As the Finance Minister Arun Jaitley raised to deliver Budget speech, many would have been glued to the television screens and few others would get their peek into the changes through media reports. But if you are just going by the changes announced in the Budget Speech by the finance minister, you would make the mistake of ignoring a bulky portion of the changes, which lay hidden in the Finance Bill, 2016.
Here are a cluster of changes, which though escaped from the speech, are changes proposed nevertheless.
Redemptions made by individuals under the Sovereign Gold Bonds shall not be charged to capital gains tax. Also, long terms capital gains made due to transfer of the Bonds are proposed to be eligible for indexation benefits, wherein you can adjust the purchase cost to the extent of inflation, thus reducing the actual gains and thereby the applicable taxes.
The interest earned on deposit certificates of Gold Monetisation Scheme would be tax-free in the hands of the owner and the capital gains too have been proposed to be exempt from tax. These deposit certificates have been proposed to be excluded from the definition of capital assets.
Non-resident Indians have more to cheer apart from the relaxation of PAN Requirement. If they have subscribed to rupee-denominated bonds issued by an Indian company and they make gains due to rupee appreciation, then such an amount would be exempt from capital gains tax.
Another area where capital gains has been declared exempt is on transfer of units in merger or consolidation of plans of a mutual fund scheme.
Also, acquisition of shares by individuals or HUFs due to demerger or amalgamation of a company shall not attract tax liability.
A major pain point for under-construction property buyers was the delay in project completion. This led to not just monetary delay, but even loss of taxation benefit, which was reduced to merely Rs 30,000 from Rs 2 lakhs if the possession was not granted within three years. The Budget 2017 corrects this anomaly by allowing the deduction of interest payable on loans taken for buying or constructing self-occupied house property if it is completed within five years.
Another change on the immovable property front is that the date of agreement fixing the amount during transfer would be considered to compute capital gains and not the date of registration. This is, however, applicable only if payment has been made to purchase the property through any mode other than cash.
If you are looking to move your funds from any Recognised Provident Fund or a Superannuation Fund to National Pension System, then such a one-time measure would be exempt from taxes.
Apart from waiver of tax, there were a slew of changes announced on the tax deduction at source and tax collection at source. Payment of accumulated balance due to an employee in EPF as per section 192 A, TDS would be deducted only if the amount exceeds Rs 50,000 (Rs 30,000 earlier).
Similarly, for applicability of tax deduction at source for winnings from horse races, the minimum earnings have been increased to Rs. 10,000 as against Rs. 5,000 earlier.
The TDS rate for payments made in respect of life insurance policies under Section 194 DA has been reduced to 1% from 2%, while those from NSS Deposits too have been slashed to 10% from 20% earlier.
There are several changes made to the return-filing eligibility and revised return filing clauses. If approved then, one now on needs to file a return of income if his/her total income during the previous year without claiming exemption under section 10(38) – which covers the long-term capital gains clauses – exceeds the threshold limit, which is Rs 2.5 lakh presently).
Hitherto, if you failed to submit the return by the due date, but before the end of the assessment year, you could file a return, but not revise it. The Union Budget 2016-17, proposes, the tax payer may revise the return before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.
So, if you forgot to file the return in July 2016 and later file the return before March 31, 2017, then you can revise your return before March 2018 or the completion of your return assessment. However, if you have filed a return because you received a notice under section 142 (1) then such a return cannot be revised.
Earlier, many taxpayers would file the returns, but had not paid the self-assessment tax or the interest applicable before furnishing the return. Such returns were considered defective. The Finance Minister has proposed that such returns be considered as valid and not be treated as defective just for non-payment of taxes.
Hope that helps you get a 360-degree view of Budget impact on your taxes and income.