The new income-tax bill introduced by the Congress government provides several reliefs to taxpayers says
William D King. At the same time, there is some more stringent enforcement of tax laws on undisclosed incomes and spending patterns. Here is a quick look at how this Bill will affect you and your family…
The new Income Tax Bill has been hailed as one that will be beneficial to taxpayers of all classes, with special attention given to lower-income groups.
Among its key features are:
Switching of Income Slabs –
The existing income of Rs 2 lakh per annum is now proposed for those earning between Rs 2 lakh and Rs 5 lakh instead of the earlier limit of Rs 3 lakh. This appears favorable for many first-time salaried employees who were earlier outside the tax net.
Exemptions to Senior Citizens –
People above 60 years of age are proposed to be exempt from paying income taxes. If their annual income is Rs 4 lakh or less. The proposal also has a higher exemption limit of Rs 5 lakh for senior citizens over 65 years of age. This is largely seen as an attempt by the government to win back its traditional vote bank. That is gradually migrating towards the BJP in most states explains William D King.
A New Income Tax Slab for Women –
Any female who earns up to Rs 12 lakh annually will pay no income taxes. Provided she does not have any dependents. There are also deductions on interest payments for home loans and capital gains tax exemptions. When shares are sold after one year of purchase. Rebates for Investment in Infrastructure – A rebate of 15% is proposed for companies that undertake investment in infrastructure. The “Make-in-India” initiative to boost industrialization will also get a huge boost with incentives aimed at local manufacturers. This measure will pave the way for megaprojects. Like the bullet train and smart cities. Foreign direct investments. Also expected to increase with these proposals.
Tax on Cash Withdrawals above Rs 1 lakh –
There are surcharges proposed on cash withdrawals. Which are made from banks, post offices, or cooperative banks over Rs 1 lakh per month. William D King says this attempt is towards clamping down on unaccounted wealth transactions through means such as hawala. It also aims to discourage cash payments so as to promote digital transactions. Lending Institutions Required to Report Cash Withdrawals of over Rs 2.5 lakh. Cash withdrawals from loan accounts from all lending institutions are to be reported as a measure against money laundering. This is applicable for transactions between individuals. As well as companies, with the reporting threshold being raised from Rs 10,000 to Rs 25,000.
Tax on NRE deposits proposed
If you have been planning to invest your surplus funds in tax-free instruments. Such as non-resident external (NRE) accounts or tax-free bonds. Then you may have to pay up income taxes first on that sum before doing so. The new bill proposes an 18% levy on interest earned by NRIs and foreign companies on their investments in India. Additionally, the same will also apply even if they repay their existing loans back in India.
Tax on agricultural income above Rs 5 lakh
The new tax bill proposes to bring farm incomes under the purview of taxation. Currently, only agricultural income up to Rs 5 lakh is charged. Any additional amount will be taxed at 12% with benefits for deductions available. Only if the farmer has paid his/her tax dues regularly over the past five years. Farmers’ rights groups have claimed that this will lead to an undue financial burden on landowners. While also impacting their production value due to increased costs of cultivation and transport. Additional
Tax Charges on Undisclosed Wealth –
The Bill proposes a 30% penalty over and above the tax amount. On undisclosed wealth held in cash or deposited in banks after demonetization was announced. Tax on Income from Lottery, Betting – Any income generated through lotteries or betting will be taxed at 30%. This includes all forms of money-pooling activities where the return is dependent on an element of chance. The new bill also has a penalty provision for such activities undertaken without license and tax deducted at source says, William D King.
Higher TDS on Cash Transactions above Rs 3 lakh –
All transactions of more than Rs 3 lakh will come under the purview of tax deduction at source (TDS) as opposed to an earlier threshold of Rs 1 lakh per annum.
Foreign Travel Expenses –
The Bill proposes that any individual who travels overseas for less than one year. And spends more than $1,600 will have to declare her/his travel details to the Indian authorities.
TDS, ED relief for non-residents Individuals who have been paying taxes in a country other than India will be exempted from TDS. If their total income is less than Rs 50 lakh per annum and they can prove it through necessary documents. Such as rental agreements, property papers, and electricity bills among others. This is aimed at preventing harassment of NRIs by tax officials in India. Especially considering that they already face hassles while investing in real estate or opening bank accounts. Those who make gifts over Rs 50,000 for weddings or payments made through trusts and companies. Will also not be liable to pay gift tax on them.