RSM India

India Union Budget 2017 – Insights & Updates

Catch up with India Union Budget 2017 expectations, updates, publication & analysis decoded by RSM here. Stay tuned as we bring our tax, regulatory & consulting expertise to the budget and provide actionable insights.

Significant Impetus to more than 96% companies by reduction in Corporate Tax Rates to 25%

Views of Dr. Suresh Surana, Founder RSM India

The Medium and Small Enterprises which constitute more than 96% of the companies filing their tax returns have been provided a huge corporate tax rate cut. It has been proposed to bring down the corporate tax rate to 25% in case of companies having a turnover of upto Rs. 50 crores in Financial Year 2015-16. This is a major relief as both the companies in the manufacturing and service sector, who are facing pressure on their bottomline and would improve the cash flows. This reduced tax rates would be a balancing act for all the companies who are bracing for a higher rate under the proposed GST legislation.

 

New Obligation of Tax deduction Cast on Individuals and HUFs (not covered under tax audit) for Rental Payments

Views of Dr. Suresh Surana, Founder RSM India

Currently, there is no tax deduction obligation on the Individuals and HUFs (not covered under tax audit) to deduct tax on any payments made by them except for payment towards purchase of house property (for property above Rs. 50 lakhs) under section 194-IA. This budget has cast the tax net wide by requiring all such individuals and HUFs paying rentals to residents above Rs. 50,000 per month or part of the month, to deduct tax on payments @ 5%.
This has been proposed through insertion of section 194-IB. Currently, there are significant penal provisions for 'Assessees-in-default' under section 201 who fail to deduct / pay tax under the Income Tax Act. As this is the first year of such an obligation being cast on Individuals / HUFs (other than covered under tax audit), there should be an suitable cushion  provided to such new deductors in case of any non-compliances. However, the newly proposed section 194-IB provides that there shall be no requirement to obtain the Tax Deduction Account Number (TAN) for the deductors (Individuals and HUFs, in case where no tax audit is applicable).

 

Housing for All project Incentivized by various Budget Pronoucements as follow up to earlier Speech of PM on 31 December 2016

Views of Dr. Suresh Surana, Founder RSM India

As was expected, there has been a lot of thrust in this Budget for "Affordable Housing for All" scheme with a view to provide 1 crore houses for homeless and those living in kutcha houses by 2019.

The developers of affordable housing project would benefit from the proposals in this budget as affordable housing is being given 'infrastructural status'. Currently External Commercial Borrowings (ECBs) in case of Affordable Housing projects is under the approval route of the Reserve Bank of India. If the infrastructure status is given to the affordable housing project, it could be eligible for ECB funding under the automatic route and a lower withholding tax of 5% and this shall significantly reduce the lending costs of the affordable project developers.
The other major relaxation to the developers is the period for completion of the affordable housing projects under section 80-IBA from increased from current period of 3 years to 5 years.

Home buyers shall also benefit from the budget proposal as the affordable housing provisions currently pegged at 30 sq mtrs build up area and 60 sq mtrs built up area for 4 metro cities (or within 25 kms of the municipal limits of these 4 cities) and other places respectively under section 80-IBA, shall be replaced by carpet area. This requirement shall enable the developer to provide more living space to the home buyers in the affordable housing projects.

 

Sr. No.

Title

Channel & Description

Type

Date Published

Hyperlink

1

India Union Budget 2017: Individuals’ Expectations - Real Estate sector

LinkedIn Pulse

‘What individuals (can) expect from the India Union Budget 2017 – in Real Estate sector’

An article by Dr. Suresh Surana, Founder RSM India

Article / Blog

27th January 2017

https://www.linkedin.com/pulse/india-union-budget-2017-individuals-expectations-real-suresh-surana

2

Budget 2017: Will FM Arun Jaitley fix anomalies in real estate taxation?

Financial Express – Online

Dr. Suresh Surana, Founder RSM India writes on ‘India Union Budget 2017 Expectations – of real estate sector as well as home buyers’

Article / Blog

25th January 2017

http://www.financialexpress.com/budget/budget-2017-will-fm-arun-jaitley-fix-anomalies-in-real-estate-taxation/521007/

 

3

Eight key industry expectations from Budget 2017

Business Today magazine – online

‘Eight key industry expectations from Budget 2017’ – An exclusive column by Dr. Suresh Surana, Founder RSM India

Article / Blog

20th January 2017

http://www.businesstoday.in/union-budget-2017-18/columns/eight-key-industry-expectations-from-budget-2017/story/244489.html

4

The Budget Hotline – Clearing Tax Queries: Live Special show ahead of the Union Budget 2017

ET Now

Dr. Suresh Surana, Founder RSM India and Mr. Mayur Shah, Partner Tax EY answer viewers’ personal tax queries related to the budget

Video

17th January 2017

https://www.youtube.com/watch?v=3MjmSt3V2wc

 

5

5 Expectations from the Budget: Concrete measures in the form of tax incentives can encourage home ownership

DNA – online and print

‘5 Expectations from the Budget’ –  An exclusive pre-budget column by Dr. Suresh Surana, Founder RSM India

 

Article / blog

14th January 2017

http://dnasyndication.com/showarticlerss.aspx?nid=yTdPgUROpNPyRhyHwObsI3s2WoI/0ZJfhCTxMdJm2pU=