TDS Rent Payment exceeding Rs. 50k

  TDS  Rent Payment exceeding Rs. 50k

Budget 2017 proposed to imposed TDS deduction liability on individual or a HUF (other than those liable for tax audit) for paying to a resident any income by way of rent exceeding fifty thousand rupees for a month or part of month during the previous year , shall deduct an amount equal to five per cent. of such income as income-tax thereon.

New Section 194-IB inserted

Ø  Applicable: - Individual or an HUF for rent payment exceeding Rs. 50,000 for a month or a part of month during the previous year.

Ø  Rate of TDS :- 5%

Ø  Deduction of tax :- at the time of credit of rent, for the last month of the previous year or the last month of tenancy if the property is vacated during the year, as the case may be, to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier.

Ø  It is further proposed that the deductor shall not be required to obtain tax deduction account number (TAN) as per section 203A of the Act.

Ø  It is also proposed that the deductor shall be liable to deduct tax only once in a previous year.

Ø  It is also proposed to provide that where the tax is required to be deducted as per the provisions of section 206AA(where PAN number of the deductee not furnished i.e at a rate of 20%), such deduction shall not exceed the amount of rent payable for the last month of the previous year or the last month of the tenancy, as the case may be.

     Salaried employee who are claiming HRA and showing payment of rent of more than Rs. 50,000/-  per month have to compulsory deduct TDS of 5%.

The amendment will be effective from 1^stJune 2017.

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Budget 2017 point on Rural sector

Following are the highlights of Union Finance Minister Arun Jaitley's 2017 Budget
speech.
The Union Budget 2017 was broadly focused on 10 broad themes — farmers, rural
population, youth, poor and health care for the underprivileged; infrastructure; financial
sector for stronger institutions; speedy accountability; public services; prudent fiscal
management; tax administration for the honest.

Rural sector
1. Government targets to bring 1 crore households out of poverty by 2019
2. During 2017-18, 5 lakh farm ponds to be taken up under MGNREGA
3. Over Rs 3 lakh cr spend for rural India. MGNREGA to double farmers income
4. Participation of women in mgnrega up to 55%
5. During 2017-18, 5 lakh farm ponds to be taken up under MGNREGA
6. Using space tech in a big way to plan MGNREGA works
7. We propose to complete 1 crore houses for those without homes
8. Allocating Rs. 19,000 cr for Pradhan Mantri Gram Sadak Yojana in 2017-18
9. We are well on our way of achieving 100% rural electrification by March 2018.
10. Swachh Bharat mission has made tremendous progress, sanitation coverage has gone up from 42% in Oct 13 to 60% now.
11. Sanitation coverage in rural areas gone up from 42% in Oct 2014 to 60%

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Important Amendment which FM did not cover in Budget Speech

Thirteen (13) Important Amendment in Income Tax, which FM did not cover in Budget Speech

1) Deemed sale value for sale of unquoted shares introduced. To be taxed at fair value. Sec 50CA
2) In absence of PAN,the rate of TCS will be twice of the extent rate or 5%, whichever is higher. Sec.206CC.
3) New Section 269ST introduced  whereby Rs three lakh in cash cannot be received on a single day or inrespect of single transaction.
4) If Return not filed as per Sec. 139 (1), concept of late fee introduced. Rs. 5000 for delay up to 31st Dec. and Rs. 10000 thereafter. Late fee to be paid before filing the Return. Sec 234F
5) CA issuing wrong certificate would be penalised with Rs. 10000
6) Capital gain on shares will be exempt only if STT was paid while purchasing the shares.
7) HP loss can be setoff against other head of income only to the extent of 200000 in same year. Balance loss can be c/f to 8 A.Ys.
8) Indl and HUF to deduct tds even if unaudited @ 5% if rent is paid 50000
9) Tds in 194J amended, now 2 percent tds instead of 10
10) The scope of section 56 will be widened and will also cover any kind of gifts in cash or kind or for no consideration with few exemptions and exception
11) MAT book profit calculation aslo ammended
12) Disallowance of expenditure from income from other sources if tds is not deducted
13) Self employed can also claim 20% contribution to NPS as deduction.

