The document summarizes key changes to India's income tax provisions in the 2018 budget. Some key points: - Long-term capital gains (LTCG) over Rs. 1 lakh from listed equity shares will now be taxed at 10%. All LTCG until January 31, 2018 will be exempt. - Standard deduction of Rs. 40,000 introduced for salaried employees in lieu of transport/medical exemptions. - Deduction limits for senior citizens increased for interest income, health insurance premiums, and medical expenditure. - Corporate tax rate reduced to 25% for domestic companies with turnover up to Rs. 250 crores.

1. Highlights of Income Tax Provisions in Budget 2018
BUDGET 2018 HIGHLIGHTS – DIRECT TAXES
TAX RATES
No change in tax rates and basic exemption limit
Tax rates continue to be same for A.Y. 2019-20 as applicable for A.Y. 2018-19. Further, there is no change in the basic exemption limit.
Health and Education Cess
“Education Cess on income-tax” @2% and “Secondary and Higher Education Cess on income-tax” @1% is levied.
Proposed amendment: A new cess named “Health and Education Cess is proposed to be levied @ 4% of income-tax including surcharge, if
applicable, in place of existing cess of “Education Cess and “Secondary and Higher Education Cess on income-tax”.
PERSONAL TAXATION
Relief to Salaried employees
At present an employee is entitled for exemption of Rs. 19,200 (Rs. 38,400 for physically handicapped or blind or deaf and dump employees)
towards transport allowance and exemption of Rs. 15,000 in respect of reimbursement of medical expenses. No Standard deduction is allowed.
Proposed amendment: A standard deduction of maximum of Rs. 40,000 is proposed to be allowed to salaried employees in lieu of present
exemption in respect of transport allowance and reimbursement of medical expenses. The net benefit is only Rs. 5,800 which would be further
reduced due to increase in cess by 1%. However, benefit of enhanced transport allowance to differently able persons shall be allowed.
Deduction in respect of interest income to senior citizen
A deduction upto Rs 10,000 is allowed under section 80TTA to an assessee in respect of interest income from savings account.
Proposed amendment: A new section 80TTB proposed to be inserted to enhance such deduction to Rs. 50,000 from the existing limit of Rs.
10,000 for senior citizens. Moreover, the benefit of such deduction is proposed to exteneded to interest on fixed deposits and recurring deposits.
Deductions available to senior citizens in respect of health insurance premium and medical treatment
Section 80D, inter-alia, provides that a deduction upto Rs 30,000 to an assessee, being an individual or a Hindu undivided family, in respect of
payments towards annual premium on health insurance policy, or preventive health check-up, of a senior citizen, or medical expenditure in
respect of very senior citizen.
Proposed amendment: Section 80D proposed to be amended to increase such limit of deduction from Rs. 30,000 to Rs. 50,000 for resident
senior citizens, who is of the age of 60 years or more during the previous year.
Senior citizens not covered by insurance can claim reimbursement of medical expenditure upto Rs. 50,000. Earlier this benefit was
available only for very senior citizens.
Further, in case of single premium health insurance policies to effect or to keep in force an insurance on the health for more than a year, it is
proposed that the deduction shall be allowed on proportionate basis for the number of years for which health insurance cover is provided, subject
to the specified monetary limit.
Enhanced deduction to senior citizens for medical treatment of specified diseases
Section 80DDB, inter-alia, provide that a deduction shall be available to an individual and Hindu undivided family in respect of an amount paid
for medical treatment of specified diseases upto Rs 80,000 in case of very senior citizen and upto Rs 60,000 in case of senior citizens.

2. Proposed amendment: It is proposed to increase such deduction upto Rs. 1,00,000 for both senior citizens and very senior citizens in place
of existing deduction upto Rs 80,000 and Rs. 60,000 in respect of very senior citizen and senior citizens, respectively.
Extending the benefit of exemption of withdrawal from NPS to non-employee subscribers
The existing provisions of the clause (12A) of section 10 of the Act provides an exemption of 40% of the total amount payable to an employee
contributing to the NPS on closure of his account or on his opting out. This exemption is 17 not available to non-employee subscribers.
Proposed amendment: It is proposed to amend this section to extend the benefit of such exemption to all assessees. However, benefit of
exemption under clause (12B) for partial withdrawal continues to be restricted to employees alone.
