Budget Snapshot 2014-15

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DIRECT TAX AT A GLANCE
Individual Taxation
Income-tax basic exemption limit raised to
`2,50,000 from `2,00,000 at present for general
category of individuals [Other than senior
citizens].
For senior citizens, basic exemption limit raised
to `3,00,000 from `2,50,000 at present.
No change in surcharge and education cess.
Limit of deduction under section 80C increased
to `1,50,000 from `1,00,000 at present.
Annual Public Provident Fund [PPF] ceiling to be
enhanced to `1,50,000 from ` 1,00,000 at
present.
Interest on housing loan deduction increased
from `1,50,000 to `2,00,000 for self-occupied
property.
Benefit of exemption under section 54EC to be
restricted to ` 50,00,000 even if investment in
specified bonds split in 2 years.
Corporate Taxation
No change in corporate tax rates, surcharge and
education cess.
Sunset clause for 10 years tax holiday extended
to the undertakings which begin generation,
distribution and transmission of power extended
to 31 March 2017.
Investment allowance at the rate of 15%
to a manufacturing company that invests
more than ` 25 crore in any year in new
plant or machinery. The benefits to be
available for 3 years i.e. for investments
made upto 31 March 2017. The
investment allowance announced last
year for investment of more than ` 100
crores in new plant or machinery will
continue to operate in parallel till
31 March 2015.
CSR spend is application of income, not
allowable as deduction under section 37.
However, CSR expenditure which is in the
nature as prescribed under section 30 to
36 shall be allowed as deduction subject
to fulfilment of conditions as specified in
such sections.
Income and dividend distribution tax to
be levied on gross amount instead of
amount paid net of taxes.
GAAR applicability not deferred -
applicable from 1 April 2015.
For set-off or carry forward and set-off
of losses, business of trade in shares
excluded from the definition of
speculation business.
Budget Snapshot 2014-15
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Budget 2012-13 Snapshot
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DIRECT TAX AT A GLANCE
Other Relevant Proposals
The eligible date of borrowing in foreign
currency extended from 30 June 2015 to
30 June 2017 for a concessional tax rate of
5% [Section 194LC] on interest payments.
Tax incentive extended to all types of long
term bonds instead of only long-term
infrastructure bonds.
Section 40(a)(ia) disallowance to apply to
all the payments on which tax is deductible
under Chapter XVII-B including salaries,
directors' fee etc. Further, the quantum of
disallowance for non-deduction of TDS be
reduced to 30% from 100% in case of
payments to resident.
Unlisted securities and units of mutual
funds (other than equity oriented mutual
fund) liable to short term capital gain if
held for less than 36 months (instead of
present period of 12 months). Further, for
units of mutual funds (other than equity
oriented mutual fund) the rate of tax has
been increased from 10% to 20%.
Conducive tax regime (tax pass through
status to be granted) to Infrastructure
Investment Trusts and Real Estate
Investment Trusts to be set-up in
accordance with regulations of SEBI.
Investment linked deduction under section
35AD extended for 2 more sectors namely,
slurry pipelines for the transportation of
iron ore, and semi-conductor wafer
fabrication manufacturing units.
Section 145(2) amended to facilitate
implementation of Tax Accounting
Standards (TAS).
Forfeiture of advance on Transfer of Capital
Assets Taxable under section 56(2)(ix).
The power of survey extended to verify the
TDS and TCS aspects also.
Provisions relating to charitable trust
taxation tightened.
Scope of settlement commission expanded.
No specific provisions in the Finance Bill on
proposed review committee of retro
amendment and expanding settlement
commission and AAR scope.
Status Quo of the erstwhile retrospective
amendments has not been disturbed.
For the purpose of charging Alternate
Minimum Tax on persons other than
company, not only profit linked deduction
are to be included but even investment
linked deduction are also to be included
and accordingly deduction claimed under
section 35AD is to be included.
Budget Snapshot 2014-15
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Budget 2012-13 Snapshot
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DIRECT TAX AT A GLANCE
International Taxation and Transfer
Pricing
Definition of Capital Asset proposed to be
widened to include securities held by FII
under section 2(14) of the IT Act - Income
from transfer of securities in the hands of
FIIs to be regarded as Capital Gains.
