SYNOPSIS
OF MAJOR DIRECT TAXES PROPOSALS FOR INDIVIDUALS
v Individual Income-tax exemption limit raised by 50,000/- that is,
from 2 Lakh to 2.5 lakh in the case of individual taxpayers, below the age of
60 years. Exemption limit raised from 2.5 lakh to 3 lakh in the case of senior
citizens.
Analysis
For Individual below 60 yrs of age
having taxable income Rs.5 Lakh or less
|
Exemption limit Rs.2,50,000
Add: Rebate u/s 87 A Rs.20,000/-
|
For Individual below 60 yrs of age
having taxable income above Rs. 5 Lakh
|
Exemption limit Rs.2,50,000
Rebate u/s 87 A Rs.20,000/- (Not
available)
|
For Individual above 60 yrs but below
80yrs of age having taxable income Rs.5 Lakh or less
|
Exemption limit Rs.3,00,000
Add: Rebate u/s 87 A Rs.20,000/-
|
For Individual above 60 yrs but below
80yrs of age having taxable income above Rs. 5 Lakh
|
Exemption limit Rs.3,00,000
Rebate u/s 87 A Rs.20,000/- (Not
available)
|
v No change in rate of surcharge for Individuals i.e. if an
individual having income above Rs 1 crore, surcharge would be leviable @ 10% of
Income tax.
v
The education cess to continue at 3 %.
v Investment
limit under section 80C of the Income-tax Act, 1961 raised from 1 lakh to 1.5 Lakh.
Investment in PPF can be made up to Rs. 1.5 lakh. (applicable from A.Y. 2015-16)
v Deduction
limit u/s 24(b) of Income Tax Act, 1961 on account of interest on loan in
respect of self-occupied house property raised from 1.5 lakh to 2 lakh. (applicable
from A.Y. 2015-16)
v A
new section in the Act is to be inserted w.e.f 01st October, 2014 to
provide for deduction of tax at the rate of 2 per cent. on sum paid under a
life insurance policy, including the sum allocated by way of bonus, which are
not exempt under section 10(10D) of the Act. In order to reduce the compliance
burden on the small tax payers, it has also been proposed that no deduction
under this provision shall be made if the aggregate sum paid in a financial
year to an assessee is less than Rs.1, 00,000.
v CAPITAL GAINS (applicable from A.Y.
2015-16)
Ø Amendment
in Section 2(42A), existing provision provide that in case of share held in a company or any other
security listed in a recognised stock exchange in India or a unit of the Unit
Trust of India or a unit of Mutual fund or a Zero coupon bond, if the
period of holding for is more than 12 months then these assets qualifies as
Long term capital asset. Now Section 2(42A) is amended to provide that an unlisted security and a unit of mutual fund
(other than equity oriented mutual fund) shall be a Short term capital
asset if it is held for not more than 36 months.
Ø Amendment
in Section 112, existing provision provide that in case of transfer of capital
asset being listed securities or Mutual
Funds or units of Unit Trust of India or zero coupon bond if tax payable on
long-term capital gain exceeds 10% of the amount of capital gain before
allowing indexation adjustment, then such excess shall be ignore. To remove tax
arbitrage, rate of tax on long term capital gains increased from 10 % to 20 %
on transfer of units of Mutual Funds or
units of Unit Trust of India.
Ø Advance
for Capital asset, such sum shall be
chargeable to income-tax under the head ‘income from other sources’ if such sum
is forfeited and the negotiations do not result in transfer of such capital
asset. A consequential amendment in clause (24) of section (2) is also being
made to include such sum in the definition of the term 'income'.
SYNOPSIS OF MAJOR DIRECT TAXES PROPOSALS FOR
CORPORATES
v Corporate
tax rate to be continued at the same rate as specified in F.Y. 2013-14
v No
change in the rate of surcharge.
If net income does not exceeds Rs 1 crore
|
If net income exceeds Rs 1 crore but less than Rs.10 crore
|
If net Income exceeds 10 crore
|
|
Domestic company
|
Nil
|
5%
|
10%
|
Foreign company
|
Nil
|
2%
|
5%
|
v The
education cess to continue at 3 %.
v TDS (applicable from A.Y. 2015-16)
Ø In
case of non-deduction of tax on payments, 30% of such payments will be
disallowed instead of 100 %.
Ø In
order to improve the TDS compliance in respect of payments to residents which
are currently not specified in section 40(a)(ia), it is proposed that the
disallowance under section 40(a)(ia) of the Act shall extend to all expenditure
on which tax is deductible under Chapter XVII-B of the Act. Under existing
provision of 40a(ia) only Interest, Commission or brokerage, Fees for technical
services, Fees for professional services, Payment to
Contractors/subcontractors, Payment of rent, Payment of Royalty to a resident
is covered.
v Investment
allowance at the rate of 15 % to a manufacturing company that invests more than
` 25 crore in any year in new plant and
machinery. The benefit to be available for three years i.e. for investments upto
31.03.2017.
v 80-IA
sunset date for the power sector extended to the undertakings which begin
generation, distribution and transmission of power by 31.03.2017.
v The
eligible date of borrowing in foreign currency extended from 30.06.2015 to
30.06.2017 for a concessional tax rate of 5% on interest payments. Tax
incentive extended to all types of bonds instead of only infrastructure bonds.
v Concessional
rate of 15% on foreign dividends without any sunset date to be continued.
v In
order to provide certainty on the issue of CSR referred to in section 135 of
the Companies Act, 2013 it is clarified that any expenditure incurred by the
assessee on the activities referred to in section 135 of the Companies Act,
2013 shall not be deemed to have been incurred for the purpose of business and
hence shall not be allowed as deduction u/s 37. However, the CSR expenditure
which is of the nature described in section 30 to section 36 of the Act shall
be allowed as deduction under those sections subject to fulfilment of
conditions, if any, specified therein. (applicable from A.Y. 2015-16)
v TRANSFER PRICING (applicable from 01st
October, 2014)
Ø Introduction
of a “Roll Back” provision in the Advanced Pricing Agreement (APA) scheme so
that an APA entered into for future transactions is also applicable to
international transactions undertaken in previous four years in specified
circumstances.
Ø Introduction
of range concept for determination of arm’s length price in transfer pricing
regulations.
Ø To
allow use of multiple year data for comparability analysis under transfer
pricing regulations.
v Income
and dividend distribution tax to be levied on gross amount instead of amount
paid net of taxes (applicable from 01st October, 2014).
OTHER DIRECT TAX PROPOSAL
IN BUDGET 2014-15
v Conducive
tax regime to Infrastructure Investment Trusts and Real Estate Investment
Trusts to be set up in accordance with regulations of the Securities and
Exchange Board of India.
v Investment
linked deduction extended to two new sectors, namely, slurry pipelines for the
transportation of iron ore, and semi-conductor wafer fabrication manufacturing
units.
v Income
arising to foreign portfolio investors from transaction in securities to be
treated as capital gains.
v 60
more Ayakar Seva Kendras to be opened during the current financial year to
promote excellence in service delivery
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