13/04/2018
With the onset of the Financial Year 2018-19, we need to start preparing for the income tax return filing for FY2017-18, which is due by 31 July for salaried individuals. We, however, also need to take cognizance of the latest changes in the tax rules to enable ourselves to file tax returns correctly. Here is a glimpse of the few changes in the income tax rules one needs to be aware of:
1. Reduced Tax for lower slab: The applicable slab rate with respect to an individual having taxable income between Rs 2.5 lakh and Rs 5 lakh has been reduced from 10% to 5%. However, there has been no change in the tax rates for other slabs.
2. Rebate under Section 87A reduced: Earlier, an individual with taxable income up to Rs 5 lakh was entitled to a tax rebate. Now, this limit has been reduced to Rs 3.5 lakh. Also the tax rebate has been reduced from Rs 5,000 to Rs 2,500.
3. Additional surcharge: A surcharge will be applicable at the rate of 10% for individuals with income in the range of Rs 50 lakh to Rs 1 crore. Surcharge at the rate of 15% continues in respect of individuals with income more than Rs 1 crore.
4. New limit for setting off of house property loss against Other Income in the same Financial Year: Till FY2016-17, the entire loss (arising on account of interest on loan) in respect of a let-out property or a deemed to be let-out property was allowed to be set off against other income (without any limit).
With effect from FY2017-18, the maximum amount of loss that can be set-off against other income in the same FY is restricted to Rs 2 lakh and the balance loss can be carried forward for set-off against house property income in future for the next eight years.
5. Holding period scaled down for considering Capital Gains as Long Term: Till FY2016-17, immovable property, being land and building or both, was considered as Long Term Capital asset if it was held for more than 36 months.
From FY2017-18, such property will be considered as long term if it is held for more than 24 months. Thus, indexation benefit will be available where the sale of immovable property takes place after 24 months.
There is a change in the base year for indexation purpose from April 1, 1981 to April 1, 2001. Accordingly, the government has notified new cost inflation indexes.
6. Fee for late filing of tax return: The due date of return filing for salaried individuals is 31 July from the end of the financial year. If the return is not filed within the due date, a fee would be levied as under:
(i) A fee of Rs 5,000 in case returns are filed after the due date but before December 31, 2018 or
(ii) Rs 10,000 in case it is filed after December 31, 2018.
However, as a relief to the taxpayers earning not more than Rs 5 lakh, the maximum fee will be Rs 1000.
Team Uttama Ministration
