The Finance Bill, 2017 has been passed by the Lok Sabha. The amendments those were proposed were also duly passed by the House. These amendments are applicable from 1 April, 2017. In this article, we have highlighted the tax laws which would come into force from April 2017:

(1) Limit for payment of expenses by cash (both, capital and revenue expenditure) reduced from Rs.20000 to Rs.10000 per day in aggregate per person.

Capital expenses paid in cash beyond the said limit will not be taken into account for depreciation purposes. However, the cash payment limit for lorry fright etc. remains the same at Rs.35000.

(2) No person shall receive an amount of two lakh rupees or more, by cash (Sec. 269ST) —

(a) in aggregate from a person in a day; or
(b) in respect of a single transaction; or 
(c) in respect of transactions relating to one event or occasion.

The penalty for violation of above is to be a sum equal to the amount of such receipt.

Examples:

1. If one sells goods worth Rs. 300000 through three different bills of Rs.100000 each to one person and accepts cash in single day at different times then section 269ST(a) will get violated.
2. If one sells goods worth Rs. 300000 through single bill to another person and receives cash of Rs.150000 on day 1 and another Rs.150000 on day 2 then section 269ST(b) will get violated, since it pertains to single transaction.
3. If one accepts cash of Rs.180000 for sales and Rs.20000 for freight charges, then section 269ST(c) will get violated even if cash is accepted on different dates, since they pertain to a single sales event.
4. If one sells his car for Rs.300000 and receives the amount in cash, then penalty levied on him will be Rs.300000.

In view of the newly introduced above said penal provisions relating to cash sales, the existing provisions (in vogue from 1.6.2016) relating to collection of TCS @ 1% on cash sales exceeding Rs.2 lakhs (Rs.5 lakhs, in the case of jewellery) are deleted. Consequently, there is no need to collect TCS on cash sales exceeding Rs.2 lakhs. Straight away it will attract equal amount penalty now.

(3) For below Rs.2 crores turnover cases – 

1. For Non Cash Sales (through Digital, Online, cheque, Bank etc.) : Net Profit will be taken as 6% of Turnover/Gross Receipt.
2. For Cash Sales : Net Profit will be taken as 8% of Turnover/Gross Receipt.

(4) Tax Exemption limit is Rs.2,50,000/- (no changes)-

1.  After that, upto Rs.5 lakh, Tax Rate is 5% (earlier it was 10%). Tax rebate of maximum Rs.2500 will be allowed, for total income upto Rs.3.50 lakhs.
2. Individuals having total income exceeding Rs.50 lakhs but below Rs.1 crore, are to pay surcharge @ 10% of the tax. Those having total income exceeding Rs. 1 crore shall continue to pay surcharge @ 15%.

(5) Payment of Rent – Rs.50,000 per month by any Individual or HUF (not subject to Tax Audit requirements) –

Deduct TDS @ 5%.

(6) Capital Gain in respect of Land & Buildings – 

– Periodicity for long term Capital Gain is reduced from 3 years to 2 years.
– Base year shifted from 01.04.1981 to 01.04.2001 for all assets including Immovable property.

(7) Corporate tax rate for the account year 2017-1-

for companies with annual turnover upto Rs. 50 crores (in the account year 2015-16) is reduced to 25%. No change in firm tax rate of 30%.

(8) Donations made exceeding Rs.2000-

will be not be eligible for deduction under section 80G, unless these are made using modes other than cash. Consequently, trusts accepting 80G donations may advise their donors to give donations exceeding Rs.2000 vide cheque / RTGS / digital modes.

(9) Sale of unquoted shares to be taxed at (deemed) fair value.

(10) In absence of PAN of the buyer of specified goods, the rate of TCS will be twice of the extent rate or 5%, whichever is higher. 

(11) From financial year 2017-18, if Return is not filed within due date, late fee of Rs.5000 for delay up to 31st December, and Rs. 10000 thereafter.

(12) AADHAR Number-

Every person who is eligible to obtain AADHAR number, should quote such number, on or after 1 July 2017, in the Return of income. Furthermore, every person who has been allotted PAN as on 1st July 2017 must intimate the AADHAR number to the Tax Authority, failing which, PAN allotted to such person shall be deemed to be invalid. Kindly note that linking of AADHAR with PAN is not possible, unless name as per AADHAR and PAN match perfectly. Hence, please take steps to rectify your name as per AADHAR to match as per PAN.

(13) Where Sec.12AA registered trusts modify their objects clause, they need to apply within 30 days to CIT for approval of the modified clauses.

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