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Budget 2017, Taxation

Following are the highlights of Union Finance Minister Arun Jaitley's 2017 Budget
speech.
The Union Budget 2017 was broadly focused on 10 broad themes — farmers, rural
population, youth, poor and health care for the underprivileged; infrastructure; financial
sector for stronger institutions; speedy accountability; public services; prudent fiscal
management; tax administration for the honest.

Tax proposals
1. India’s tax to GDP ratio is not favourable.
2. Out of 13.14 lakh registered companies, only 5.97 lakh companies have filed
returns for 2016-17.
3. Proportion of direct tax to indirect tax is not optimal.
4. 1.95 crore individuals showed income between Rs 2.5 lakh to Rs 5 lakh.
5. Out of 76 lakh individual assessees declaring income more than Rs 5 lakh, 56 lakh
are salaried.
6. Only 1.72 lakh people showed income of more than Rs 50 lakh a year.
7. Between Nov 8 to Dec 30: Deposits between Rs 2 lakh and Rs 80 lakh was made
in 1.09 crore accounts.
8. Net tax revenue of 2013-14 was Rs 11.38 lakh crore.
9. Out of 76 lakh individual assessees declaring income more than Rs 5 lakh, 56 lakh
are salaried.
10. 1.95 crore individuals showed income between Rs 2.5 lakh to Rs 5 lakh.
11. Rate of growth of advance tax in Personal I-T is 34.8% in last three quarters of
this financial year.
12. Holding period for long term capital gain lowered to 2 years
13. Propose to have carry-forward of MAT for 15 years.
14. Capital gains tax to be exempted for persons holding land from which land was
pooled for creation of state capital of Telangana.
15. Corporate tax: In order to make MSME companies more viable, propose to
reduce tax for small companies of turnover of up to Rs 50 crore to 25%. About 67
lakh companies fall in this category. 96% of companies to get this benefit.
16. Propose to reduce basic customs duty for LNG to 2.5% from 5%
17. SIT on black money suggested no cash transactions of more than Rs 3 lakh. Govt
has accepted this proposal.
18. Income Tax Act to be amended. No transaction above Rs 3 lakh to be permitted
in cash.
19. Limit of cash donation by charitable trust reduced to Rs 2,000 from Rs 10,000.
20. Net revenue loss in direct tax could be Rs. 20,000 crore.

Personal Income Tax
1. Existing rate of tax for individuals between Rs. 2.5- Rs 5 lakh reduced to 5% from
10%
2. All other categories of tax payers in subsequent brackets will get benefit of Rs
12,500.
3. Simple one page return for people with annual income of Rs. 5 lakh other than
business income.
4. People filing I-T returns for the first time will not come under govt. scrutiny.
5. 10% surcharge on individual income above Rs. 50 lakh and up to Rs 1 crore to
make up for Rs 15,000 crore loss due to cut in personal I-T rate. 15 surcharge on
individual income above Rs. 1 crore to remain.

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Deemed profit under 44 AD to be reduced to 6 percent from 8 percent

As per the press release on 19^th of December 2016

Measures for Promoting Digital Payments & Creation of Less-Cash Economy

Under the existing provisions of section 44AD of the Income-tax Act, 1961 (the Act), in case of certain assesses (i.e. an individual, HUF or a partnership firm other than LLP) carrying on any business (other than transportation, agency, brokerage and commission) and having a turnover of Rupees Two Crore or less, the profit is deemed to be 8% of the total turnover.

 In order to achieve the Government’s mission of moving towards a less cash economy and to incentivise small traders / businesses to proactively accept payments by digital means, it has been decided to reduce the existing rate of deemed profit of 8% under section 44AD of the Act to 6% in respect of the amount of total turnover or gross receipts received through banking channel / digital means for the financial year 2016-17. However, the existing rate of deemed profit of 8% referred to in section 44AD of the Act, shall continue to apply in respect of total turnover or gross receipts received in cash.

Legislative amendment in this regard shall be carried out through the Finance Bill, 2017

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