SOME IMPORTANT HIGHLIGHTS OF INCOME TAX

HIGHLIGHTS

• Turnover of companies upto ₹ 50 crore, tax will be 25% instead of 30%. 
• MAT (Minimum Alternate Tax) credit carry forward for 15 instead of 10 years.
• Long term capital gains on property period reduced from 3 to 2 years.
• Base year for indexation now 2001 instead of 1981.
• Cash expenditure now allowed only ₹ 10,000 instead of ₹ 20,000 per transaction.
• No transaction above ₹3 lac will be allowed in cash.
• Trust cash donations max allowed only ₹ 2,000 instead of 10,000.
• political parties, maximum cash donation from 1 person ₹ 2,000.
• Professionals can pay advance tax in 1 installments if below ₹ 50 lac.
• Time for revising income tax return now reduced.
• Scrutiny (critical observation or examination ) time limit reduced to 18 months.
• Simple 1 page income tax return for persons having non business income.
• If Return not filled as per Sec. 139 (1), concept of late fee introduced. ₹ 5,000 for delay up to 31st December and ₹10,000 thereafter. Late fee to be paid before filling the return Sec 234F.
   
• CA issuing wrong certificate would be penalized with ₹ 10,000.
• Individual and HUF to deduct TDS even if unaudited @ 5% if rent is paid ₹ 50,000.
• TDS in 194J amended, now 2% instead of 10% 
• Self employed can also claim 20% contribution to NPS as deduction.

RESIDENTIAL STATUS AND TAX LIABILITY

RESIDENTIAL STATUS :-

Residential status of a every person is to be decided every year, as per IT rules to find out which income of a person will be taxable in India.
Residence - To live or stay in India.
Citizenship-  By birth.

Residential status of an Individual:-

To check the residential status of an individual, there are two basic condition- A1 and A2.
If an individual satisfied only one of the two basic conditions then he/she is resident. If no one is satisfied then he/she will be non- resident.

RESIDENT:-

• Ordinary resident (OR):- A1 or A2 + B1 and B2
• Non ordinary resident (NOR):- A1 or A2 + B1 or B2 or B0 

NON RESIDENT:-

• NRI:- A0

To check either he/she is OR or NOR.
There are further/additional two conditions B1 AND B2.

Lets check the status, resident or non resident:-

• A1:- He/She should be in India for atleast 182 days in the relevant previous year.

For example:- Assessment year(A.Y.) is 2018-19
                   Relevant previous year(R.P.Y) is 2017-18
Assessment year is in which the tax payer is paying tax of the previous year.

• A2:- He/She should be in India for atleast 60 days in the relevant previous year and(+) 365days in 4 previous year just before the relevant previous year. 

For example:- A.Y. is 2018-19
                          R.P.Y is 2017-18 = 60 days +
            2016-17+2015-16+2014-15+2013-14 =365 days total 4 yrs(previous yr. just before R.P.Y)

Exception when A2 not applied:-

1. Crewman (Shipman)
2. Indian citizen goes to abroad for employment purpose. (A2 applied in visit, study, business etc.)
3. Indian origin foreign comes to India
4. Indian origin:- forefather born in undivided India.

• B1:- He/She should be resident (A1 or A2) in India for atleast 2 times in 10 year before the relevant previous year.

For example:- In any 2 years of the 10 years before the relevant previous year the individual should fullfill the condition fron A1 or A2.

• B2:- He/She has been in India for atleast 730 days in 7 years just before the relevant previous year.