Some key announcements in Union Budget for FY 2014-15
KEY DIRECT TAXES PROPOSALS
- Personal Income-tax exemption limit raised by Rs. 50,000/- that is, from Rs.2 lakh to Rs.2.5 lakh in the case of individual taxpayers, below the age of 60 years. Exemption limit raised from Rs. 2.5 lakh to Rs. 3 lakh in the case of senior citizens.
- Investment limit under section 80C of the Income-tax Act raised from Rs.1 lakh to Rs.1.5 lakh.
- Deduction limit on account of interest on loan in respect of self occupied house property raised from Rs. 1.5 lakh to Rs2 lakh.
- Investment allowance at the rate of 15 percent to a manufacturing company that invests more than Rs. 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.
- 10 year tax holiday extended to the undertakings which begin generation, distribution and transmission of power by 31.03.2017.
- Concessional rate of 15 percent on foreign dividends without any sunset date to be continued.
- The eligible date of borrowing in foreign currency extended from 30.06.2015 to 30.06.2017 for a concessional tax rate of 5 percent on interest payments. Tax incentive extended to all types of bonds instead of only infrastructure bonds.
- To remove tax arbitrage, rate of tax on long term capital gains increased from 10 percent to 20 percent on transfer of units of Mutual Funds, other than equity oriented funds.
- Income and dividend distribution tax to be levied on gross amount instead of amount paid net of taxes.
- In case of non deduction of tax on payments, 30% of such payments will be disallowed instead of 100 percent.
- Government to review the DTC in its present shape and take a view in the whole matter.
- 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.
- Introduction of range concept for determination of arm’s length price in transfer pricing regulations.
- To allow use of multiple year data for comparability analysis under transfer pricing regulations.
KEY INDIRECT TAXES PROPOSALS
- To boost domestic manufacture and to address the issue of inverted duties, basic Customs duty (BCD) reduced on certain items.
- To encourage production of LCD and LED TVs below 19 inches in India, basic customs duty on LCD and LED TV panels of below 19 inches reduced from 10 percent to Nil.
- Increase / Decrease in Excise Duty on certain products.
- Changes in Point of Taxation rules
- Changes in Place of Provision of Services Rules
- Increase in interest rate charge for late payment of service tax
- To broaden the tax base in Service Tax, sale of space or time for advertisements in broadcast media, extended to cover such sales on other segments like online and mobile advertising. Sale of space for advertisements in print media however would remain excluded from service tax.
- Service provided by radio-taxis brought under service tax.
- Services by air-conditioned contract carriages and technical testing of newly developed drugs on human participants brought under service tax.
- Provision of services rules to be amended and tax incidence to be reduced on transport of goods through coastal vessels to promote Indian Shipping industry.
- Services provided by Indian tour operators to foreign tourists in relation to a tour wholly conducted outside India to be taken out of the tax net and Cenvat credit for services of rent-a-cab and tour operators to be allowed to promote tourism.
- Service tax exempted on loading, unloading, storage, warehousing and transportation of cotton, whether ginned or baled.
- Services provided by the Employees’ State Insurance Corporation for the period prior to 1st July 2012 exempted, from service tax.
- Exemption available for specified micro insurance schemes expanded to cover all life micro-insurance schemes where the sum assured does not exceed Rs.50, 000 per life insured.
Other Important changes
Convergence with International Financial Reporting Standard (IFRS) by Adoption of the new Indian Accounting Standards (2nd AS) by Indian Companies:
- Indian companies will have to adopt the new Indian Accounting Standards (Ind AS) voluntarily from F.Y 2015-16 and on a mandatory basis from F.Y 2016-17