Finance Bill 2017: Tax reforms to look out for

Applicable from April 1, 2017,  the Finance Bill, recently passed by the Parliament is likely to bring in some significant amendments in the income tax laws. The ten most significant developments are the following:

1) The tax rate for income group Rs 2.5 lakh to Rs 5 lakh will be reduced from 10 per cent to 5 per cent.
However, the rebate under Section 87A will be reduced from Rs 5,000 to Rs 2,500; whereas rebates for taxpayers with income above 3.5 lakh will become void.


2) A surchange of 10 per cent will be imposed on individuals with income between Rs 50 lakh to Rs 1 crore, besides the continuation of the existing surcharge of 15 per cent for income above Rs 1 crore.

3) I-T return filing will be simplified with a one-page form for individuals with a taxable income of upto Rs 5 lakh.

4) Tax savings through investment in Rajiv Gandhi Equity Savings Scheme will be dismissed from Assessment Year 2018-19. 

5) In the case of undisclosed income and assets of over Rs 50 lakh, tax officials may reopen tax cases for upto 10 years. 

6) The holding period of a property, which is to be treated as long-term gains, will be reduced from three years to two years, helping the property sellers to save tax.


7) The tax benefits enjoyed by borrowers for properties on rent will reduce by a high margin, cutting down on interest paid on home loans by rental borrowers and self occupied borrowers. Till now the rental borrowers enjoyed a rebate on the entire interest and the self occupied borrowers enjoyed a deduction of Rs 2 lakh. 

8)  A deduction of 5 per cent TDS (tax deducted at source) will be applied on for rental payments above Rs 50,000 per month.

9) From now onwards, the NPS subscribers will be able to withdraw 25 per cent of their contribution for emergencies, prior to retirement, without attracting tax. 

10)The Bill also made Aadhaar verification mandatory while applying for PAN as well as for filing I-T returns from July 1, 2017.