CAPITAL GAINS TAXATION
Taxability of Long-term Capital Gains on sale of listed equity shares etc.
Long term capital gains(LTCG) arising from transfer of long term capital assets, being equity shares of a company or an unit of equity oriented
fund or an unit of business trusts, is exempt by virtue of section 10(38), provided sale and acquisition transactions carried out on a recognized
stock exchange and are liable to securities transaction tax (STT).
Proposed Amendment: In order to minimize economic distortions and curb erosion of tax base, section 10(38) proposed to be withdrawn. For
taxing LTCG in excess of Rs. 1 lakh @10%, a new section 112A proposed to be inserted with effect from A.Y. 2018-19.
All LTCG up to 31st January, 2018 will be grandfathered by way of providing that the cost of acquisitions in respect of the long term capital
asset acquired by the assessee before the 1st day of February, 2018 , shall be deemed to be the higher of –
a) the actual cost of acquisition of such asset; and
b) the lower of –
(i) the fair market value of such asset on 31.1.2018 ; and
(ii) the full value of consideration received or accruing as a result of the transfer of the capital asset.
Such capital gains would neither be eligible for benefit of Chapter VI-A deductions nor rebate u/s 87A.
Short-term Capital Gains under section 111A
Short-term capital gains taxable under section 111A would continue to be taxable @15%.
Conversion of stock-in-trade into Capital Asset
Section 45 of the Act, inter alia, provides that capital gains arising from a conversion of capital asset into stock-in-trade shall be chargeable to
tax. However, in cases where the stock in trade is converted into, or treated as, capital asset, the existing law does not provide for its taxability.
Proposed Amendment: Section 28 proposed to be amended to tax the profit or gains arising from conversion of inventory into capital asset or its
treatment as capital asset as business income. The full value of the consideration received or accruing as a result of such conversion would be fair
market value of the inventory on the date of conversion determined in the prescribed manner.
Further, for determining capital gain on transfer of such capital asset, the fair market value on the date of conversion shall be the cost of
acquisition. The period of holding would be reckoned from the date of conversion or treatment.
It may be noted that business income would be taxable in the year of conversion and there is no provision for postponement of taxability
of income to the year in which the transfer took place.
Transfer of immovable property

3. At present, while taxing income from capital gains (section 50C), business profits (section 43CA) and other sources (section 56) arising out of
transactions in immovable property, the sale consideration or stamp duty value, whichever is higher is adopted. The difference is taxed as income
both in the hands of the purchaser and the seller.
Proposed Amendment: Section 50C, 43CA & 56 proposed to be amended to provide that no adjustments shall be made in a case where the
variation between stamp duty value and the sale consideration is not more than 5% of the sale consideration.
Deduction under section 54EC
Deduction under section 54EC is available in respect of capital gain, arising from the transfer of a long-term capital asset, invested in the long-
term specified asset at any time within a period of six months after the date of such transfer. Long-term specified asset means any bond,
redeemable after three years and issued on or after the 1st day of April, 2007 by the National Highways Authority of India (NHAI) or by the
Rural Electrification Corporation Limited (RECL); or any other bond notified by the Central Government.
Proposed Amendment: Section 54EC proposed to restrict the exemption in respect of capital gain arising from the transfer of a long-term
capital asset, being land or building or both only and not other capital assets. Further, the period for redemption of long-term specified asset,
being a bond increased from three years to five years.
INCOME COMPUTATION DISCLOSURE STANDARDS (ICDSs)
The central government has notified ten ICDSs effective from A.Y. 2017-18.These are applicable to all assesses (other than an individual or a
Hindu undivided family who are not subject to tax audit under section 44AB of the said Act) for the purposes of computation of income
chargeable to income-tax under the head “Profits and gains of business or profession” or “Income from other sources”.
Proposed Amendment: The Delhi High Court in case of Chamber of Tax Consultants & Anr Vs. Union Of India & Ors has held that certain
provisions of ICDSs are ultra vires the Income-tax Act, 1961. In order to bring certainty, the following amendments are proposed to be effected
with retrospective effect from A.Y. 2017-18, in the Income-tax Act in line with the ICDSs:
BUSINESS TAXATION
Incentives to micro and SMEs
Domestic companies whose turnover was less than Rs. 50 crore in financial year 2015-16 was liable to pay corporate tax @25% in FY 2017-18.

