Budget 2017 Highlights

On the backdrop of demonetisation, the Budget 2017-18 had assumed immense importance. A few had expected it to palliate the pain of the common man who suffered many hardships after demonetisation came in effect. The others had hoped to see the finance minister making some big bang announcements.

The Budget 2017-18 turned out to be a prudent one indeed. While infrastructure development took centre stage, agriculture and allied segments, rural consumption, affordable housing and digitalization remained other focus areas. Those who expected generous tax exemptions got disappointed, though. The Government plans to spend judiciously and confine allocations, to a large part, to the productive areas.

You must be wondering as to what’s there for you in store. The attempts have been made to simplify the tax filing process and reward those who migrate to digital payments.

Some important announcements are as follows:

• Tobacco consumption in any form exposes you to the risk of developing cancer. To support people in quitting their addiction, the Government has proposed to levy additional duty on cigarettes, gutkha and panmasala. Quitting addiction can save you lots of money too.
• The rate of personal income tax for those earning in the range of Rs 2.5 lakh and Rs 5 lakh has been reduced to 5.0% from 10% earlier. This may leave more money in your hands. You should plan to invest it wisely .
• If your income ranges from Rs 50 lakh to Rs 1 crore, you will have to pay a surcharge of 10% on your tax amount. Under such a scenario, you may consider to slash some unnecessary expenses to compensate for this additional tax burden.
• The income tax for Micro Small and Medium Enterprises (MSMEs) with the annual revenue upto Rs 50 crore has been reduced to 25.0%. Therefore, if you run a small manufacturing unit, your profit after tax might jump a bit.
• If you are filing a return of income under presumptive taxation scheme, you would be allowed to show 6.0% of the total turnover as your earnings provided you receive payments in non-cash mode. Those with the annual income of Rs 2 crore can avail the benefits of this provision. That means, opting for digital payment can save you upto Rs 4 lakh p.a.
• Simultaneously, the upper ceiling for mandatory audit of businesses has been revised from Rs 1 crore to Rs 2 crore, provided they have opted for the presumptive income scheme. Likewise, if your turnover is below Rs 25 lakh or alternatively your income is upto Rs 2.5 lakh, you need not maintain any books of accounts . With this, your compliance cost may dip, going forward.
• If you migrate to digital transactions, your chances of securing credit facilities from the formal sources may improve now thanks to transparency digitalization brings in. The Government has urged SIDBI to refinance financial institutions offering unsecured loans at reasonable interest rate.
• Those of you who have a habit of filing income tax returns late will have to pay the penaltyupto Rs 10,000 in the Assessment Year (AY) 2018-19. The Government believes, imposing fines would ensure the timely filing of returns. Please don’t forget to file your income tax returns on time.
• The Government has proposed to change the base year for the calculation of capital gains from April 01, 1981 to April 01, 2001. All assets eligible for the benefit of indexation stand to gain by this announcement. If you had inherited real estate or gold or bought any of these assets before prices appreciated massively in the last decade, you are likely to gain. With the change in the base year, taxable capital gains would be lower now onwards.
• And there’s good news for those living in urban areas. You can now expect some improvement in the quality of public services and delivery of infrastructure. The allocations to the ministry of urban development have gone up 39.5%--from Rs 24, 523 crore to Rs 34,212 crore. Besides, smart city projects may further improve the living conditions in select cities.
• Indian Railways will receive a major facelift treatment. You may see an improvement in the areas such as Passenger safety and cleanliness. So, whenever you travel by train next time, don’t forget to share your feedback on cleanliness with railways.
• Service charge on e-tickets booked through IRCTC has been removed, making the train travel even more competitive.
• The Government has granted ‘infrastructure’ status to ‘affordable housing’. You may expect developers to launch more projects in this segment. Falling interest rates on housing loans is another positive for those looking to buy a house.
• Any transaction over Rs 3 lakh in cash would attract a penalty of an equivalent amount. Suppose, you make cash payment of Rs 7 lakh for buying a car, the seller will have to pay the penalty of Rs 7 lakh. Be careful while you enter large value cash transactions.
• With growing digitalization, cyber security issues are becoming critical. As a safety measure, the Government has planned to set up a Computer Emergency Response Team for Financial Sector (CERT-Fin). Always follow safety instructions given by your bank.

On the whole, the motto of the Government in Budget 2017-18 has been “Transform, Energize and Clean India.”Job creation, tax compliance and digitalization are likely to remain the anchors of future growth.