Budget 2017: Time to align with the changes in income tax rules

 Finance Minister has opted to offer a small concession on income tax front. However, he has also capped the benefit on income from house property. Balwant Jain (more) Company Secretary, Bombay Oxygen | Capital Expertise: Tax ,Property Balwant Jain The budget of 2017 has many provisions which affect an individual tax payer. Let us discus these in detail. Reduced tax rates for initial tax slab and imposition of surcharge on higher taxable income Looking at the fact that the tax base of the tax payer is very narrow in the country as compared to other countries, the finance minister did not have the luxury of increasing the present limit exemption limit of Rs. 2.50 lakh. In order to increase the tax base, the Finance minister has proposed reduced tax rate for the initial tax slab of Rs. 2.50 lakh to Rs. 5 lakh from 10% to 5%. This will reduce tax liability almost all the tax payers

However in order to make up for the loss due to proposal of reduced tax rates, the finance minister has proposed to levy a surcharge of 10% on the taxpayers whose income is above Rs. 50 lakh. Surcharge of 15% on the income above Rs 1 Crore will continue to be levied. Reduction in amount and eligibility for tax rebate under Section 87A Presently an Individual tax payer is eligible to a tax rebate of up to Rs. 5000 in case the taxable income does not exceed Rs. 5 lakh. The Finance minister has proposed to reduce both. Now the eligibility for this rebate has been reduced to Rs. 3.5 Lakh and the quantum of the tax rebate will also be restricted to Rs. 2500 only. So effectively individual with income less than Rs 3 lakh and senior citizens with income less than Rs 3.50 lakh will not have to pay any tax. Of course, they still have to file income tax returns. 

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