10 Tax changes in Financial Year 2017-18 that will impact your Taxes

(Last Updated On: June 3, 2017)
Another Financial year 2017-18 has just begun and has already brought in a host of new laws & regulations on the common man. Let us warn you, not knowing about these changes will hurt your tax life. You think we are exaggerating? Checkout for yourself below!

So here we are with the lists of all the things that will seriously impact your taxes financial year 2017-18. Let’s begin :-

1. Change In Tax Slab:

Since the union budget released for financial year 2017-18, it has been the most discussed topic and you probably are aware of the tax slab rate that has been revised. If you are having an income ranging from 2.5-5 Lakh rupees, tax slab has been made 5 % from the earlier 10%. While 10% surcharge has been increased if you are having an income above 50 lakhs. Know more

2. Reduction in Tax Rebate

In union budget 2017-18, there is a change in tax rebate under section 87A for small taxpayers.
From this year onward, the tax rebate which is for maximum of Rs.2500, would be given to you if you fall under the category of having a taxable income up to Rs.3.5 Lakhs. For F.Y. 2016-17 the rebate was for the income up to Rs.5 Lakhs.
But the GOOD news is that you will be able to continue to enjoy the old rebate in the income tax returns filed during this year i.e. return for the FY 2016-17.

3. Penalty for not filing of returns

Well this is going to be bad news for the lazy taxpayers because from this F.Y. onward the tax department is going impose penalties for non-filers and late filers. If you don’t file up to 31st December , penalty imposed for late fees would be Rs.5000 and thereafter Rs. 10,000.
However, there is lesser penalty i.e. Rs. 1,000/- for the persons having income upto Rs. 5 lakh.

4. Reduction in cash expenses

That’s right! And make no mistake about it. From this F.Y. onward Limit for payment of expenses by cash (both, capital and revenue expenditure) has been reduced from Rs.20,000 to Rs.10,000 per day in aggregate per person.

5. TDS on Rent

YES! Unfortunately If you are a salaried person ( Individual/HUF) paying Rent of Rs.50,000 per month or above, then you have to deduct TDS @ 5% & deposit in government treasury. Earlier exemption was from the deduction of any TDS on rent. It will be effective from June 2017.

6. Change in Capital Gain calculations

The much awaited changes have now been done! If you have sold land/building, then the capital gains calculation formula has been changed.
  • Base year required for indexation has been shifted from 01.04.1981 to 01.04.2001 for all assets.
  • Periodicity for long term Capital Gain reduced from 3 years to 2 years.
Both these changes are highly appreciated by everyone, as these will increase the cost of asset and reduce the capital gain. Thus, there’s a way for you that leads to the lesser payment of taxes.
(Capital Gain= Sale Price- Cost)

7. No cash donation more than 2,000

Believe it or not! You will surely lose the tax deduction under section 80G if you make a donation via cash for more than 2000. Last year this limit was for Rs. 10,000.
So, if you want to continue to enjoy the tax benefits, then pay via other modes than cash.

8. Linking PAN with Aadhar

This year the government has taken another step to demolish black money. Under this new proposed rule if you don’t link your PAN with your Aadhar until December, then the government will make your PAN No invalid.
So,if your spellings mismatched in PAN & Aadhar card then you must rectify it now.

9. Surcharge on income above 50 lakhs

In case, you are an individual, HUF, AOP, BOI or artificial juridical person then right now surcharge imposed on you was at the rate of 15% of tax, if income exceeds 1 Crore.
But from this F.Y. 2017-18 onwards, It is now proposed to collect surcharge at rate of 10% of tax, if income exceeds 50 lakhs  and   at  the  rate  of  15%  if  income  exceeds  1  Crore.

10. Transaction  in  cash  above  2  lakhs  is  prohibited

A new Section  269ST  proposed recently, will get effective from Financial Year 2017-18. Under this no one can receive an amount of 2 lakhs or more in cash in a single day or in any respect of single transaction. If you neglect this provision then there will be a 100% penalty under section 271DA. It means that penalty will be equal to the amount transacted. However, this restriction is not applicable to Government, any banking company, post office savings bank or co-operative bank or any other notified person.
You are probably wondering why? Well this brilliant step taken by union government will help to cut down the corruption.

Now that you are aware of all the changes that will impact your taxes, it’s your turn to avoid making this Financial year a taxing one. Start action now. Trust me you’ll be glad you did.

In case you need any help with your taxes, then contact our experts now.

Good luck filing your returns. Let us know your queries and doubts in the comment section. We will love to help you out.


Team Tax2Win