4. Proposed amendment: The benefit of concessional rate of corporate tax@25% is proposed to be extended to domestic companies whose
total turnover or gross receipt in the previous year 2016-17 does not exceed Rs. 250 crores.
Charitable Trusts: To go digital for claiming exemption
Last year, the post demonetisation Union Budget witnessed changes in tax laws denying benefit of deductions from business income in respect of
expenditure for which cash payment exceeds Rs.10,000 . However, such changes were not incorporated in the special taxation regime applicable
to charitable trusts. Hence, charitable trusts were availing benefits even in respect of application of income by way of cash payments.
Proposed amendment: This year, the restrictive provisions are proposed to be made applicable to charitable trusts governed by the
special taxation regime under section 10(23C) and 11 and 12. Furthermore, non-deduction of tax at source would now attract
disallowance in the hands of the charitable trust also. This is a positive measure for bringing charitable trusts into the digital net.
Deduction in respect of employment of new employees
A deduction of 30% is allowed in addition to normal deduction of 100% in respect of emoluments paid to eligible new employees who have been
employed for a minimum period of 240 days during the year under section 80JJAA.
However, the minimum period of employment is relaxed to 150 days in the case of apparel industry.
Proposed amendment: Section 80JJAA proposed to be amended to extend this relaxation to footwear and leather industry. Further, the
deduction of 30% would also be available for a new employee who is employed for less than the minimum period during the first year but
continues to remain employed for the minimum period in subsequent year. Such deduction would be available from the subsequent year.
Deduction in respect of income of Farm Producer Companies
Section 80P provides for 100 percent deduction in respect of profit of cooperative society which provide assistance to its members engaged in
primary agricultural activities.
Proposed amendment: This benefit proposed to be extended to Farm Producer Companies (FPC), having a total turnover upto Rs 100
crore, whose gross total income includes any income from-
• The marketing of agricultural produce grown by its members, or
• The purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them
to its members, or
• The processing of the agricultural produce of its members.
The benefit shall be available for a period of five years from the financial year 2018-19.
Dividend Distribution tax on deemed dividend
Dividend distributed by a domestic company is subject to dividend distribution tax payable by such company. However, deemed dividend under
section of 2(22)(e) is taxed in the hands of the recipient and no dividend distribution tax is currently being levied.
Proposed amendment: It is proposed to tax deemed dividend referred under section 2(22)(e) in the hands of company. Dividend
distribution tax @30% without grossing up is proposed to be levied on the company.
Expanding scope of accumulated profits for deeming dividend
Accumulated profits for deeming dividend has been provided in section 2(22) as all profits of the company upto the date of distribution or
payment or liquidation, subject to certain conditions.
Proposed amendment: The scope of accumulated profits for deeming dividend would include, in a case of amalgamated company, the
accumulated profits of the amalgamating company also, whether capitalised or not, on the date of amalgamation.
RETURN OF INCOME AND ASSESSMENT PROCEDURE
Mandatory filing of return to claim deduction under the heading C in Chapter VIA

5. Section 80AC provides that no deduction would be admissible under section 80-IA or section 80-IAB or section 80-IB or section 80-IC or section
80-ID or section 80-IE, unless the return of income by the assessee is furnished on or before the due date specified under sub-section (1) of
section 139 of the Act.
Proposed amendment: It is proposed to extend the scope of section 80AC to provide that the benefit of deduction under the heading “C.—
Deductions in respect of certain incomes” in Chapter VIA shall not be allowed unless the return of income is filed by the due date. It will
now include its scope section 80P, 80PA, 80QQB and 80RRB.
Entities to apply for Permanent Account Number in certain cases
Section 139A, inter-alia, provides that every person specified therein and who has not been allotted a permanent account number shall apply to
the Assessing Officer for allotment of a Permanent Account Number (PAN).
Proposed amendment: Section 139A proposed to be amended to provide that non-individual entities, which enters into a financial transaction of
an amount aggregating to Rs. 2,50,000 or more in a financial year shall be required to apply to the Assessing Officer for allotment of PAN.
