Salient Features of Finance Bill, 2018 :
No change in Tax Rate. All persons including individuals, HUF, Firms and Companies to pay same tax. However Education cess is being increased from 3 to 4 % to be known as “Education and Health cess.”
- However for Domestic Companies having total turnover or gross receipts not exceeding Rs 250 crores in Financial year 2016-17 shall be liable to pay tax @ 25% as against present ceiling of Rs 50 crore in Financial year 2015-16.
- Surcharge in case of Individual/HUF/AOP/BOI :
- @ 10% if Total Income exceeds Rs. 50 lakhs but not exceeding Rs. 1 Crore.
- @ 15% where Total Income exceeding Rs. 1 Crore.
- Surcharge in case of Firm/Co. Op. Society :
- @ 12% if Total Income exceeding Rs. 1 Crore.
- Surcharge in case of Domestic Company
- @ 7% where Total Income exceeding Rs. 1 Crore but does not exceeding Rs. 10 Crore.
- @ 12% where Total Income exceeding Rs. 10 Crore.
- Surcharge in case of Company other than Domestic Company
- @ 2% where Total Income exceeding Rs. 1 Crore but does not exceeding Rs. 10 Crore.
- @ 5% where Total Income exceeding Rs. 10 Crore.
- Resident Senior Citizen will have benefit upto Rs. 50,000/- U/s. 80TTB in respect of any Interest on FDR from Bank, Co-operative Bank & Post Office.
The said deduction will be over and above regular deduction as Interest from Saving Bank upto Rs. 10,000/- U/s. 80TTA.
- Medical Health premium paid by and in respect of Senior Citizen will be allowed as deduction U/s. 80D to the extent of Rs. 50,000/-.
STANDARD DEDUCTION :
- Standard Deduction of Rs 40,000 for salaried employees. However benefit of transport allowance of Rs 19,200 and Medical Reimbursement of Rs 15,000 under Section 17(2) are being withdrawn. Thus net benefit to salaries class only Rs 5,800.
CAPITAL GAIN :
- Long term Capital gain exemption under section 10(38) in respect of listed STT paid shares being withdrawn.
- Tax on STT paid long term capital Gain will be 10% under Section 112A.
However capital gain up to 31.1.2018 shall not be taxed as cost of acquisition will be taken as Fair Market Value as on 31.1.2018.
- Deduction U/s. 54EC for Investment in Capital Gain Bonds will be only in respect of Land and Building.
A lock-in period for Investment in a such Bonds has been increased to 5 Years from 3 Years.
- Agriculture Commodity Derivates income /loss also not to be considered as speculative under section 43(5).
- Jantry Value variation is permitted in a Range of 5 %.
OTHER IMPORTANT AMENDMENTS :
Provision of Section 43CA, 50C and 56(2)(x) being amended to allow 5% of sale consideration in variation vis a vis stamp duty value. On account of location, disadvantage etc.
Provision of section 40(ia) and 40A(3) and 40A(3A)are being made applicable to Charitable Trust . Hence expenditure incurred in cash will not be eligible as deduction.
- Deemed dividend to be taxed in the hands of the company as Dividend Distribution of Tax @ 30%.
- Interest on compensation, enhanced compensation. Claim or enhancement claim and subsidy, incentives to be taxed in the year of receipt only as per new Section 145B.
- Conversion of stock in trade to capital asset to be charged as business income in the year of conversion on Fair Market value on the date of conversion.
Income Computation and Disclosure Standards(ICDS) being given statutory backing in view of decision of Delhi High Court decision.
Marked to market loss computed as per ICDS to be allowed under section 36.
Gain or loss in Foreign Exchange as per ICDS to be allowed under new section 43AA.
Construction Contract income to be computed on percentage completion method as per ICDS.
Valuation of Inventory including Securities to be as per ICDS.
GENERAL AMENDMENTS :
- Certain measures have been taken to promote start-ups U/s.80IAC having Turnover not exceeding Rs. 25 Crore and benefits have been extended upto 31.03.2021.
PAN to be obtained by all entities including HUF other than individuals in case aggregate of financial transaction in a year is Rs 2,50,000 or more. All directors, partners, members of such entities also to obtain PAN.
All companies irrespective of income to file return and in case it is not filed, such companies will be liable for prosecution irrespective of the fact weather it has tax liability of Rs 3,000 or not.
Assessments to be E assessment under new section 143(3A)
No adjustment under section 143(1) while processing on account of mismatch with 26AS and 16A.
Penalty for non filing financial return as required under section 285BA being increased to Rs 500 per day.