Union Budget 2017 Impact on Income Tax
Written on Monday, February 6, 2017
By Mitali Sharma
The much awaited Union Budget 2017 is out and we all want to know its impact on different aspects of our lives like Tax, Business, Investment, etc. Expert analysis on budget impact will continue for sometime, but in the mean time check out how the Budget has impacted the Income Tax for different profiles of taxpayers.
1. The existing rate of taxation for income of Rs 2.5-Rs 5 lakh has been reduced to 5% from the present rate of 10%.
How Will this Impact Your Tax Calculation?
As per the previous Income Tax rules, the total tax liability for the income slab of 2,50,000 - 5,00,000 was 25,000 @ 10%. Now, since the 10 % has been reduced to 5 %, so the total tax liability for the same slab works out to be Rs. 12,500.
Thus, the new budget gives you a total tax saving (before cess) is of Rs. 12,500.
2. No changes in the rate of taxation for the other slabs
3. Surcharge of 10% of tax on income Rs 50 lakh to Rs 1 crore. (New Levy)
4. Surcharge of 15% of tax on income more than Rs 1 crore. (Existing Levy)
5. Rebate under section 87 A reduced to Rs 2,500 from the existing Rs. 5000. Also, the capping income limit for the same has been reduced to income up to Rs 3,50,000 from the existing limit of Rs. 5,00,000.
1. LIC scheme offering 8% guaranteed pension will be introduced
2. The details of the scheme will be announced by LIC soon.
1. In the individual front, small businessmen benefited from lower income tax rates for income up to Rs 3.5 lakh
2. The presumptive tax at 8% of the turnover has been reduced to 6%, only if the turnover is below Rs 2 crore and received by non-cash means.
3. Increased ease in raising loans for businesses because the MUDRA lending target is doubled to Rs 2.44 crore.
1. Tax exemption on long-term capital gains (LTCG) on stocks will remain as same
2. The holding period for the long-term capital gains (LTCG) on the property has been reduced from 36 months to 24 months.
A lot was being expected from this budget in regards to Tax, especially after the Demonetization act. However, various media sources have quoted that the budget results and the expectations are not on the same line. The new levy of adding a surcharge of 10% of tax on income Rs 50 lakh to Rs 1 crore has increased the tax liability on the taxpayers but on the other hand, the budget is being praised as it is tax friendly for the individuals with low-income slab of Rs. 2,50,000 - Rs. 5,00,000.