Further, the managing director, director, partner, trustee, author, founder, karta, chief executive officer, principal officer or office bearer or any
person competent to act on behalf of such entities would also apply to the Assessing Officer for allotment of PAN.
Prosecution for failure to furnish return
Section 276CC provides that if a person willfully fails to furnish in due time the return of income which he is required to furnish, he shall be
punishable with imprisonment for a term, as specified therein, with fine. However, a person shall not be proceeded against under the said section
for failure to furnish return if the tax payable by him on the total income determined on regular assessment as reduced by the advance tax, if any,
paid and any tax deducted at source, does not exceed Rs. 3,000.
Proposed amendment: It is proposed to exclude company from such exemption of prosecution. Therefore, companies would be liable for
prosecution for failure to furnish return even if there is no tax liability.
Rationalisation of prima-facie adjustments during processing of return of income
Section 143(1) provides for processing of return of income made under section 139, or in response to a notice under section 142(1). At the time of
processing of return, the total income or loss shall be computed after making the adjustment, inter alia, in respect of addition of income
appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return.
Proposed amendment: It is proposed to restrict the scope of adjustments in processing of return by providing that aforesaid adjustment shall
not be made in respect of any return furnished on or after the assessment year commencing on the first day of April, 2018.
E-Assessments: A tax-payer friendly measure
The budget proposal to notify an electronic mode for assessment across the country will significantly reduce harassment of tax payers by the tax
authorities and usher in greater efficiency and transparency in the assessment procedure.
Major Changes in Income tax from April-1, 2018
April 1, the beginning of the new financial year brings into some major changes in the tax structure:
1) Long term capital gains(LTCG) on equity:
After a gap of 14 years, the government reintroduced long term capital gains amounting to Rs one lakh and above at the rate of 10% on the sale of
equities and equity mutual funds if they are sold any time after one year of their purchase. This means even If you sell your equity on April2, you
will be liable to pay the tax at the rate of 10% on account of long term capital gains. The tax will not have indexation benefits also. However,
the capital gains made before January 31 will be exempt. This means any rise before January 31 will not taken into account while calculating the
capital gain for the financial year 2018-19.
2) Corporate tax rate:

6. Corporate tax rate that is currently 30% has been reduced for a set of companies. The corporate entities that have a turnover of upto Rs 250 crore
are meant to pay only 25% corporate tax instead of 30% earlier.
3) Interest Income exemption:
Section 80TTB is introduced for senior citizens. The current amount of interest income of Rs10,000 that is allowed to be exempted has been
raised to Rs.50,000 in case of senior citizens.
4) Exemption under section 80D:
The income tax exemption under section 80D of the income tax act, allowed for payment and medical expenditure, has also been raised from the
current limit of Rs.30,000 to Rs.50,000 for senior citizens.
5) Education and health cess:
The education and health cess has been raised from the current rate of 3% to the new rate of 4%, which will be the only additional levy on the
small tax payers this time.
6) Standard deduction :
A standard deduction of Rs.40,000 is allowed for transport and medical expenditure.
7) Medical Treatment:
Exemption for medical treatment for senior citizens has been raised to Rs.1 lakh. Earlier the limit was Rs.60,000 ad Rs.80,000 for senior citizens
and very senior citizens, respectively.
Changes in Income Tax Relevant from AY 2018-19 Onwards
1. Income Tax Slab Rates
• No tax with income less than Rs 2,50,000 for individuals, Rs. 3,00,000 for Senior Citizens and Rs. 5,00,000 for Super Senior Citizens
• 0%-5% tax with income Rs 2.5/3.00 lacs to 5 lacs for different age groups
• 20% tax with income Rs 5 lacs to 10 lacs
• 30% Tax with income above Rs. 10 Lacs
2. Surcharge for Individuals and HUF.
Till now , surcharge was not levied on Individuals and HUF but it will now be levied from AY 2018-19 on wards.
Surcharge: 10% of income tax, where total income exceeds Rs.50 lakh up to Rs.1 crore.
Surcharge: 15% of income tax, where the total income exceeds Rs.1 crore.
