Summary of important proposals made in Budget 2018

Summary of important proposals made in Budget 2018

  • There are no changes in personal rates of Income Tax in the budget. The education and Secondary & Higher Education Cess has been abolished but the Health and Education Cess @ 4% has been introduced in the budget. Effectively, Cess on Income Tax has been increased from 3% to 4%.

  • The benefit of reduced rate of corporate taxation of 25% has been extended to domestic companies having turnover upto Rs. 250 Crores during the year 2016-17.
  • The exemption to long term capital gain on sale of equity shares or equity oriented funds has been withdrawn. The tax @ 10% will be levied on such long term capital gain in excess of Rs. 1 lac.
  • The standard deduction of Rs. 40,000/- has been allowed from Income from Salary.
  • The legal backing has been provided to Income Computation and Disclosure Standards by amending various provisions retrospectively to overcome the decision of Delhi High Court.
  • The deemed dividend u/s. 2(22)(e) of the Act has been covered under Dividend Distribution Tax at the rate of 30%.
  • The dividend distribution tax has been imposed on any income distributed to unit holder of equity oriented fund.
  • Conversion of Inventory into Capital Assets will be chargeable to tax as business income on the day of conversion.
  • The limit for presumptive taxation u/s. 44AE for plying, hiring or leasing of goods carriage business has been revised.

  • The provisions of disallowance of expenses for non-deduction of tax at source u/s. 40(a)(ia) and for cash payment exceeding Rs. 10,000/- u/s. 40A(3) or 40A(3A) shall now be applicable to trust or charitable organizations claiming exemption u/s. 11 or 10(23C) of the Act.
  • For an unit located in an International Financial Service Center, the alternate minimum tax under section 115JC shall be charged at the rate of 9 percent instead of 18.50 percent.
  • There are various benefits extended to senior citizens. The deduction for interest from deposits with banking company, cooperative society engaged in banking or post office has been increased to Rs. 50,000/- for senior citizens. The limit for TDS on such interest is also increased to Rs. 50,000/-. The limit for deduction u/s. 80D for health insurance is also increased to Rs. 50,000/-.
  • The benefits of deduction under Chapter VIA heading “C.—Deductions in respect of certain incomes” (i.e. 80IA, 80IB etc.) will be available only if the return of income is filed within due date prescribed.
  • The benefit of 100% deduction of Profit also extended to Farmer Producer companies having turnover below Rs. 100 Crores. This benefit is available for 5 years from FY 2018-19.
  • The new scheme for E-assessment under Income Tax will be prescribed to have greater transparency and accountability.
  • Penalty for non-furnishing of Statement of Financial Transactions has been increased from Rs. 100/- per day to Rs. 500/- per day.
  • Obtaining of PAN made compulsory for non-Individual entities if they enters into financial transaction of an amount aggregating to Rs. 2,50,000/-.
  • The meaning of the term ‘Business Connection’ u/s. 9 of the Act has been expanded to cover various entities.
  • No changes have been made in Goods and Services Tax provisions in the budget.
  • The limitation period have been provided for adjudication of show cause notice under the Customs Act.
  • The concept of Electronic Cash Ledger has also been introduced under the Customs Act.
  • The rates of Custom Duty of many products have been increased to give boost to Make in India campaign.
  • There are number of measures proposed to boost the agriculture and rural economy.
  • Proposed to introduce National Health Protection Scheme to cover over 10 crore poor and vulnerable families (approximately 50 crore beneficiaries) providing coverage upto 5 lakh rupees per family per year for secondary and tertiary care hospitalization.
  • If the stamp duty valuation (jantri value) does not exceed 5% of the consideration for transfer of immovable property, the consideration stated in the sale deed will be considered as full value consideration for the purpose of section 43CA and 50C of the Income Tax Act, 1961. However, as per the various judicial decisions, 10% of difference is always a reasonable difference. Therefore, the 10% difference in value could have been reasonable.

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