Simple and easy to understand Summary of important changes in Income Tax Act applicable from 1st April 2017 with special reference to cash transactions. Please note that this is not an exhaustive list of changes. I have included only those changes which I believe are applicable to all of us in general and especially to Small & Medium Scale Businesses.

1. Compiled & Presented By:
Anuj Sharma
Important Changes in Income Tax
Provisions w.e.f. 1st April 2017
For Private Circulation Only

2. Limits for Expenses Paid in Cash
 Limits for expenses paid in cash (both
Capital as well as Revenue) has been
reduced from Rs. 20,000 to Rs. 10,000
per day in aggregate per person.
 Capital expenses paid in cash beyond
Rs. 10,000 will not be allowed for
Depreciation purposes.
 Cash payment limit for Lorry Freight
remains the same at Rs. 35,000

3. Cash Receipts
 No person shall receive an amount of
Rs. 2,00,000 (Two Lakh) or more, by
cash (Sec. 269ST)
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.
The penalty for violation of above is to be a
sum equal to the amount of such receipt.

4. Example:
a) in aggregate from a person in a day
 Mr. A sells goods worth Rs. 3,00,000 to
Mr. B and generates 3 different bills of
Rs. 1,00,000 each and accepts cash in a
single day at different times then Mr. A
shall be found guilty of violation of
Section 269ST(a) of Income Tax Act.

5. Example:
b) in respect of a single transaction
 Mr. A sells goods worth Rs. 3,00,000 to
Mr. B and generates one single bill for
Rs. 3,00,000. He then receives cash Rs.
1,50,000 on Day 1 and Rs. 1,50,000 on
Day 2 then Mr. A shall be found guilty of
violation of Section 269ST(b) of Income
Tax Act.

6. Example:
c) in respect of transactions relating
to one event or occasion
 Mr. A sells goods worth Rs. 2,05,000 to
Mr. B and makes a cash Sale bill for Rs.
1,95,000 and another cash voucher for
Rs. 10,000 as Freight Charges for the
same goods sold then Mr. A shall be
found guilty of violation of Section
269ST(c) of Income Tax Act. This will
be true even if both cash amounts are
received on different dates.

7. Mr. A books a wedding party at a Hotel & the
Hotel makes a bill of Rs. 1,50,000 for Food
and Rs. 1,00,000 for Hall Charges and
accepts cash Rs. 2,50,000 from Mr. A then
the hotel shall be found guilty of violation
of Section 269ST(c) of Income Tax Act.
Even if they are 2 different types of expense,
but they are for the same wedding.
Hotel Related Example:
c) in respect of transactions relating
to one event or occasion

8. Penalty Explained
If Mr. A sells his car for Rs. 3,00,000 and
receives the entire amount in cash then
he has to pay a total penalty of
equivalent amount of cash received by
him. Hence Penalty = Rs. 3,00,000

9. TCS Provision Abolished
 Earlier – 1 % TCS on cash sales
exceeding Rs. 2 Lakhs (Rs. 5 Lakhs in
case of jewellery)
 Now – No need to collect TCS.
Cash Sales exceeding Rs. 2 Lakhs will
Straightaway attract Penalty Of
Equivalent amount as previously
explained.

10. Salary Payment
Salary or Bonus payments exceeding Rs.
10,000 have to be done by Cheque
Compulsorily.

11. TDS on Transport
Compulsory to deduct TDS on Transport
charges and payment to be made by
cheque only.

12. TDS on Rent Payments
 Earlier: No TDS on Rent Payments by
Individuals or HUFs
 Now: Individuals & HUFs paying Rent
more than Rs. 50,000 per month have to
deduct TDS @ 5%

13. Tax Exemption Limits
 Same as Earlier – Rs. 2,50,000/annum
 2,51,000 – 5,00,000 = 5% (Earlier 10%)
 Maximum Tax Rebate under Section
87A Rs. 2,500 (Earlier Rs. 5,000) for
total income up to Rs. 3,50,000 (Earlier
Rs. 5,00,000)per annum.

14. Rebate Explained
Total Income Tax Payable
before Cess
Rebate u/s 87A Tax Payable +
3% Cess
2,65,000 750 750 0
2,70,000 1,000 1,000 0
3,00,000 2,500 2,500 0
3,50,000 5,000 2,500 2,575 (Rs. 75
Cess)

15. Company & Firm Tax Rates
 Companies with Annual Turnover up to
Rs. 50 Crore – 25% (Earlier 30%)
 Firms (Partnership or LLP) – 30% (Same
as before)

16. Deemed Profit for Small Firms
 In case of Assessee being an Individual,
or an HUF or a Partnership Firm (other
than LLP) carrying on any business
having a turnover of Rs 2 Crore or less.
 May not maintain any Books of
Accounts.
 Earlier Deemed Net Profit was 8 % of
Total Turnover as per section 44AD of
IT Act.

17. Deemed Profit for Small Firms
 Now Deemed net profit will be as under:
 Non Cash Sales (Receipts through Digital
Wallets, Online Transfer, Cheques, NEFT,
RTGS) – Deemed Net Profit shall be 6% of
Total Turnover or Gross Receipts.
 Cash Sales – Deemed Profit shall be 8% of
Total Turnover or Gross Receipts.
 To encourage non-cash payments
through bank or digital channels.

18. Capital Gain on Land & Building
 Periodicity for LTCG reduced from 3
years to 2 years.
 Base Year shifted from 1st April 1981 to
1st April 2001 for all assets including
immovable property.
 Base Year Shift helps the investor as
now prices are more realistically
calculated accounting for inflation.

19. Donations – 80G
 Cash Donations exceeding Rs. 2,000 –
Not Eligible for deduction u/s 80G
 Bank/Digital or any mode other than
cash – No limit
 Trusts accepting 80G donations Have
To Advise their donors to give donations
exceeding Rs. 2,000 vide cheque / RTGS
/ digital modes.

20. Value of Unquoted Shares
 Value of Unquoted Shares for example
shares of Private Limited Companies to
be taxed at Fair Market Value.

21. Penalty for Late Return Filing
 IT Return not filed within Due Date (31st
July for Individuals & 30th September for
Non-Individual Assessees)
 Up To 31st December – Rs. 5,000
 After 31st December – Rs. 10,000

22. Aadhar to be linked with PAN
 Every person eligible to obtain Aadhar has
to quote Aadhar number in IT Return.
 Every person who has PAN Card must
intimate Aadhar number to IT Dept failing
which pan shall be deemed invalid.
 Aadhar – PAN cannot be linked if name
doesn’t match perfectly in both the
documents.

23. The New Mantra of Transacting
 Avoid Cash transactions as much as
possible.
 Go Less-Cash
 Go Digital
 Avoid “Smart” Evasive Tactics to
subvert the laws.
 The Government knows more than you
think it does!

24. Disclaimer
 Information provided in this
presentation is entirely based on My
Personal Interpretation of the revised
Income Tax Act.
 Please use your own discretion while
transacting.
 Please consult your Chartered
Accountant / Financial Advisor in case
of any doubts or Clarifications.

25. Thank You!!!
 Grazie
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 Domo Arigato
 Merci
 Danke
 Obrigado
 Mahalo
 शुक्रिया