PERSONAL FINANCE SPECIAL (BUDGET 2017-2018)


Hello Readers,

Here, I able to collected short note about personal financial budget 2017-2018 year.

1) Income Tax rate cut to 5 % in the income slab between Rs 2.5 lakh and Rs 5 lakh from 10%

Effect on Tax Payer: Positive. This will reduce the tax liability of all tax payers across slabs. The percentage reduction of tax liability will be greater for tax payers in the lower slabs.


2) Rebate under Section 87A reduced from Rs.5,000 to Rs.2,500 and the applicable limit has been reduced from taxable income of Rs.5 lakh to Rs.3.50 lakh.

Please refer below illustration to understand the effect of both the above changes:



3) 10% surcharge on individual income above Rs 50 lakh and upto Rs 1 crore to make up for Rs 15,000 cr loss of due to cut in personal I-T rate. The existing surcharge of 15% for total income above Rs 1 crore remains unchanged.

Effect on Tax Payer:Negative. This will increase the tax liability of tax payers with total income more than Rs.50 lakh and upto Rs.1 crore. The percentage reduction of tax liability will be greater for tax payers in the lower slabs.

4) First time income tax returns filing will not come under government scrutiny.

Effect on Tax Payer: Positive. This will encourage more income earners to file income tax returns.

5) The holding period for computing long term capital gains (LTCG) on land & building reduced from 3 years to 2 years

Effect on Tax Payer: Positive. Investors can now sell their investments into property quicker than before.

6) For the purpose of computation of capital gains, the Indexation base date has been changed from April 1, 1981 to April 1, 2001.

Effect on Tax Payer: Positive. As the general price increase in capital assets has been more than the cost of inflation index in the last 15 years, this move would benefit all investors who have bought properties between 1981 and 2001 by increasing their indexed cost of acquisition, thereby reducing the capital gains on which tax has to be paid.

6) For the purpose of computation of capital gains, the Indexation base date has been changed from April 1, 1981 to April 1, 2001.

Effect on Tax Payer: Positive. As the general price increase in capital assets has been more than the cost of inflation index in the last 15 years, this move would benefit all investors who have bought properties between 1981 and 2001 by increasing their indexed cost of acquisition, thereby reducing the capital gains on which tax has to be paid.


7) Set-off amount for loss from house property, against other heads of income, capped at Rs. 2 lakh. Any unabsorbed loss can be carried forward for next 8 assessment years and set off against future income from house property. Currently there is no upper limit for let out properties; however, there is a maximum limit of Rs.2 lakh for self-occupied properties.

Effect on Tax Payer:Negative. Hitherto, investors have been using this provision of no upper limit for let out properties to a great extent to save more tax. These investors will now have to shell out more tax. The carry forward provision might not be of use in the initial years of the loan, as there might not be any income from house property to set off, in these years

8) Partial withdrawal from NPS tax - exempt up to 25% of employee's contribution

Effect on Tax Payer: Positive. Till now, only at maturity, 40% of the withdrawals were exempt from tax. This move will help investors to fund any emergencies without getting much of a bite.

9) Exemption on Long-term capital gains tax on sale of equity investments will now be available, only if Securities Transaction Tax (STT) is paid both at the time of sale & purchase. Earlier, the requirement of STT was only at the time of sale of the shares.

10) The time limit for filing your income tax return and revising the return filed has been reduced and has to be done before end of the respective assessment year. The budget also provides for levy of mandatory fee if you delay filing of your income tax return beyond the due date.

thanks to icicidirect,copyright noted.

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