Higher education and secondary cess: 3% of Income Tax (for AY 2018-19)
4% of Income Tax (for AY 2019-20)
The Rate of Surcharge for other assessee (Company, Firm and Local Authority remains unchanged for AY 2018-19)
3. Rebate of Income Tax in case of Certain Individuals (Section 87A)
You can claim the rebate if you satisfy both the following conditions:
• You are a Resident Individual; and

7. • Your Total Income Less Deductions (under Section 80) is equal to or less than Rs 3,50,000. (Rs. 5,00,000 up to AY 2017-18)
The rebate is limited to Rs 2,500. (Rs. 5,000 till AY 2017-18) Which means if the total tax payable is lower than Rs 2,500, such lower amount of
tax will be the rebate under section 87A. This rebate is applied on total tax before adding Education Cess.
4. Change in Holding Period to qualify as Long Term Capital Asset
It is commonly understood that a capital asset if held for more than 36 months is a long term capital asset, else it is a short term capital asset.
At the same time, we also remember that the period of 36 months is cut down to 12 months in case of security (other than a unit) listed on a
recognized stock exchange in India or a unit of Unit Trust of India or a Unit of an Equity oriented fund or a Zero Coupon Bond.
But The Finance Act 2017 provides that in case of an immovable property being land or building or both, the period of holding should be more
than 24 months or more to qualify as long term capital asset.
In addition, The Finance Act 2016 provides that on case of shares of a company which are not listed on a recognized stock exchange in India, the
period of holding should be 24 months or less to qualify as short term capital asset.
So, this way we have three check post, 12 months for listed shares, units of Equity oriented fund and zero coupon Bonds, 24 months for unlisted
shares and Immovable property and 36 months in case of all other remaining Capital Assets.
5. Base Year Changed from 1981 to 2001
Old Rule: If the asset was acquired after 01-04-1981, the purchase price has to be indexed with cost inflation index computed with a base as 100
on above date.
If the asset was acquired before 01-04-1981, we could use the fair market value as on that date or the actual cost and claim a deduction for
the cost of improvement incurred from above date.
New Rule: If the asset was acquired after 01-04-2001, the purchase price has to be indexed with cost inflation index computed with a base as 100
on above date.
If the asset was acquired before 01-04-2001, we could use the fair market value as on 01-04-2001 or the actual cost and claim a deduction for
the cost of improvement incurred from above date.
Financial
Year
Cost
Inflation
Index
Financial
Year
Cost
Inflation
Index
Financial
Year
Cost
Inflation
Index
2001-02 100 2007-08 129 2013-14 220
2002-03 105 2008-09 137 2014-15 240
2003-04 109 2009-10 148 2015-16 254
2004-05 113 2010-11 167 2016-17 264
2005-06 117 2011-12 184 2017-18 272
2006-07 122 2012-13 200
6. Penalty for Late Filing of Return [Section 234 F]
This change is one of the most notable changes done in Income Tax. There had been no late fee or penalty for delayed filing of Returns. Income
Tax Department was quiet lenient in this regard.
If a person who is compulsorily required to file Income Tax Return (ITR) doesn’t file return on time then he is liable to a penalty as follows
Amount Of Penalty
For person with Total Income of more than Rs. 5,00,000

8. 1. If ITR is filed after due date but on or before 31st December 5,000
2. If ITR is filed after 31st December but upto 31st
March 10,000
3. No Return Filing is possible after 31st
March of AY.
For person with Total Income of less than Rs. 5,00,000 – Rs. 1,000 (up to Mar 31st
of AY)
Penalty is not applicable if ITR is filed before due date but verification is done after the due date.
In addition to the penalty interest under Section 234A is also levied on late filing of Income Tax Return.
7. Insertion of Section 269ST
Section 269ST is introduced by Finance Act, 2017 with effect from 01.04.2017 and put a limit on Cash Transaction to put a check on Black
Money and Tax Theft. Section is much talked about section as it provides penalty for any cash transaction above the value of Rs. 2 Lakh, equal to
the Transaction amount.
PROVISION OF
SECTION 269ST
No person shall receive an amount of two lakh rupees or more—
(a) in aggregate from a person in a day; or
(b) in respect of a single transaction; or
(c) in respect of transactions relating to one event or occasion from a person,
otherwise than by an account payee cheque or an account payee bank draft
or use of electronic clearing system through a bank account.
