The Union Budget for 2017-18 proposes several changes to income tax rates and slabs. For individual taxpayers, the rate for income between Rs. 2.5-5 lakhs has been reduced from 10% to 5%. This will eliminate tax liability for those earning up to Rs. 3 lakhs and only Rs. 2,500 for those earning between Rs. 3-3.5 lakhs. Small firms with up to Rs. 50 crores turnover will now pay 25% tax instead of 30%. The conclusion states that while the budget aims to mitigate economic damage from demonetization, it does not adequately allocate funds from new bank accounts or address job growth.

1. UNION BUDGET 2017-18
TAX MATTERS
SUBMITTED TO: CA Ankit Toshniwal
SUBMITTED BY: Ms. Yogita Sharma

2. Income Tax Slab Rates
INCOME SLABS TAX RATE
Upto Rs. 2,50,000 Nil
From Rs. 2,50,000 – Rs. 5,00,000 5%
From Rs. 5,00,000 – Rs. 10,00,000 20%
Above 10,00,000 30%
•Above Rs.50 lakhs , the assesses have to pay 10% surcharge on the tax
paid.
•Above Rs.1 cr. , the assesses have to pay 15% surcharge on the tax
paid, instead of 10%.

3. EFFECT OF BUDGET 2017-18 ON TAXATION
• The income tax rate for the tax slab of Rs. 2,50,000 to Rs. 5,00,000
from 10% to 5%.
• This is expected to reduce the tax liability of all persons earning up
to Rs. 5 lakhs, to zero with rebate or half.
• To avoid duplication of benefit, the existing rebate to the same
group of beneficiaries will be reduced to Rs.2500, available to
assesses having income up to Rs. 3.5lakh.
• Combined effect of these mean that there will be no tax liability of
individuals earning up to Rs. 3,00,000 lakhs.
• Tax liability of only Rs. 2500 for those earning between Rs. 3-3.5
lakhs.
• Individuals earning up to Rs. 4.5 lakhs will have no tax if they use
the full limit of Rs. 1.5 lakhs in investment under Sec. 80C.
• All other taxpaying individuals in subsequent brackets will get a
uniform benefit of Rs. 12,500 per person.

4. • There will be a 10% surcharge for those whose annual income is Rs.
50 lakhs to Rs. 1 crore.
• The existing 15% surcharge for those whose annual income is above
Rs. 1 crore will continue.
• Small firms with turnover up to Rs. 50 crores will now only need to
pay 25% tax instead of 30%.
• Firms incorporated after 31st March 2016 could now avail of a three-
year tax holiday in the first seven years of their existence.
• There is also a proposal to allow a carry forward of Minimum
Alternative Tax for a period of 15 years up from the current 10 years
now.
• Basic Custom Duty for LNG reduced from 5% to 2.5%.
• The Income Tax Act to be amended to avoid cash transactions above
INR 3 lakhs.
• Capital gains tax to be exempted for persons holding land from
which land was pooled for creation of the capital ofAndhra Pradesh.

5. • A simple one page form will be introduced for filing tax return for
individuals having taxable income up to Rs. 5 lakhs other than
business income.
• Taxpayers who do not file their returns on time will have to shell
out a penalty of up to Rs. 10,000 from Assessment Year 2018-19.
• No deduction will be allowed for investment in Rajiv Gandhi Equity
Saving Scheme from Assessment Year 2018-19.
• Mr. Jaitley has cut tax benefits provided on buying a second house.

6. CONCLUSION
“Overall this budget appears to be have been use as a
a mechanism for controlling the damage done to
the economy and sentiments due to
demonetization. It has missed out on an
opportunity to efficiently allocate the money
deposited through 26 crores Jan Dhan Accounts
during the demonetization drive. It is unlikely that
this budget will be able to improve the GDP or help
to create jobs.”