Transfer of Government Security by one NR
to another NR not to be regarded as
transfer [Section 47].
Rationalisation of the definition of
International Transaction under section
92B(2) transaction between two residents
may be regarded as deemed international
transactions [Section 92B].
Roll back provisions in Advance Pricing
Agreement Scheme proposed for previous 4
years [Section 92CC] [w.e.f. 1 October
2014].
Comparability Analysis Use of multiple
year data permitted Rules are awaited.
Introduction of range concept for
determining ALP Arithmetic mean to be
used only when there are inadequate
comparables - Detailed Rules awaited.
Sunset date for concessional rate of 15% on
dividend received from specified foreign
companies under section 115BBD removed.
TPO also empowered to levy penalty under
section 271G in addition to AO and
Commissioner (Appeals) [w.e.f. 1 October
2014].
General and Administrative
Government will not ordinarily bring any
retrospective amendments. All cases of
litigation arising out of retrospective
amendments will be scrutinized by a high
level committee of CBDT, before initiating
any action.
AAR scope to be expanded with resident
taxpayers allowed to approach AAR with
some threshold, more AAR benches
proposed.
High level committee to interact with trade
and industry. Based on the recommendations
of the Committee, the CBDT and CBEC to
issue appropriate clarification within
2 months wherever required.
60 more Aaykar Seva Kendras to be opened
during the current financial year to promote
excellence in service delivery.
The Government shall consider the
comments received from the stakeholders on
the revised DTC and shall review it in its
present shape and then take a view.
Budget Snapshot 2014-15
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INDIRECT TAX AT A GLANCE
Goods And Services Tax
Government to resume process of
consultation with States for expediting
introduction of nationwide GST.
Central Excise
Peak rate of excise duty remains
unchanged.
Excise Duty reduced:
Specified food processing and packaging
machinery from 10% to 6%
Footwear having retail sale price
exceeding ` 500 and upto ` 1,000 from
12% to 6%
Sports gloves from 12% to 6% (2%
without CENVAT Credit)
Motor Spirit from ` 7.5 per litre to `
2.35 per litre
Excise Duty increased on:
Cigarettes in the range of 11% to 72%.
Pan masala from 12% to 16%.
Unmanufactured tobacco from 50% to
55%.
Gutkha and chewing tobacco from 60%
to 70%
Clean Energy Cess on locally mined coal
from ` 50 /MT to ` 100/MT
Smart cards from 6% (2% without
CENVAT Credit) to 12%.
Excise Duty completely withdrawn from:
Equipments used for setting up of
renewable energy plant.
PSF and PFY manufactured from plastic
waste and scrap including PET bottles
with for the period from 29 June 2010
to 11 May 2012. From 11 July 2014 duty
is proposed to be levied at 6%, with
option to pay duty at 2% without
availment off CENVAT credit.
Additional Duty of Excise at 5% has been
levied on aerated waters containing added
sugar.
Mandatory pre deposit for filing of appeal
at 7.5% and 10% of duty and penalty for
first and second appeal respectively.
Similar changes have been brought in
Customs and Service Tax.
Valuation rules amended to provide relief
from Supreme Court judgment in case of
FIAT India, over conditions to include non-
monetary consideration in assessable value.
Customs
Peak rate of duty remains unchanged.
Baggage allowance for passengers increased
from ` 35,000 to ` 45,000.
Duty free entitlement extended from 3% to
5% to trimming, embellishment and other
specified activities for ready-made
garments.
Export Duty on bauxite increased from 10%
to 20%.
Education Cess imposed on imported
electronic products falling outside the
purview of IT Agreement.
Basic Customs Duty increased on :
Imported flat-rolled products of
stainless steel.
Metallurgical coke to 2.5% to align it
with coking coal.
Half cut or broken diamonds to 2.5%.
Budget Snapshot 2014-15
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INDIRECT TAX AT A GLANCE
Reduction of Basic Customs Duty on:
Equipments for setting up of solar
energy plant to single rate of 5%.
