In a major relief to
small taxpayer and to bring more people in the tax net, the Union
Finance Minister Shri Arun Jaitly announced a reduction in tax rates
from 10 per cent to 5 per cent for individual income between Rs. 2.5 to
5 lakhs. The total amount of tax foregone on account of this measure is
expected to be Rs 15,500 crores. So the Finance Minister also announced
several revenue mobilization measures in the Budget 2017-18.
While presenting the General Budget 2017-18 in Parliament today , the
Union Finance Minister proposed the following measures:
I. Extend the provisions of Section 115BBDA of the Income-tax Act which
provides for levy of tax at the rate of 10 per cent on dividend income
exceeding Rs 10 lakh, to all resident persons except domestic companies
or trust or institution or fund registered under section 12AA or
referred to in section 10(23C). Presently, these provisions are
applicable only to the individuals, Hindu undivided family (HUF) and
II. Widen the scope of Section 56 of the Income-tax Act to provide that
any money, immovable property or specified movable property received
without consideration or with inadequate consideration, by any person,
subject to certain exemption and exceptions, shall be taxable if its
value exceeds Rs 50000.
III. In case of transfer of unquoted equity shares, where the fair
market value, determined in the prescribed manner is less than the
consideration received, such fair market value shall be the deemed value
of consideration for the purpose of computation of capital gains.
IV. Some restrictions have been put on the exemption from long term
capital gains in case of transfer of listed shares acquired after 1st
V. Introduction of a new provision in the Income-tax Act to provide for
tax deduction at source at the rate of 5 per cent by an individual or
HUF, other than those whose books of account are required to be audited,
while making payment of rent of an amount exceeding Rs 50,000 per month.
VI. In order to align the transfer pricing provisions with the OECD
transfer pricing guidelines and international best practices a new
section will be inserted to provide that the assesse shall make
secondary adjustment where the primary adjustment to the transfer price
has been made in certain cases. The provision shall apply if the primary
adjustment exceeds one crore rupees and the excess money attributable to
the adjustment is not brought to India within the prescribed time.
VII. In order to address the issue of thin capitalisation, a proposal
has been made that the interest paid by an Indian company or permanent
establishment of a foreign company, shall not be allowed as deduction in
computing its taxable profit subject to certain conditions.
VIII. Provisions have also been made to address the existing anomaly of
interest deduction in respect of let-out property vis-à-vis
IX. The donation by an entity registered under Section 12A or approved
under section 10(23C), to other entity, registered under Section 12A,
with the direction that such donation shall form part of the corpus,
shall not be treated as application of income for charitable purposes.