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Union Budget 2017 Is A Big Push Towards Cashless Economy

Presumptive tax for small traders with turnover upt o 2 crore under 44Ad now 6 per cent instead of 8 per cent for full non cash turnover

Photo Credit : Reuters

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This budget has given a big push towards cashless economy, which might have its operational challenges, but in the long term, it will help to widen the tax base. Reduction of taxes at lower end and taxing more at the high end is a good populist move.

I hope the government focuses on reducing tax litigation that is key to improving confidence in entrepreneurs. Some initial steps have been taken with presumptive taxation but more bold steps on departmental levels are required.

Limiting Cash funding to political parties and Trusts is quite an interesting move to cut down on cash circulation, especially with the elections going forward. This will certainly impact 'cash for votes'.

Simplification and reduction of taxes at lower end is again a good step forward. This not only means more income, more taxes but will also encourage more people to pay taxes and stay compliant since cost of non-compliance is rising.

I abolish Foreign Investment Promotion Board (FUPB), thereby opening up the economy for FDI AND US going Swadesh, spotlight will be on India. The country's CFO (FM), needs to now clean up tax administration process to reduce litigations and introduce fair and neutral approach to assessments rather than keep slapping tax notices to everyone just because the department has a revenue target to achieve. This increases unwanted litigation costs and is tarnishing India's image.

Some of the key points / changes captured by Bhairav Kothari, founder & MD, SuperCFO from today's Union Budget.

1. Turnover of companies up to 50 crore - tax will be 25 per cent instead of 30 per cent
2. MAT credit carry forward for 15 instead of 10 years
3. Long term capital gains period reduced from 3 to 2 years
4. Base Year for indexation now 2001 instead of 1981
5. Presumptive tax for small traders with turnover up to 2 crore under 44Ad now 6 per cent instead of 8 per cent for full non cash turnover
6. Cash expenditure now allowed only 10000 instead of 20000 per transaction
7. No transaction above 3 lac will be allowed in cash
8. Trust cash donations max allowed only 2000 instead of 10000
9. Political parties - max cash donations from 1 person Rs 2000
10. Domestic transfer pricing - only if 1 party enjoys tax benefits
11. 44AD - turnover limit increased to 2 crore for business
12. For profession - Professionals can pay advance tax in 1 installments if below 50 lakh
13. Time for revising income tax return now reduced.
14. Scrutiny time limit reduced to 18 months
15. Individual tax reduced for income 2.5 to 5 lakh tax rate now reduced to 5 per cent
16. Surcharge of 10 per cent on those who earn income from 50 lakh to 1 crore
17. TDS - no TDS on insurance agents if 15 h filed
18. Simple 1 page income tax return for persons having non business income up to 5 lakh

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


Bhairav Kothari

Bhairav Kothari is Founder & Managing Director of SuperCFO Services Pvt.Ltd. ("SuperCFO"). SuperCFO is a Virtual CFO, Interim CFO, Special Purpose CFO and Full-time CFO Services company for start-ups and mid sized companies. Bhairav, a recipient of Best Young Entrepreneur Award in Financial Service Sector (2010), has rich experience of 15+ years as finance professional which includes public company listings (IPO), debt syndication, private equity financing, mergers & acquisitions, cross border accounting (including IFRS & US GAAP), implementation of cost controls and setting up of robust MIS systems. Bhairav has also successfully implemented corporate restructuring events involving international jurisdictions; encompassing taxation, corporate law and foreign exchange regulations.After completing his graduation in Commerce with specialization in Computers and Operations Research, he completed his Chartered Accountancy (CA), securing 36th rank in the foundation course. He also holds a Diploma in Business Finance from the Institute of Chartered Financial Analysts, India.

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