Union Budget 2017 | Important Proposals and Analysis

1. #DeMo to #NaMo
Relevant proposals and way ahead
BY JAIN SHRIMAL & CO.
JAIPUR|MUMBAI

2. Executive Summary
Tax Rates
Other Proposals
GST
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INDEX

3. Executive
Summary
#QUICK #GRAB
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4. (C) JAIN SHRIMAL & CO. 4
Corporate tax rate for certain companies
@25%
Presumptive tax rate of 6% on
non-cash transactions instead
of 8%
Restrictions
on cash
transactions
for capital
goods also
Cash
transaction
allowed up to
limit of
Rs 10,000
In case of Joint development agreement, asset
shall be considered to be transferred when
completion certificate is received
Slab rate of
10% changed
to 5%
TDS on rent to
be deducted
by non-
business
individuals
also
Transfer
pricing not
applicable on
40A(2)(b)
transactions
Corpus
Donation by
Trust can only
be given by
corpus fund
Restriction on
cash receipt of
more than 3
lakhs
SNAPSHOT

5. Tax Rates
#PINCH #LESS
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6. (C) JAIN SHRIMAL & CO. 6
Status Resident Individual Senior Citizen(Above 60
Years)
Very Senior
Citizen(Above 80 Years)
Net Taxable
Income
(INR Lakhs)
Present Proposed Present Proposed Present Proposed
<2.5L Nil Nil Nil Nil Nil Nil
2.5L <> 3L 10% 5% Nil Nil Nil Nil
3L<>3.5L 10% 5% 10% 5% Nil Nil
3.5L<>5L 10% 5% 10% 5% Nil Nil
5L<>10L 20% 20% 20% 20% 20% 20%
10L<>20L 30% 30% 30% 30% 30% 30%
Rates not changed for retaining the tax base.
Rebate u/s 87A has been restricted to Rs 2,500 and subject to maximum net income of Rs 3,50,000
Surcharge of 10% introduced for net income above 50 lakhs. For net income above 1 cr it is 15%.
TAX RATE

7. (C) JAIN SHRIMAL & CO. 7
Status Individual Senior Citizen(Above 60
Years)
Very Senior
Citizen(Above 80 Years)
Net Taxable
Income(INR)
Present Proposed Present Proposed Present Proposed
2,50,000/- Nil Nil Nil Nil Nil Nil
3,00,000/- 3090/- Nil Nil Nil Nil Nil
3,50,000/- 8,240/- 2,575/- 3,090/- Nil Nil Nil
5,00,000/- 23,690/- 12,875/- 18,450/- 10,300/- Nil Nil
10,00,000/- 1,28,750/- 1,15,875/- 1,23,600/- 1,13,300/- 1,03,000/- 1,03,000/-
20,00,000/- 4,37,750/- 4,24,875/- 4,32,600/- 4,22,300/- 4,12,000/- 4,12,000/-
Maximum benefit given to net income between 3 lakhs to 5 lakhs
TAX RATE

8. (C) JAIN SHRIMAL & CO. 8
Status Domestic Company
(Surcharge as applicable)
Firm
(Surcharge as applicable)
Gross Receipt Present Proposed Present Proposed
Upto 5 Crores 29% 25% 30% 30%
Upto 50 Crores
(Cover 96%
companies)
30% 25% 30% 30%
Above 50 Crores 30% 30% 30% 30%
Firms taxed higher then the companies. Also carry restrictions on remuneration to partners
#DISCRIMINATION
TAX RATE

9. Other Proposals
#DEVIL #IN #DETAIL
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10. (C) JAIN SHRIMAL & CO. 10
Proposals Reaction
Holding period of Immovable property to qualify for Long Term Capital gain has
been reduced to 24 months from 36 months. Will increase investment and
liquidity in reality sector. #FEEL #GOOD
For Joint Development agreements, Capital Gains shall arise in the year in which
the completion certificate for the project is issued. Earlier the timing of taxability
of transfer was disputed leading to a long debate between department and
assesse. Also, for stamp duty valuation purpose, value as on date of completion
certificate shall be taken into consideration.
Base year for Indexation shifted from 1.4.1981 to 1.4.2001. It may benefit the
property purchased from 1981 to 2001. #BUISNESS #FOR #VALUERS
Scope of Sec 54EC expanded and CG will notify more bonds for the same. Shall
give additional investment option to assessee.
Shares acquired without paying STT are not eligible to exemption u/s 10(38). It is
proposed to bring exceptions in case of IPOs, FPOs, Right/Bonus issues. A measure
to curb penny stock transactions.
In case of transfer of Unquoted shares below FMV; FMV shall be deemed to be full
value of consideration and Capital Gain will be calculated accordingly. May lead to
lot of litigation
CAPITAL GAINSCAPITAL GAINS

11. (C) JAIN SHRIMAL & CO. 11
Proposals Reaction
Cash donation limit for Section 80G reduced to Rs.2,000 from Rs.10,000.
Limit for cash payment per day has been reduced to Rs.10,000 from existing
Rs.20,000. Goes with government plan of demonetization
Capital expenditure incurred in cash exceeding Rs.10,000 per day shall not form
part of Actual cost of acquisition.
Receipt of cash above Rs.3 lakhs in a day or for a single transaction or for an
event or occasion not permitted. Penalty of equal amount is also proposed. Event
or occasion will cover any possible transaction and may lead to inconvenience.
Cash donation to political party allowed up to Rs.2,000 only. A welcome move !!!!
CASH TRANSACTIONS
#PAYTM #KARO

