Commentary on Live Budget 2017

Commentary on Live Budget 2017

Capital gains tax relief for real estate deals: 

Unoccupied houses to be subject to tax at notional rates. Number of years when capital gains can be taxed from real estate liquidation reduced from 3 year to 2 years. Furthermore this basket of instruments introduced to decrease investment without of tax. This will result in lower taxes for those selling property at a profit.

Capital gains tax to be exempted, for persons holding land from which land was pooled for creation of state capital of Andhra Pradesh.

Corporate Tax:

Income tax for medium, small and micro enterprises with an annual turnover of 50 crore will now to pay 25% instead of 30%.  There is a reduction of tax 5%.

Income Tax exemption on covered under startups is propose to decrease tax rate of companies of Rs 50 crore  by 5%

Not to remove MAT in 2017-18 and further propose to allow a carry forward of MAT for a period of 15 year as against 10 years.

Political Party Funding:

Transparency in political funding:

India is the world’s largest democracy. 70 years after independence country has not been able to evolve in transparent funding of political parties. Political parties get donations through anonymous modes. Effort required cleaning the political funding system in India

Cash donation limit to parties come down to Rs 2,000.  Mr. Jaitley announces that maximum cash donation to political parties can be Rs 2,000. Earlier limit was Rs. 20,000.

Political parties can receive donations only by cheque/digital mode.

Electoral bonds will be introduced.  Bonds can be bought from banks by donors only through cheques/digital modes.  The same can be redeemed only in the account of registered political parties. Donor can purchase bonds from RBI.

Every political party will have to file returns in accordance with the I-T Act, and exemption from income tax will be available only on compliance.

Income Tax On Individual:

Income tax up to Rs 5 lakh income reduced to 5 per cent. Propose reducing the tax rate of people earning Rs 2.5 to 5 lakh per annum by 5%

Zero tax liability on those with income of up to Rs 3 lakh

10% surcharge on those with income between Rs 50 lakh and Rs 1 crore. Further surcharges @15% on incomes above Rs 1 crore will remain continue.

Long-term capital gains tax on immovable property will apply after 2 years. Current provision is 3 years.

People filing I-T returns for the first time will not come under govt. scrutiny for the first year

Simple one page return for people with annual income of Rs. 5 lakh other than business income

Cash Transaction

Cash transaction above Rs 3 lakh barred. Therefore no cash transactions above Rs 3 lakh will be permitted.


    February 1st, 2017

    “The fiscal deficit bit does not seem very credible. Jaitley is leaving room to exceed it at a later time. I think people will question the fiscal math over the next few days.”

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