Table of Contents
HIGHLIGHTS OF UNION BUDGET 2018-2019
- Slab rates kept the same.
- Education Cess and SHEC rates increased to 4% from the existing 3%.
- Charitable / Religious Trusts claiming exemption under section 11 & 12 or under section 10(23C) for a business conducted by them will be needed to follow the provisions of sections 40(a)(ia), 40A, and 40A(3) i.e. TDS compliance to be ensured, Cash payments to restrict within limits of Rs. 10,000 only.
- Salaried assessee to avail a standard deduction of Rs. 40,000/-
- Payment received on termination or modification of terms and conditions of a contract relating to business now to attract taxation.
- A businessman converting stock in trade into a capital asset has to pay the tax on the appreciation.
- A number of amendments made in the Income Tax Act to give sanctity to the ICDS applicability like:
- Marked to market losses as per ICDS to be permissible under section 36.
- Foreign exchange difference in revenue items arising as per ICDS applicability to be recognized as profit or loss.
- Insertion of section 43CB proposed to provide validity to the applicability of percentage completion method on construction contracts.
- Immovable property relating stamp duty valuations having impact under section 43CA, 50CA, and 56(2)(x) relaxed to the extent of 5% difference of the consideration received or accruing as a result of the transfer.
- Changes in income computation formula in case of truck and loading tempo operators under section 44AE for heavy goods vehicle Rs. 1000 per ton of gross vehicle weight formula on per month basis to be adopted and for other vehicle Rs. 7500/- as old provision to continue.
- Reduction in scope of exemption claimable under section 54EC from any long-term capital asset to the long-term capital arising on account transfer of land or building or both only. Further, the redemption period of bonds is also proposed to be increased to 5 years.
- An employee leaving the job may be in receipt of any compensation or other payment from any person in connection with such termination or for the modification of terms and conditions of such employment shall be taxable for the same as income by way of other sources, an amendment proposed under section 56.
- Certain amendments were made under sections 79, 115JB, and 140 to acknowledge and provide relief in cases covered under the Insolvency and Bankruptcy Code 2016.
- Health insurance premium contribution in case of senior and very senior citizens extended to Rs. 50,000/- : amendment under section 80D
- Quantum of deduction under section 80DDB for medical treatment in case of a senior citizen and very senior citizen increase from Rs. 60,000 and Rs.80,000 respectively to Rs. 1,00,000/-
- Increase in scope of section 80IAC by modifying the definition of ‘eligible business’ to include even start-ups engaged in innovation, development, or improvement of products or processes or services or a scalable business model with a high potential of employment or wealth creation. Further last date of incorporation of business extended from 31.3.2019 to 31.03.2021.
- Relation of minimum number for days of employment of an employee to 240 days also relaxed to just 150 days in case of footwear or leather products even.
- New deduction section 80PA proposed to be inserted to provide 100% deduction to Producer Companies from eligible business being marketing of agricultural produce grown by the members or purchase of agricultural implements, seeds, livestock or other articles intended for agriculture or processing the agricultural produce of the members.
- Section 80TTB to be inserted to provide relief to senior citizens in respect of income arising in form of interest from banking companies, cooperative society, and the post office to the extent of Rs. 50,000 for a financial year. However, in such a case, the benefit of section 80TTA shall not be available.
- Proposed insertion of section 112A to tax long-term capital gain arising on account of transfer of listed shares and units of equity-oriented mutual fund units @ 10% on an amount exceeding Rs. 1 lakh. However, the cost for such purposes is prima-facie to take color from fair market value as of 31.01.2018.
- Dividend in the nature of section 2(22)(e) also to attract dividend distribution tax on company @ 30%.
- Alignment of dividend distribution tax rates on dividends distributed by various kinds of mutual funds under section 115R.
- Prima-facie adjustment under section 143(1) on account of mismatch between Form 26AS and form 16 or 16A not to take place w.e.f AY 2019-2020.
- New subsection (3A) proposed to be inserted under section 143 to bring up an e-assessment procedure as per the Budget Speech of Hon’ble Finance Minister.
- ICDS was further strengthened by making necessary amendments in section 145A.
- New section 145B proposed to provide certain exceptions of taxation in certain special cases.
- No TDS from senior citizen resident payees for payment of interest on time and recurring deposits up to Rs. 50,000 during a financial year.
- No substantial amendments in assessment, TDS, TCS, remedies, and penalty procedures.
Union Budget 2018
The proposed tax rates for the next 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% |
| # The 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 the aggregate of Income-tax and Surcharge.