Crude Glycerine from 12.5% to 7.5%.
Forged steel rings used for Wind Energy
production from 10% to 5%.
Machinery and Equipments for setting
up of Bio-CNG plant to from 7.5% to a
single rate of 5%.
Different type of coal such as
Bituminous coal, Coking coal etc., to
2.5%, although CVD is leviable @ 2%.
Ships imported for breaking from 5% to
2.5%.
Exemption from Basic Customs Duty:
Colour picture tubes.
LCD and LED TV panels below 19 inches.
Specified inputs for EVA sheets, flat
copper wire and back sheets for PV
ribbons.
Pre-forms of precious and semi-precious
stones.
Di-Phenyl Methane for use in
manufacture of spandex yarn.
Portable X-ray machine/system.
Special Additional Duty exemption in
respect of:
Inputs/components for manufacture of
PCs/ tablets.
Parts required for Wind Energy
Generators.
Service Tax
Service Tax rate remains unchanged.
Scope of Service Tax extended:
Services made taxable by deleting the
following from Negative list or Mega
Exemption notification:
Sale of space or time for
advertisement in broadcast media to
cover all forms of advertisement
except Print Media.
Services provided by Radio Taxis.
Transportation of passenger with or
without accompanied belongings by air
conditioned contract carriages.
Services by way of technical testing or
analysis of newly developed drugs on
human participants.
Certain education auxiliary services.
Renting of immovable property service
to educational institutions.
.
Service tax on Maintenance or repair or
completion and finishing services of
immovable property enhanced to 70% from
60%.
Interest on delayed payment of service tax
increased for :
First 6 months 18% p.a.
Beyond 6 months uptill 1 year 24% p.a.
Beyond 1 year 30% p.a.
E-payment of ST mandatory from 1 October
2014 for all assessees.
Budget Snapshot 2014-15
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INDIRECT TAX AT A GLANCE
Service Tax on Reverse Charge Method
extended to:
Independent / non executive directors
for all body corporate
Services provided by Recovery Agents to
Banks, Financial Institutions and NBFC.
Place of Provision of Services Rules:
Intermediary services extend to dealings
in goods.
In relation to repair of goods meant to be
re-exported without being put to use,
Place of provision would be outside
India.
Exemption from service tax granted to:
All life micro-insurance schemes approved
by the IRDA, where sum assured does not
exceed ` 50,000.
Transport of organic manure by vessel, rail
or road (by GTA).
Loading, unloading, packing, storage or
warehousing, transport by vessel, rail or
road (GTA), of cotton.
Treatment, disposal of bio-medical waste.
Services received by RBI from outside
India, for management of Forex reserves.
Services provided by the Indian tour
operators to foreign tourists in relation to
tours wholly conducted outside India.
CENVAT Credit Rules:
Definition of place of removal
introduced in CENVAT Credit Rules,
2004, which is replica of existing
definition in Cental Excise Act, 1944
Time limit for taking CENVAT Credit on
input and input services specified at 6
months from the date of issuance of
prescribed document.
Payment to service provider before
availing CENVAT Credit not required
where full reverse charge mechanism is
applicable.
CENVAT Credit reversed on account of
non receipt of export proceeds to be
allowed as re-credit on receipt of export
proceeds within the extended prescribed
period
CBEC clarification on distribution of
CENVAT Credit on common input service
by ISD CENVAT Credit to be distributed
to all the operational units
Rule 12A amended to restrict transfer of
CENVAT Credit availed after 10 July,
2014 by a large taxpayer from one unit to
another.
Abatements amended :
Transport of goods by vessel increased
from 40% to 50%.
Rent a cab provider (without
abatement), 50% each by Service
Provider & Service Receiver
Miscellaneous:
Resident private limited company can
apply for advanced rulings.
Service Tax exemption procedure
simplified for SEZ.
Prescribed time limits for completion of
adjudication under service tax in line
with Central Excise.
Power of search and seizure extended
to any Central Excise office on
authorisation by Joint Commissioner or
Additional Commissioner.
Budget Snapshot 2014-15
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