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Income Tax amendment for FY 2017-18

The Indian Union Budget 2017 was released with an optimistic view on 1st of February 2017 by the Honorable Finance Minister, Arun Jaitley.

The amendment bill was passed in both the houses (Lok Sabha and Rajya Sabha) and have recently got President’s assent on 31st May 2017. Now the amendment bill has become an Act and all the proposed provisions are now legally binding.

Mentioned below are the impacts of the budget on INDIVIDUALS TAXATIONS. All the mentioned changes are to be applied while processing and deducting TDS :

1. Tax rate changes:

The rates on income tax deduction were brought down. This change will impact individuals whose income is more than Rs. 2,50,000. On a common basis, any person earning more than Rs. 5,00,000 will save Rs. 12,500 each year.

2. Surcharge

For individuals who are earning income of more than Rs. 50 Lacs but less than Rs. 1 Cr, an additional surcharge of 10% has been proposed to be levied on the said income.

The 15% surcharge on individuals whose incomes exceeds Rs. 1 Crore will continue to apply.

3. Tax rebate under section 87A:

Also the to cover up the losses of providing lower rate of tax, the tax rebate under Section 87A has been proposed to be amended as: The individual whose taxable income is less than Rs. 3,50,000 will get a rebate of Rs. 2,500 from their tax liability. (Earlier the provision was to provide the tax rebate of Rs. 5,000 for individual earning income less than Rs. 5 Lacs, this provision would be deleted)

4. Income Tax Returns

Every individual with a taxable earning income is required to submit their income tax returns. The government of India is all set to introduce one pager income tax return document for all the individuals whose income is less than Rs. 5 Lac.
Furthermore, to ensure every individual files their income tax return on time, there is a proposal to levy penalty on delayed returns. Consequently, any individual filing their return after 31st July, the individual will have to penalty ranging from Rs. 1,000 to Rs. 10,000 based on the income stated in their income tax returns.

5. Exemption under Chapter VI A

While employed individuals have many company schemes (like reimbursement, allowances, etc.) to claim additional benefit of income tax exemption, these are not available with the self-employed individuals. In order to provide parity between an individual who is an employee and an individual who is self-employed, it is proposed to provide that the self-employed individual shall be eligible for deduction up to 20% of his/her gross total income in respect of contribution made to National Pension Scheme under section 80CCD (1). (Currently, the limit is of 10% of total gross income for both individuals)

6. Loss from House Property

In case loss incurred on ‘let out property’ or ‘deemed let out property’, an individual can claim full loss for the year against income from salary or any other head of income (currently) under Section 24. Now, the government has proposed to restrict the benefit of ‘claim of loss’ on ‘let out’ house property in a year to Rs. 2 Lac against any other source of income. The unclaimed loss can be carry-forwarded to 8 years and can be adjusted only against income from house property.

7. Capital Gains:

Currently, long-term capital gains on immovable assets are calculated based on 3 years. In this year’s budget the government has proposed for the below calculation amendment:Any immovable asset held for 2 years and more and any profit earned on the sale of same would be termed as long-term capital gain.(earlier long term profits calculations were based on 3 years)

8. Removal of Section 80CCG

The deduction under Section 80CCG will no longer be allowed from Financial Year 2017-18 for any new investors. However, an assessee who has claimed deduction under Section 80CCG for the Financial Year 2016-17 or prior to it, has an unclaimed amount of investment carried forward, then he or she shall be allowed to claim the deduction under this Section till the Financial Year 2018-19. (The Section 80CCG (Rajiv Gandhi Equity Savings Scheme) was introduced as a part of the Finance Act, 2012. Currently, under the Section 80CCG, deduction would be allowed for investment made by resident individual on listed equity shares or listed units of an equity oriented fund – subject to certain conditions for an amount equal to amount invested or Rs. 25, 000 (whichever is lower) for three consecutive assessment years.)

Rates of Provident Fund (PF) Administrative Charges reduced

The Employees’ Provident Fund organization (EPFO) has reduced the PF administrative charges to 0.65% (earlier the rate was 0.85%). Furthermore, the Employees’ Deposit Linked Insurance (EDLI) administrative charges have been reduced to 0% (nil) (earlier the charges were 0.01%). These changes are implemented from 1st April 2017.

S.No Particulars Non Contributory (No Employee is being paid, but PF code is in use) Old Rate Up to 31st March 2017 Revised Rate from 1st April 2017 Non Contributory (No Employee is being paid, but PF code is in use) Old Rate Up to 31st March 2017 Revised Rate from 1st April 2017 1 PF Admin Charges
(A/c No: 2)
in payment challan Monthly Minimum rate of Rs. 75 Monthly Minimum rate of Rs. 75 Monthly Minimum rate of Rs. 500 (or)
0.85% of PF wage , whichever is higher Monthly Minimum rate of Rs. 500/- (or)
0.65% of PF wage , whichever is higher 2 EDLI Admin Charges
(A/c No: 22)
in payment challan Monthly Minimum rate of Rs. 25 0% (Nil) Monthly Minimum rate of Rs. 200/- (or)
0.01% of restricted PF wage, whichever is higher (No change in the contribution rate but only on Monthly Minimum rate) 0% (Nil) Approved transfer from Recognized Provident Fund & Superannuation Fund to National Pension Scheme (NPS)

The National Pension Scheme (NPS) has been gaining popular investment views from many of the tax saving investors.

