Hi Folks

“Early bird catches the worm” is an old adage. It is so true for very many things. So also for the Union Budget 2017-18 which was advanced by a month and presented on the 1st of February for the very first time. This definitely leaves both the Government and the governed (read individuals and businesses) with clear 2 months to understand the impact of the budget changes and plan accordingly for the ensuing financial year. It is a bold move and only a leader with foresight and conviction can actually make these kind of changes. Stating an intent is one thing. Actually putting it into action amidst lot of distractions and making a battalion of bureaucrats work for it is yet another. On both counts this Government scores.
We are already a fortnight into the new budget. The notifications have been reviewed, interpreted, debated, cheered, jeered and what not…….thanks to other governance related issues in India’s leading corporate houses and political parties; global upheavals; backlashes & fears that are grabbing the headlines, Budget news is already history. But it makes sense to know since it impacts our present and future. If you want a quick summary of the key changes, read on.
Should you wish to refer to any older issues of Lexspeak, do visit our Resource Centre at  sharadasc.com.

Warm regards

Select Notifications, Circulars and enclosed D.O. letter which explains the Budget changes can be downloaded


  • Cash donation to charitable trust reduced from Rs. 10,000 to Rs. 2,000
  • No cash transactions above Rs. 3 lakhs subject to certain exceptions.
  • For Joint Development Agreement signed for development of property, the liability to pay capital gain tax will arise in the year the project is completed.
  • In line with the ‘Indradhanush’ roadmap, Rs. 10,000 crores for recapitalisation of Banks provided in 2017-18.
  • Aadhar Pay, a merchant version of Aadhar Enabled Payment System will be launched shortly.
  • Maximum amount of cash donation for a political party will be Rs. 2000 from any one source.
  • Political parties will be entitled to receive donations by cheques or digital modes.
  • Every political party would have to file its return within the time prescribed.


  • MAT credit is extended to 15 years compared to earlier 10 years.
  • MSME companies having turnover upto Rs. 50 crores, tax would be reduced to 25% as against 30%.
  • Concessional withholding rate of 5% charged on interest earned by foreign entities in external commercial borrowings or in bonds and Government securities is extended to 30.6.2020. This benefit is also extended to Rupee Denominated (Masala) Bonds.
  • For the purpose of carry forward of losses in respect of start-ups, the condition of continuous holding of 51% of voting rights has been relaxed subject to the condition that the holding of the original promoter / promoters continues.
  • The profit (linked deduction) exemption available to the start-ups for 3 years out of 5 years is changed to 3 years out of 7 years.
  • Allowable provision for Non-Performing Asset of Banks increased from 7.5% to 8.5%. Interest taxable on actual receipt instead of accrual basis in respect of NPA accounts of all non-scheduled cooperative banks also to be treated at par with scheduled banks.
  • Threshold limit for audit of business entities who opt for presumptive income scheme increased from Rs. 1 crore to Rs. 2 crores. Similarly, the threshold for maintenance of books for individuals and HUF increased from turnover of Rs.10 lakhs to Rs.25 lakhs or income from Rs.1.2 lakhs to Rs. 2.5 lakhs.
  • Time period for revising a tax return is being reduced to 12 months from completion of FY, at par with the time period for filing of return. Also the time for completion of scrutiny assessments is being compressed further from 21 months to 18 months for AY 2018-19 and further to 12 months for AY 2019-20 and thereafter.


  • Individuals filing ITR for first time would not come under Govt. scrutiny.
  • Simple one-page form to be filed as Income Tax Return for the category of individuals having taxable income up to Rs. 5 lacs other than business income.
  • Existing tax rates for individuals having taxable income of Rs. 2.5 lakhs to Rs. 5 lakhs is reduced from 10% to 5%.
  • Rebate u/s 87A reduced to Rs. 2500 from Rs. 5000; Allowed to only Individuals/HUF with total income less than or equal to Rs. 3.50 Lacs
  • Surcharge of 10% for those whose annual income is Rs 50 lakh to Rs.1 crore.
  • 15% surcharge on incomes above Rs. 1 crore to continue.
  • Holding period of immovable property for long term capital gains reduced from 3 years to 2 years.
  • The base year for indexation calculation is changed from 1.4.1981 to 1.4.2001 for all classes of assets including immovable property.
  • Under scheme of presumptive income for small and medium tax payers whose turnover is upto Rs. 2 crores, the present, 8% of their turnover which is counted as presumptive income is reduced to 6% in respect of turnover which is by non-cash means.
  • Under scheme for presumptive taxation for professionals with receipt upto Rs. 50 lakhs p.a. advance tax can be paid in 1 instalment instead of 4.
  • For senior citizens, Aadhar based Smart Cards containing their health details will be introduced
  • And a few more changes…………………..

Customs duty

  • Basic customs duty on LNG reduced from 5% to 2.5%.

Service Tax

  • Service Tax on rail tickets booked through IRCTC removed.
  • Application fee for seeking advance ruling is increased from Rs. 2,500 to Rs. 10,000.
  • The time limit provided to Authority for pronouncement of an advance ruling is extended from 90 days to 6 months.
  • Exemption on Life Insurance services by Army, Naval and Air Force Group Insurance Funds to their members.
  • Exemption on upfront amount paid on grant of long-term lease of Industrial Plots.
  • The definition of “process amounting to manufacture” has been placed in the mega exemption notification instead of the Negative List.


  • Foreign Investment Promotion Board (FIPB) to be abolished in 2017-18 and further liberalisation of FDI policy is under consideration.
  • Foreign Portfolio Investor (FPI) Category I & II exempted from indirect transfer provision. Indirect transfer provision shall not apply in case of redemption of shares or interests outside India as a result of or arising out of redemption or sale of investment in India which is chargeable to tax in India.
For other important highlights, please click on the below link.

Other important highlights of Budget 2017-18

The concept of Place of Effective Management (POEM) for deciding the residential status of a company was introduced by the Finance Act, 2015. It is effective from 01.04.2016 and accordingly shall apply from AY 2017-18 onwards. The guiding principles related to POEM have been published.
CBDT has issued FAQs relating to General Anti Avoidance Rule (GAAR) for clarifying the doubts and concerns as raised by the stakeholders about implementation of GAAR provisions.
W.e.f. 2nd February, 2017, further powers have been delegated to Regional Offices for compounding of offence for delay in filing the Annual Return on Foreign Liabilities and Assets (FLA return), by all Indian companies which have received Foreign Direct Investment in the previous year(s) including the current year. Such powers have been delegated to all Regional Offices (except Kochi and Panaji) without any limit on the amount of contravention.
Kochi and Panaji Regional offices can compound the above contraventions if such contravention is below Rs.1,00,00,000/- only. Contraventions above such monetary limit will continue to be compounded at Central Office.
Note: The contents of this Newsletter are only a summary and has not dealt with any issue in detail. Any action taken or proposed to be taken must be in consultation with professionals and not merely based on the articles / news updates. Lex Valorem disclaims all liability on action taken without professional advice.

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