12. (C) JAIN SHRIMAL & CO. 12
Proposals Reaction
Threshold limit of Turnover for audit u/s 44AB has been increased to 2 cr from
existing 1cr. It was very much needed to avoid confusion between section 44 AD
and 44AB. #AUDIT
Threshold for maintenance of books for Individuals and HUF increased to 25 lakhs
from 10 lakhs in case of turnover and to 2.5 lakhs from 1.2 lakhs in case of net
income.
Applicability of domestic transfer pricing; In case of transactions with parties
covered u/s 40(A)(2b) removed except in some specified cases. #TP #GONE
Quoting PAN mandatory for TCS. Non quoting will entitle for TCS at double rate or
5% whichever is higher. Will bring the unorganised sector into government net.
#TCS #TRAP
BUSINESS

13. (C) JAIN SHRIMAL & CO. 13
Proposals Reaction
For Startup companies to carry forward the losses for first 7 years, condition for
continuous holding of 51% equity relaxed. Subject to, that original promoters hold
the same shares as originally allotted to them. Start-up promoters need to be
careful of this fact while diluting their shareholding, however small it maybe.
For start-ups, profit linked exemption extended to 3 out of 7 years from 3 out of 5
years. #STARTUP #INDIA
MAT credit can be carried forward up to 15 Assessment Years instead of 10
Assessment Years earlier. #CHIDAMBARAM #LEGACY
To promote digital transaction, presumptive taxation rate u/s 44AD for Non cash
business turnover will be 6% instead of 8% for the rest. The same was already
announced by honorable prime minister to sweeten the demonetization pill.
#DIGITAL #INDIA
BUSINESS

14. (C) JAIN SHRIMAL & CO. 14
Proposals Reaction
TDS to be deducted and deposited by Individual and HUF paying rent more than
Rs.50,000 per month (even where not liable to audit u/s 44AB) once a year. This is
to curb HRA exemption on the basis of fake receipts. However the same will
increase the compliance burden for already highly taxed salaried persons. #FAKE
#HRA
Set off of Losses of House Property with other heads of Income has been restricted
to 2 Lakhs only. However it will be allowed to carryforward and set off in
subsequent years. Will bring hardships to genuine cases. #LOOPHOLE #PLUGED
Maximum deduction limit u/s 80CCD(1) (National pension Scheme) for non
salaried individuals increased to 20% of Gross Total Income. This will bring parity in
provisions for salaried and non salaried class.
INDIVIDUAL

15. (C) JAIN SHRIMAL & CO. 15
Proposals Reaction
For assesses whose cases were regularly selected for scrutiny, refund shall be
issued without prejudice to such selection. Earlier such refunds were withhold till
finalization of assessment. It may create issue in large refund cases, where
assessments are generally prejudicial to assesse as interest on refund is lower vis
a vis interest on demand.
Revised return can be filed only up to 12 months from the end of Financial year.
Assessments to be completed within 18 months for AY 2018-19 and within 12
months for AY 2019-20 and onwards. For AY 2018-19, September deadline will
coincide with due date or corporate tax return.
Late fee for filing of return beyond due date. For return filed after due date but
before 31st December fee of 5,000 will be levied beyond that fee of Rs10,000 will
be charged. For net income below 5 lakhs, the same fee will be Rs 1,000 only.
Ideally, such late fee should be based on tenure of delay rather then a flat fee.
#GOVERNMENT #INTO #BUSINESS
COMPLIANCES

16. (C) JAIN SHRIMAL & CO. 16
Proposals Reaction
Provisions of Section 40a(ia), i.e. disallowance of expenditure for not deducting
TDS ,now applies to “Income from Other Sources” also. It is brought in tandem
with Sec 194 IB imposing TDS liability on non business individuals.
In case of exempt entities like trust, donation to corpus of other exempted
entities is now proposed to not to be treated as application of income. It shall
plug the planning tool where trust use to apply there normal income to corpus of
other trust thereby leading to non-taxability at both payer and payee ends.
#CHARITY #BEGINS #AT #HOME
MISCELLANEOUS

17. GST
#CHANGE #IS #ALWAYS #CONSTANT
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18. (C) JAIN SHRIMAL & CO. 18
GST
Changes,
Transitions &
Challenges
State wise
Registration Advance
Received
Taxable
Real time
Matching of
Input Credit
37 returns
for each
Registration
Credit only
on receipt of
goods and
services
Careful
Transfer of
existing
credits
New Billing
patterns and
records
Separate
recording for
Inventory
Receipts
Extra credits
during
transition
phase
Change in
Contracts
Changes in
ERP
Changes in
Procurement
and Supply
patterns

19. Thank You
Editorial Team
CA Narendra Shrimal |CA Naman Shrimal |CA Ranjan Mehta
Shreyansh Karnawat | Palak Bansal
Thanks & Regards
CA S K Jain |CA Ashok Jain |CA Mohit Patni
CA Nikesh Sharma |CA Priyansh Gupta
CA Anshul Chittora | CA Akshay Jain |CA Krishan Singhal
(C) JAIN SHRIMAL & CO. 19
Disclaimer
The information contained on this presentation is based on Budget proposal as on 1st
February 2017 and is general in nature and does not take into account any personal
situation. You should consider whether the information is appropriate to your needs,
and where appropriate, seek professional advice from an adviser before acting on the
same.