Keeping the same in line, during the recent budget of 2016-17, the government had announced the opportunity for all the subscribers of recognized ‘Provident Funds’ and ‘Superannuation Funds’ to transfer their accumulated corpus funds from their respective schemes to National Pension System (NPS) without any tax implication.

The interested subscriber needs to follow the below procedure to complete the transfer procedure of PF or superannuation fund to NPS:

  1. Active NPS Tier 1 account: The subscriber must open and register for an NPS account through the Points-of-Presence (POPs) or online through eNPS on the NPS Trust website –
  2. Approach the PF department: The subscriber should approach the Recognized Provident Fund/Superannuation Fund Trust through the current employer by giving request for transfer to his/her respective NPS account.
  3. Release of funds: The Recognized Provident Fund/Superannuation Fund Trust may initiate transfer of the Fund by issuing the cheque/draft in the name of:
    • In case of government employee: Nodal Office Name (PAO or CDDO Name) Employee Name : PRAN (12 Digit No.)
    • In case of subscriber presently under Private Sector including All Citizen Model: POP (Name of the POP) Collection Account-NPS Trust: Subscriber Name: PRAN (12 Digit No.)
  4. Letter of receipt of funds: The employee should request the Recognized Provident Fund/Superannuation Fund to issue a letter to his present employer informing that the amount is being transferred


The transferred Provident Fund/Super annuation Fund will not be treated as contribution of the current year by employee/employer and accordingly the subscriber would not make Income Tax claim of contribution for this transferred amount.

Unified annual return to be filed by contractor as well as principal employer

Last month, the government of India provided a new responsibility for principal employers: Click here to read more about new responsibility provided last month.

This month, the government has proposed and released a unified return to be filed by the contractor as well as principal employer.

As per the recent amendment:

  1. Every contractor shall upload a Unified Annual Return in the Form XXIV on the web portal of the Ministry of Labour and Employment on or before the 1st day of February following the close of the year to which it relates.
  2. Every principal employer of a registered establishment shall upload a Unified Annual Return on or before the 1st day of February following the end of the year to which it relates. Refer the link to find format of Form XXIV:
Maternity Benefit (Amendment) Act 2017 passed.

The Maternity Benefit (Amendment) Bill, 2016 was passed by the Rajya Sabha on 11th August, 2016. The changes proposed in the bill will have major impact on the health, well-being and growth of the future generation in the country. It is aimed to have a positive impact on women’s participation in labour force and will improve the work-life balance of the women workers. On 9th March 2017, the Lok Sabha passed the Maternity Benefit (Amendment) Bill, 2016. The president has also provided the assent as on 27th March 2016 and the maternity benefit amendment proposed are now binding and are to be implemented in every organizations to which it applies respectively.

All amended provision is effective from 01 April 2017 except "Work from Home".

Subsection (5) of the amendment bill, Work from Home - Nature of Work assigned to a women could be carried her own home the employer be allowed her to do so after availing maternity benefit will be effective from 01 July 2017.

To read details of proposed amendment under maternity benefit please refer the given link:

Security guards are proposed to be 'skilled-worker' status

India is a country with reportedly 50 Lacs private security guards currently working in it. The Ministry of Labour and Employment has proposed to bring the entire workforce under the definition of “skilled-worker” under Minimum Wages Act, 1948.

This categorization of security guards as 'skilled-workers’ will increase their minimum wages up to Rs. 15,000 and the armed security guards and supervisors as 'highly-skilled' workers will increase the minimum monthly wage up to Rs. 25,000.

This proposed amendment will not only increase the security personnel salary but will also provide social cover to over 2.5 Crore people, including their family members and is expected to have a positive socio-economic impact.



Gratuity exemption limit proposed to be increased

The 7th Pay Commission has recently increased the gratuity exemption limit to Rs. 20 Lacs (earlier the limit was Rs. 10 Lac) for all their government employees. Furthermore, the Ministry of Labour and Employment is in discussion to raise the gratuity limit for non-government employees to Rs. 20 Lacs, in par with government employees. The impact of this new initiative would reportedly be enhanced tax saving for the employees.

Compliance Calendar for the month of April, 2017 Due date Nature of transaction Existing rules Mode Professional Tax - States - Remittances 10th April 17 Andhra Pradesh & Madhya Pradesh State-wise regulations By Challan 15th April 17 Gujarat Gujarat PT regulations By Challan 20th April 17 Karnataka Karnataka PT regulations By Challan & Online 21st April 17 West Bengal West Bengal PT regulations By Challan 30th April 17 Assam & Orissa State-wise regulations By Challan 30th April 17 Maharashtra Maharashtra PT regulations Online PF Central 15th April 17 Remittance of Contribution EPF & MP Act, 1952 Online ESI Central 21st April 17 Remittance of Contribution (Main code and Sub codes) ESIC Act, 1948 Online TDS 30th April 17 TDS Payment Income Tax Act, 1961 Online 31st May 17 TDS Annual return Income Tax Act, 1961 Online 31st May 17 Form 16 Income Tax Act, 1961 Online Labour Welfare Fund Remittances 15th April 17 Kerala State wise regulations By Challan
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