Budget 2017 was presented in Parliament on Wednesday morning, signalling an end to the colonial legacy of presenting the bill on last working day of February. The finance bill came out amid huge expectations. The common person expected key reforms and introduction of tax relief following the pinch felt post demonetisation. Indeed several such measures were introduced, although not necessarily exactly as expected.
Reduction of tax rate from 10% to 5%
The basic exemption limit of ₹2.5 lakh was expected to be raised but this did not happen. Finance Minister, Arun Jaitley in his speech shared that out of 3.7 crore individuals who filed tax returns in 2015-16, 99 lakh showed income below exemption limit, so lifting the limit would mean losing the large chunk of people falling in that category. However, the FM took another route to provide relief to small taxpayers. The tax rate of 10% on income from ₹2.5 lakh to ₹5 lakh has been reduced to 5% bringing a smile on faces of taxpayers.
The tax rate of 10% on income from ₹2.5 lakh to ₹5 lakh has been reduced to 5% bringing a smile on faces of taxpayers.
The rebate under section 87A of ₹5000 available earlier to taxpayers earning up to ₹50,000 has been reduced to ₹2500. This rebate shall be available to taxpayers whose income doesn't exceed ₹350,000. The other tax slab rates have not been altered but all the taxpayers will now get a minimum tax saving of ₹12,500 earning ₹500,000 or more.
Simplified one-page return for those earning up to ₹500,000
Post demonetisation, people have been queuing up to deposit money into their bank accounts. The deposits can't go unnoticed by the tax department, which is something depositors are aware of; as a result they have started filing returns and paying advance tax liability.
In order to motivate people to file their returns a simple one-page form will be introduced to be filed as income tax return for the category of individuals having taxable income up to ₹5 lakh other than business income.
No scrutiny in next year for first-time return filers
People who will be filing their return for the first time received good news from the FM. The FM announced that they will not be brought under scrutiny for one year. However in case of exceptional high value transactions, they might be called to disclose sources of income and so on.
Super-rich to feel the pinch of surcharge
The super-rich earning income more than ₹50,00,000 (but not exceeding ₹1crore) will now have to pay additional 10% tax as surcharge on tax payable on income. Earlier surcharge was payable on exceeding limit of ₹1crore but now individuals, Hindu Undivided Families (HUFs), Associations of Persons (AOPs) and Bodies of Individuals (BOIs) too will have to pay the surcharge.
Overall, budget 2017 has been able to meet the expectations of common citizens and has earned a thumbs-up from them.