INCOME TAX IMPORTANT ANALYSIS OF ALL MAJOR AMENDMENTS IN INCOME TAX APPLICABLE FOR A.Y. 2018-19

IMPORTANT ANALYSIS OF ALL MAJOR AMENDMENTS IN INCOME TAX APPLICABLE FOR A.Y. 2018-19

Maintenance of Books of Accounts

  • Change in limits for Maintenance of Books of Accounts (Section 44AA): If your net income* from Business or Profession in the financial year 2017-18 is more than Rs 2,50,000 OR if your total sales from Business or Profession in the financial year is more than 25,00,000, then you need to maintain the books of accounts. Earlier these limits were Rs 1,25,000 and Rs 10,00,000 respectively. *Net Income means Gross receipts less all expenses

Income tax Returns

  • Important changes relating to Filing of Income tax Returns:  Can be filed till one year from the end of the financial year. YES, a belated return can be revised till one year from the end of financial year.
  • Fees for late filing of the income tax return (Section 234F): The due date of return filing is generally 31st July. If the return is filed upto 31st December of relevant Assessment Year, then late filing fees of Rs 5000 will be mandatorily levied and Rs 10000 will be levied if the return is filed after 31st December of the relevant Assessment Year.
  • 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.
  • Time period for revision of tax return cut to one year (from 2 years) from the end of relevant financial year or before completion of assessment, whichever is earlier.

Tax deducted at source

  • Section 194-IB is inserted for Individuals and HUF who pay rent exceeding Rs 50,000/- per month
    Individuals and HUF who pay rent to a resident exceeding Rs 50,000/- per month or part of the month, TDS at the rate of 5% is to be deducted on the total rent amount paid during the tenancy period only in the last month of the financial year or last month of the tenancy, whichever is earlier. Also, PAN of the landlord is required to be furnished while making the payment of said tax. If the PAN is not been furnished to tenant, then TDS at the rate of 20% will be deducted. Such higher TDS deducted cannot exceed the amount of rent paid in the last month. Deductor is not required to file the TDS returns and also not required to obtain the TAX Deduction Number (TAN).
  • In absence of PAN of the buyer of specified goods, the rate of TCS will be twice of the extent rate or 5%, whichever is higher.
  • Payment of Rent – Rs.50,000 per month by any Individual or HUF (not subject to Tax Audit requirement) – Deduct TDS @ 5%.

Changes in capital gain

  • Change in period for considering Capital Gain as Long Term: Till financial year 2016-17, immovable property, being land and building or both were considered as Long Term Capital asset after holding it for more than 36 months., Now from financial year 2017-18 immovable property, being land and building or both will be classified as Long term Capital Asset after holding it for more than 24 months. Thus, Indexation benefit will be available after completion of 24 months.
  • Tax exemption will be available on reinvestment of capital gains in notified redeemable bonds (In addition to investment in NHAI and REC bonds).
  • Shares of unquoted shares to be taxed at (deemed) fair value.
  • Capital gain in respect of Land and Building period reduced from 3 Years to 2 Years and Base year shifted from 01/04/1981 to 01/04/2001.

Deduction under chapter vi a

  • Deduction for first time investors in listed equity shares or listed units of equity oriented funds under the Rajiv Gandhi Equity Savings Scheme under section 80CCG of IT act 1961 is withdrawn from FY 2017-18. If an individual has already claimed deduction under this scheme before April 1, 2017, They shall be allowed to avail a deduction for the next two years.
  • No tax is applicable for partial withdrawals from National Pension System. NPS subscribers will be able to withdraw 25% of their contribution to the corpus for emergencies before retirement. Withdrawal of 40% of the corpus is tax free before retirement.
  • Donation made exceeding Rs.2000 will be not be eligible for deduction under section 80G.

Tax slab rate

  • Tax Exemption limit is Rs.2,50,000/- (same as earlier) After that, up to 5 Lakh, Tax rate is 5% (earlier it was 10%).
  • Corporate tax rate for the account year 2017-18 for companies with annual turnover up to Rs.50 crores (in account year 2015-16) is reduced to 25%. No change in firm tax rate of 30%.
  • Tax rebate is reduced to Rs.2500 from Rs.5000 per year for taxpayers with income up to Rs.3,50,000 (earlier Rs.5,00,000).
  • Surcharge at 10 percent 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%.

The  tax rates for the  financial year 2018-19

Tax Rate* for an individual for the A.Y. 2019-20
Income Rates of Income-tax
Individual (Age less than 60 Years) Senior Citizen (Age above 60 Years) Super Senior Citizen (Age above 80 Years)
1 Up to Rs. 2,50,000 Nil Nil Nil
2 Rs. 2,50,000 to Rs. 3,00,000 5% Nil Nil
3 Rs. 3,00,000 to Rs. 5,00,000 5% 5% Nil
4 Rs. 5,00,000 to Rs. 10,00,000 20% 20% 20%
5 Above Rs. 10,00,000 30% 30% 30%

*The above rates are exclusive of surcharge and cess.

A resident individual, whose taxable income does not exceed Rs. 3, 50,000, can claim a tax rebate under section 87A. The amount of rebate shall be lower of 100% of income-tax or Rs. 2,500.

Tax Rates* for Corporate Assessee for the A.Y. 2019-20
Status of Taxpayer Rates of income-tax
1 Firms/Local Authority 30%
2 Domestic Company 30%/25%#
3 Foreign Company 40%
# Tax rate is 25% if turnover or gross receipts of the domestic company in the previous year 2016-17 doesn’t exceed Rs. 250 crore

*The above rates are exclusive of surcharge and cess.

Tax Rates* for Co-operatives Societies for the A.Y. 2019-20
Income Rates of income-tax
1 Up to Rs. 10,000 10%
2 Rs.10,000 – Rs.20,000 20%
3 Above Rs. 20,000 30%

*The above rates are exclusive of surcharge and cess.

*Rates of Surcharge
Particulars Taxable Income
50 Lacs to 1 Crore 1 Crore to 10 Crores Exceeding 10 Crores
Individuals/HUF 10% 15% 15%
Firm/ Local Authority/ Co-operative Society Nil 12% 12%
Domestic Company Nil 7% 12%
Foreign Company Nil 2% 5%
Co-operative Societies Nil 12% 12%

*The health &education cess at the rate of 4% shall be computed on aggregate of Income-Tax and Surcharge. 

Other changes

  • 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.
  • Where Section 12AA registered trusts modify their object clause, they need to apply within 30 Days to CIT for approval.
  • For below Rs. 2 crores turnover cases – For Non cash sales (through Digital, Online, cheque, Bank etc.) : Net Profit will be taken as 6% of Turnover/ Gross Receipt. It is 8% For Cash Sales.
  • 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 IT return is 31 July. Therefore, it is advisable for taxpayer to get their Aadhar number at the earliest.

Disclaimer:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. The author is a Chartered Accountant and the Chief Gardener & Founder Director of Rajput Jain & Associates , a leading Tax & Investment Planning Advisory Service Provider. His blog can be found at http://carajput.com/blog/For any query you can write to info@carajput.com. Hope the information will assist you in your Professional endeavors. For query or help, contact:   info@carajput.com or call at 09811322785/4 9555 5555 480)

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