Important Points for Consideration for March and April 2018

The Financial Year 2017-18 is fast approaching towards closure. In this regard, kindly keep few important points in mind which will facilitate the finalization of accounts and doing yearly compliance:

a) 31st March is last date for Income Tax return filing for FY 2015-16 and FY 2016-17

Kindly note that 31st March 2018 is last date for preparation and filing of Income Tax Return for FY 2015-16 and FY 2016-17. After 31st March, Income Tax Return filing for these 2 years cannot be done. Therefore, those who have not yet done Income tax filing for these 2 years shall file before 31st March 2018.

b) Withdraw money before 31st March in order to avoid negative cash

All existing companies and new companies shall make an analysis of their accounting till date to determine whether they have sufficient cash balance in books. In case there is negative cash, try to withdraw as much cash as possible from current account till 31st March 2018.

c) Newly registered companies need to open current account before 31st March 2018

All those companies which has been newly registered during FY 2017-18 [April 2017 to March 2018] shall open current account in bank before 31st March 2018 otherwise Tax return of companies could not be filed.

10 Income tax changes that will come into effect from April 1, 2018, once the Finance Bill is passed by the Parliament.

1) Re-introduction of standard deduction

Standard deduction of Rs 40,000 has been reintroduced from salary income as was applicable previously. This is available for both salaried class as well as for pensioners. Further, there is no need to submit any proof or bills in order to claim the same.

2) Transport allowance and medical reimbursements are now taxable

With the introduction of standard deduction, allowance for transport of Rs 19,200 p.a and medical reimbursements of Rs 15000 p.a has now became taxable.

3) New cess rate of 4 per cent

Cess has been increased form 3% to 4% and now it is called as “Health and Education Cess.

4) Now long-term capital gains (LTCG) on equity and equity-oriented mutual funds became taxable

From April 1, capital gain tax @ 10% will be levied on LTCG arising from the sale of equity and equity-oriented mutual funds. Earlier, these gains were exempt from tax. LTCG up to Rs 1 lakh will be exempt from tax per year.

5) Tax-exemption limit of interest income for senior citizens has increased

Tax exemption limit on interest income for senior citizens has increased from Rs 10,000 to Rs 50,000. Interest income will include interest on fixed deposits (FD) and recurring deposits (RD).

6 Threshold limit for the TDS for senior citizens has been increased.

In case of senior citizens, TDS will not be deducted from interest incomes up to Rs 50,000 a year for senior citizens.

7) Increase in the deduction limit on medical expenditure

The limit of deduction under section 80D and section 80DDB has been increased for senior citizens. Under section 80D, it is increased from Rs 30,000 to Rs 50,000. Similarly, under section 80DDB, it has been increased to Rs 1 lakh for all senior citizens from Rs 60,000 (in case of senior citizens) and Rs 80,000 (for super senior citizens).

8) Now, Dividend distribution tax will be payable on equity mutual funds

Dividend distribution tax will be charged at 10 per cent on the dividends distributed in case of equity mutual funds. However, it will remain tax-free in the hands of investors. The tax will be deducted by the fund houses before distribution of dividend.

9) Extension in time limit of Pradhan Mantri Vaya Vandana Yojana

The aforesaid scheme is proposed to be extended till March 31, 2020. Further, the maximum investment limit has also been proposed to increase to Rs 15 lakh.

10) On investment in NPS, now tax exemption also available for self-employed

NPS exemption available to salaried class has now also been extended for self-employed. It is proposed to exempt 40 per cent of the total amount payable from tax upon closure of National Pension System (NPS).

 

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Author: Anil Agrawal
EZYBIZ India Consulting LLP, New Delhi. The firm is business and tax consultancy firm providing consultancy in Taxation, Regulatory, Transfer pricing, Valuation, Corporate funding and Business set up matters. He may be reached at 9899217778 or anil@ezybizindia.in.

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