EXCEPTIONS
(a) Government;
(b) any banking company, post office savings bank or co-operative bank;
(c) transactions of the nature referred to in section 269SS;
(d) such other persons or class of persons or receipts, which the Central
Government may, by notification in the Official Gazette, specify.
PENALTY FOR
NON
COMPLIANCE
SECTION 271DA
If a person receives any sum in contravention of the provisions of section
269ST, he shall be liable to pay, by way of penalty, a sum equal to the
amount of such receipt
Any penalty imposable under sub-section (1) shall be imposed by the Joint
Commissioner.
Most of us would have heard this section as this was one of the highly discussed topic after the Budget Speech of 2017.
This section applies on the person receiving payment in excess of Rs. 2,00,000.
Kisi Ek bande se ek sath ya
kisi ek transaction ke silsile me total milakar ya (chahe alag alag din)
kisi event ya occasion ke silsile me total milakar (chahe alag alag din)
aap 2,00,000 se zyada ki payment accept nhi kar sakte.
Agar karoge to utni hi penalty hai.

9. I have translated it in Hindi because I personally feel when you learn the essence of any section in your mother tongue then it is easy to
comprehend.
8. Deemed Gift –Section 56(2)(x)
Finance Act 2017 has inserted a new clause (x) in section 56(2) w.e.f 1st April 2017 (i.e. applicable from AY 2018-19 related to FY 2017-18)
which has considerably widened the scope of provisions taxing deemed gift as income. The applicability of corresponding old deemed gift
clauses being section 56(2)(vii) and 56(2)(viia) has been restricted up to AY 2017-18 only.
The new clause (x) envisages to tax the deemed gift of certain defined properties/assets in the hands of every person receiving such
property/asset subject to certain exceptions as provided therein. The old provisions were only applicable to some persons & not all persons.
Also, earlier in the hands of Firm and a private company, the receipt of only unquoted shares of a private company was covered by deemed gift
taxing provisions whereas now it covers all the defined properties/assets.
9. Deemed Capital Gains –Section 50CA
The Finance Act 2017 has also inserted a new section 50CA which provides that in case of sale of capital asset being unquoted shares, its Fair
Market Value (FMV) shall be deemed to be the sale consideration if sale is made at a price less than FMV. As such, if shares are sold at
consideration which is less than prescribed FMV, then capital gains shall be computed taking consideration to be the prescribed FMV.
FMV for the purposes of section 56(2)(x) is to be determined as per Rule 11U and Rule 11UA.
Transactions covered u/s 56(2)(x) and 50CA must be either done at FMV or it should fall in any of the exclusions provided.
10. GAAR Provisions
GAAR which stands for General Anti Avoidance Rules has been made effective from AY 2018-19 on wards.
To understand GAAR, one should know the difference between Tax Planning, Tax Avoidance and Tax Evasion.
Tax Planning is a situation where the taxpayer takes advantage of a fiscal incentive afforded to him by the tax legislation by actually complying
to the conditions attached to that fiscal incentive.
Tax Evasion is the result of illegality, suppression and misrepresentation and fraud.
Tax Avoidance is the result of actions taken by the assessee, none of which or no combination of which is illegal or forbidden by the law itself.
But there could be the elements of malafide motive. It is usually done by adjusting the affairs in such a manner that there is no infringement of
taxation laws and to take full advantage of the loopholes therein so as to attract the least incidence of tax.
So having understood the difference between the three, we should now understand the concept of GAAR which applies only on impressible tax
avoidance arrangement.
GAAR do not apply to the instances of tax evasion as tax evasion is already prohibited under the current provisions of the act.
However, GAAR Provisions apply where the aggregate tax benefit in the relevant AY arising to all the parties to the arrangement exceed Rs. 3
crore.
A Foreign Institutional Investor (FII) who:
-Is an assessee under the Act
-Has not taken benefit of the DTAA and
-Has not invested in listed or unlisted securities with prior permission is not subject to the GAAR Provisions.

10. With this, I conclude this write-up. I have tried to cover few changes, which many of us have already heard before but sometimes require a
revision. Hope the article helps. I advise all the readers to be very alert to the changes coming in the field of Taxation; it is the only way out to
gain confidence in your knowledge, your work, your performance in office and studies.