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There have been frequent changes with respect to the cash transactions which are summarized below,effective 01-04-2017, and also certain recent direct tax changes.

(1) Limit for payment of expenses by cash (both, capital and revenue expenditure) reduced from Rs.20,000 to Rs.10,000 per day per person. Capital expenses paid in cash beyond the said limit will not be taken into account for depreciation purposes.  However, the cash payment limit for lorryfreight etc. remains the same at Rs.35,000.

(2) No person shall receive an amount of two lakh rupees 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.

Examples for above –

i) If one sells goods worth Rs.3,00,000 through three different bills of  Rs.1,00,000 each to one person and accepts cash in single day at different times then section 269ST(a) will get violated.

ii) If one sells goods worth Rs.3,00,000 through single bill to another person and receives cash of Rs.1,50,000 on day 1 and another Rs.1,50,000 on day 2 then section 269ST(b) will get violated, since it pertains to single transaction.

iii) If one accepts cash of  Rs.1,80,000 for sales and Rs.20,000 for freight charges,  then section 269ST(c) will get violated even if cash is accepted on different dates since they pertain to a single sales event.

iv) If one sells his car for Rs.3,00,000 and receives the amount in cash, then penalty levied on him will be Rs.3,00,000.

(2A)  In view of the newly introduced above said penal provisions relating to cash sales, the existing provisions (in vogue from 1.6.2016) relating to collection of TCS @ 1% on cash sales exceeding Rs.2,00,000 (Rs.5,00,000 in the case of jewellery) are deleted.  Consequently, there is no need to collect TCS on cash sales exceeding Rs.2,00,000. Straight away it will attract an equal amount of penalty now.

(3) For below Rs.2 crore turnover cases –

For Non Cash Sales (through Digital, Online, cheque, Bank etc.) : Net Profit will be taken as 6% of Turnover/Gross Receipt.

For Cash Sales : Net Profit will be taken as 8% of Turnover/Gross Receipt.

(4) Tax Exemption limit is Rs.2,50,000 (same as earlier) –

After that, upto Rs.5 lakh, Tax Rate is 5% (earlier it was 10%). Tax rebate of maximum Rs.2500 will be allowed, for total income upto Rs.3.50 lakh.

Individuals having total income exceeding Rs.50 lakh but below Rs.1 crore, are to pay surcharge @ 10% of the tax. Those having total income exceeding Rs.1 crore shall continue to pay surcharge @ 15%.

(5) Payment of Rent - Rs.50,000 per month by any Individual or HUF (not subject to Tax Audit requirements) - deduct TDS @ 5%.

(6) Capital Gain in respect of Land & Buildings –

– Periodicity for long term Capital Gain is reduced from 3 years to 2 years.

– Base year shifted from 01.04.1981 to 01.04.2001 for all assets including Immovable property.

(7) Corporate tax rate for the account year 2017-18 for companies with annual turnover upto Rs.50 crore (in the account year 2015-16) is reduced to 25%.  No change in firm tax rate of 30%.

(8) Donations made exceeding Rs.2,000 will be not be eligible for deduction under section 80G, unless these are made using modes other than cash.  Consequently, trusts accepting 80G donations may advise their donors to give donations exceeding Rs.2000 vide cheque / RTGS / digital modes.

(9) Sale of unquoted shares to be taxed at (deemed) fair value.

(10) In absence of PAN of the buyer of specified goods, the rate of TCS will be twice of the extent rate or 5%, whichever is higher.

(11) From financial year 2017-18, if Return is not filed within due date, late fee of Rs.5,000 for delay up to
31 December, and Rs.10,000 thereafter.

(12) Every person who is eligible to obtain AADHAR number, should quote such number, on or after July 1, 2017, in the Return of income. Furthermore, every person who has been allotted PAN as on July 1, 2017 must intimate the AADHAR number to the Tax Authority, failing which, PAN allotted to such person shall be deemed to be invalid.

(13) Where Sec.12AA registered trusts modify their objects clause, they need to apply within 30 days to CIT for
approval of the modified clauses.

(14) Any person responsible for paying any sum to a land owner under a joint venture agreement, shall deduct TDS at the rate of 10%.

Ocean Freight

The taxation of Ocean Freight on imports has undergone changes w.e.f 23.04.2017 making the importer liable to
service tax under reverse charge mechanism. A brief write up on the subject as under :

Summary of cases where the importer is liable to pay service tax under reverse charge on ocean freight in the case of imports from 23.04.2017:

1. FOB agreementwith foreign shipper:

Rate of Tax:4.5% of freight (as 30% abatement is available)

Point of tax: date of payment of ocean freight to foreign shipper

2. CIF/CFR agreementwith foreign shipper:

Rate of Tax:4.5% of freight (as 30% abatement is available). However as freight value is not known, tax can be paid at 1.4% of CIF value at the option of the importer.

Point of tax: date of bill of lading