ALSO READBudget 2018 might have Rs 740-bn allocation towards fertiliser subsidy Budget 2018: Budgetary support for Indian Railways to be cut by 27% in FY18 Budget 2018 may waive NOC to streamline transfer of stressed assets Budget 2018: New bottoms-up mechanism for farm-gate marketing likely Budget 2018: Unfair to judge me on demonetisation and GST only, says Modi
Senior citizens' interest income up to Rs 50k tax-exempt
Senior citizens will get substantial relief -- exemption of interest income on deposits with banks and post offices will be increased from Rs 10,000 to Rs 50,000 and TDS need not be deducted on such income under section 194A; the limit of deduction for health insurance premium or medical expenditure will go up from Rs 30,000 to Rs 50,000 under section 80D; and the limit of deduction for medical expenditure for certain critical illnesses will go up from Rs 60,000 in the case of senior citizens and Rs 80,000 in the case of very senior citizens, to Rs 100,000 for all senior citizens, under section 80DDB. The Pradhan Mantri Vaya Vandana Yojana, under which LIC offers an assured return of eight per cent, will be extended up to March 2020 and the existing limit on investment of Rs 750,000 per senior citizen will be enhanced to Rs 1.5 million.
Relief to salaried taxpayers
To provide relief to salaried taxpayers, a standard deduction of Rs 40,000 will be allowed in lieu of the present exemption for transport allowance and reimbursement of miscellaneous medical expenses. However, the transport allowance at the enhanced rate will continue to be available to differently-abled persons. Other medical reimbursement benefits in cases of hospitalisation for all employees will continue.
Incentive for post-harvest activities in agriculture
To encourage professionalism in post-harvest value addition in agriculture, entities registered as Farmer Producer Companies and having annual turnover of up to Rs 1 billion will be allowed hundred per cent deduction in respect of profit derived from such activities for a period of five years from FY 2018-19.
Incentives for job creation in footwear
To encourage new job creation, the concession given to the apparel industry under section 80-JJAA of the Income-tax Act, whereby certain deductions are allowed in respect of emoluments paid to eligible new employees who have been employed for a minimum of 150 days during the year, will now be extended to the footwear and leather industry.
Firms with sales up to Rs 2.5 bn to pay 25% tax
Companies with a turnover of up to Rs 2.50 billion in FY 2016-17 will now have to pay a lower corporate tax rate of 25 per cent. This will benefit the entire class of MSMEs, which accounts for almost 99 per cent of companies filing tax returns. The lower tax rate will leave these companies with higher investible surpluses.
Tax incentives for IFSCs to push bourses
To promote trade in stock exchanges located in international financial services centres (IFSC), the transfer of derivatives and certain securities by non-residents will be exempted from capital gains tax. Further, non-corporate taxpayers operating in an IFSC will be charged Alternate Minimum Tax (AMT) at a concessional rate of nine per cent, on a par with the Minimum Alternate Tax (MAT) applicable to companies.
Limits on cash payments by trusts
In order to procure audit trails of the expenses incurred by trusts and institutions, payments exceeding Rs 10,000 in cash made by such entities will be disallowed and will be subject to tax. Further, in order to improve TDS compliance by these entities, in case of non-deduction of tax, 30 per cent of the amount will be disallowed and will be taxed.
10% tax on long-term capital gains above Rs 100k
Long-term capital gains exceeding Rs 100,000 will now be taxed at a rate of 10 per cent without allowing the benefit of indexation. However, all gains up to January 31, 2018 will be grandfathered. The gains from equity shares held for up to one year will remain short-term capital gains and will continue to be taxed at the rate of 15 per cent.
10% tax on income distributed by equity MFs
The finance minister has proposed a tax on distributed income by equity-oriented mutual funds at the rate of 10 per cent. The aim is to provide level playing field across growth-oriented funds and dividend distributing funds. (The dividend distribution tax rate amounts to 28.84 per cent.)
New health and education cess to be levied
To take care of the education and health needs of “below poverty line” and rural families, the existing three per cent education cess on personal income tax and corporation tax will be replaced by a four per cent health and education cess to be levied on the tax payable.
E-assessment income tax roll-out across India
E-assessment, introduced in 2016 on a pilot basis and extended to 102 cities in 2017, with the aim of transforming the decades-old assessment procedure of the income tax department and the manner in which they interact with taxpayers, is now to be rolled out country-wide. The Income-tax Act will be amended to notify a new scheme where assessment will be done electronically.
Customs duty hiked on mobiles, TV parts
To further incentivise the domestic value addition and Make in India, the customs duty on mobile phones will be increased from 15 per cent to 20 per cent, on some of their parts and accessories to 15 per cent and on certain parts of TVs to 15 per cent. This aim of this measure is also to promote the creation of more jobs in India.
New 10% social welfare surcharge levied
The education cess and secondary and higher education cess on imported goods will be abolished, and be replaced by a social welfare surcharge, at the rate of 10 per cent of the aggregate duties of customs, on imported goods, to provide for government social welfare schemes. Goods which were hitherto exempt from education cesses on imported goods will, however, be exempt from this surcharge.
Changes in Customs Act to improve EODB
Changes in the Customs Act, 1962, will be made to further improve the ease of doing business in cross-border trade, and to align certain provisions with the commitments under the Trade Facilitation Agreement. To smooth down dispute resolution processes and to reduce litigation, amendments will be made, to provide for pre-notice consultation, definite timelines for adjudication and deemed closure of cases if those timelines are not adhered to.