Lest the impact of a Finance Act embodying the budget proposals of a year is misunderstood, it must be made clear for the lay folks that bulk of the changes are not immediate but meant to kick in from the next assessment year. In the event, when you file your income tax return for the assessment year 2017-18 soon, you would have to go by the income tax provisions as amended by the last Finance Act, 2016. However some of the provisions kick in immediately if mentioned in the relevant clause.
To wit, the need to see or link aadhaar with PAN kicks in from 1 July 2017 itself. The stated objective is to halt ghost returns in their tracks. For many law abiding persons this won’t be a big deal. One can immediately link aadhaar with PAN by logging in using one’s Permanent Account Number. But there may be cases where the two identity documents are not on all fours especially for people in South India who are conspicuously without surnames by and large. They would do well to immediately log in to the aadhaar website and change their name online by uploading a supporting document and change their names to accord with PAN which expands initials. Else, they can file the return for 2016-17 before 1 July 2017. But this would only put off the immediate danger. The change will have to be done in any case for the subsequent years.
The reduction in tax liability by a whole 5 percent point on income up to Rs 5 lakh following the reduction of the first slab rate from 10 to 5 percent kicks in from the assessment year 2018-19. However its impact would be felt immediately specially by employees in the lower income brackets as TDS by employers starting April 2017 would be lesser pro tanto. The simplified income tax return for those with income not exceeding Rs 5 lakh however kicks in immediately so much so that when you file your return you would be pleasantly surprised by the terseness of the return assuming your income does not exceed Rs 5 lakh and it is sans business income.
Normally, people wait for three years before they sell their houses because any premature sale attracts short term capital gains tax. But come 1 April 2017, you can sell even your two year old houses without the fear of exposing yourself to short term capital gains tax because the minimum holding period has been reduced to two years in order to make the grade of long term capital asset for houses. And there is good news for earners of long term capital gains. As it is one can invest the gain up to a maximum of Rs 50 lakh in NHAI or REC bonds within six months of earning such gain. Now more such institutions are going to be added.
Charitable and religious institutions have hitherto been enjoying a touch-me-not status thus encouraging fraudsters to resort to floatation of such institutions with a veneer of altruism or religiosity to hoodwink the taxman. Their income is tax-free. Small wonder charlatans start educational institutions with alacrity as education is considered to be a charitable activity per se. So are hospitals. While their tax-free status continues, the touch-me-not status is sought to be disturbed and with reason. Income tax raids can be carried out on such institutions come April 2017 if there is a suspicion of them being used for ulterior purposes including tax evasion and money laundering.
As for companies, the amendment conferring on them freedom to make limitless anonymous donations to any registered political party has raised both eyebrows and hackles of critics. Because in a milieu of transparency, the move is antediluvian fostering opacity. However corporates were not making upfront donations in the face of the requirement to disclose the names of the political parties benefitting from their munificence which they felt invited reprisals from parties not in their favored list when they came to power.
Be that as it may but the move is bound to make electoral bonds, an innovation of budget 2017, a nonstarter. Electoral bonds too has for its USP anonymity. It would now be rendered redundant with corporates seeing merit in making cheque donations that is much simpler than the convoluted process of first buying these bonds from designated banks during the designated period. Effectively the limitless cheque anonymous donations regime has cannibalized electoral bonds. Nay, electoral bonds are still-born.
Updated Date: Mar 28, 2017 15:59 PM