The new financial year FY18-19 has begun with a staggering taxation regime implemented all over the nation. Completing more than over nine months of the roll-out, the Goods and Services Tax Act has brought almost every business under its umbrella. Until now, around 1.03 crore taxpayers registered under the newly implemented taxation regime in India. And making the compliance mechanism of the regime easier, the government is trying to make the businesses perform error-free taxation.
Although the biggest issue that arose in the recent past was of the refunds. The exporters in India had claimed the refunds but didn’t get any from the government’s end. Hence, the Central Board of Excise and Customs took the charge and released over INR 12,500 crore of refunds. And soon this issue got resolved, the government made some noticeable changes in the Goods and Services Tax Act marking the beginning of the new financial year. These changes will not only affect the business complying with the regime but also GST exemption for small business. Here are the major changes that government made in the taxation regime:
- The rule for salaried taxpayers– From now onwards, INR 40,000 will be deducted from all the salaried taxpayer’s income amount. Following the deduction, the calculation of the applicable tax would occur. Talking about the profit, the margin is kept INR 5,800 per year because as per the recent GST rule, the tax is applicable to both medical expenses as well as transport allowance. However, the government has been lenient about the decision for the deduction amount. It only increased the amount around INR 6,000 as earlier the deduction amount was INR 34,200.
- Hiked cess- The benefit of the taxpayer on the standard deduction might be used up as the government has increased the cess amount. The taxpayers would not have to bear the burden of cess charges of 4%. Earlier the charges were at 3%. In some cases, the tax liability of a taxpayer would increase after he adjusts the standard deduction and cess in the final amount. And also the paperwork required in the process would be least due to the removal of the bills to claim allowances.
- The relief for seniors- The senior citizens in India account for 9% of the entire populations that is almost 11 crore. And for obvious reasons the elderly section of society needs more attention and care than any other section. Thus the government has decided to increase the limit of exemption of annual income as per the rules of GST Exemption for Small Business from INR 10,000 to INR 50,000. Undoubtedly, this move of the government has made the post-retirement life of the elderly people easy.
- Re-arrival of long-term capital gains- In the financial year 2018-19 one more tax would be added as the government decides to re-include LTCG in the taxation. And also the effect of the regime will be felt instantly as the calculation of gains will be based on the price of the stock in January 2018. Interestingly, for the retail investors, the gains (only up to INR 1 lakh) will not be taxed.
- Reduction in the corporate tax- The government has also planned relief for the businesses paying corporate tax. As per the last year, the limit for the corporate tax was applicable to the companies having a turnover of INR 250 crore. And the percentage was fixed at 30%. Now with the new rules in the effect, the applicable corporate tax percentage is reduced from 30% to 25%. Until now the lower tax rate was applicable to the companies having an annual sale of INR 50 crore.
Since the implementation of the Goods and Services Tax Act, the government has made hundreds of modification in the regime. Fortunately, most of these changes have worked well for the taxpayers of the nation. The government is leaving no stones unturned to make the regime simpler. Also, it is keeping a track on the evasion measures by implementing effective measures like e-way billing system. The pace in which the government is working for the simplification of the regime would result in the increased tax revenues post after few years.