Important Things to Know about Income Tax Payment – Changes Introduced in Budget 2017

Every person who earns an income is obliged to pay a certain amount of tax to the government. However, not many people fully understand the implications of the tax structure implemented by the state and the central governing authorities. The Income Tax is essentially a certain portion of the income that you pay to the government towards the national development as well as for paying the salaries of the central and state government officials. All the taxes are levied by passing a law, and the provision of the Income Tax system in India is governed by the Income Tax Act of 1961.

All salaried employees, business owners, corporate companies and other establishments/individuals that generate revenue by some mean in India are required to make Income Tax payment to the government. However, the amount of tax the individuals has to pay depends on several factors. If you are wondering about the recent changes implemented in the Income Tax structure by the government after the Union Budget since April 1, 2017, then here are a few important things you must know:

• As per the new budget that came into effect on April 1st, 2017, the income tax rate for people falling in the income bracket of 2.5 Lakhs INR to 5 Lakhs INR has been revised to 5%. However, for the people whose income is in excess of 50 Lakhs INR per annum, they would have to pay a surcharge in addition to the applicable Income Tax. The Surcharge would be 10% for people whose income is 50 Lakhs INR to 1 Crore, and the Surcharge would be 15% for people whose income is over 1 Crore.
• For all the people who income is up to Rs 50 Lakhs per annum or less, filing of ITR (Income Tax Return) would become easier for them; they would need to fill a simple one-page form, designed especially for the people falling under the bracket.
• Individuals who have invested under the Rajiv Gandhi Equity Savings Scheme will not be eligible to claim tax deduction from the assessment year 2018-2019.
• For all those who fail to file their ITR for a financial year within the stipulated period (the last date to file the returns without attracting any fine being 31st December) would have to pay a penalty of 5000 INR. For people with their annual income less than 5 Lakhs INR, the fine applicable to them is 1000 INR.
• According to a report by Economic Times, the financial budget of 2017 has introduced changes in the holding period of long term immovable properties; the time-period has changed from three years to just two years. Also, if any such property is held for more than two years, the individuals would have to pay 20% tax, which would be eligible for exemptions and reinvestments.
• From July 1, 2017 people who do not have Aadhaar card will not be able to file their ITR.
• There is good news for individuals who have invested in the NPS or the National Pension Scheme; they need not pay any tax on any partial withdrawals from their NPS investment. People can withdraw up to 25% of their contribution before retirement in case of any financial emergency.

I am Amol Kale.. In this post, we’ll have a look at the important components of the Form 16 Format.