be deducted by Individual/ HUF (Other than Tax Audit) if the rent paid exceeds Rs. 50,000 p.m.
  • TDS u/s 194J @2% instead of 10 % has to be deducted in case of person engaged only in call centre operations.
  • Form 15G/15H can be furnished in case of insurance commission as well.
  1. Surcharge @ 10% will be levied in case total income exceeds 50 lakhs but does not exceed 1 crore.
  2. No deduction will be allowed from 2017-18 onwards for fresh investments made under Rajiv Gandhi Equity Saving Scheme (RGESS).
  3. Corporate Provisions:
  • Corporate tax rate is reduced to 25% for companies with annual turnover up to Rs. 50crore in the previous fiscal.
  • MAT/ AMT credit can be carried forward to 15 years instead of current 10 years.
  1. Penal Provisions on professionals: As per Section 271J, penalty of Rs. 10000 can be levied if the following persons furnish incorrect information-
  • Accountant
  • Merchant banker
  • Registered Valuer

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About the author

Amrita Agrawal

Amrita is a finance professional, a qualified Chartered Accountant and Company Secretary with more than half a decade of work-experience. She is an avid reader and keen to be a full-time blogger.


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