Union Budget 2014-15 at a
glance
I.
Income-tax
For Individuals,
Total Income Tax Rates (e)
Up to INR 250,000 (a),(b) NIL
INR 250,001 to
INR 500,000 (c) 10%
INR 500,001 to INR 1,000,000 20%
INR 1,000,001 and above (d)
30%
a. For a resident individual aged
between sixty and eighty, the basic exemption limit is INR 300,000.
b. For a resident individual aged
eighty or above, the basic exemption limit is INR 500,000.
c. Rebate from tax of
upto INR 2,000 or 100 per cent of the tax whichever is less available for a
resident individual whose total income is below INR 500,000.
d. 10 per cent surcharge is
applicable if the total income exceeds INR10,000,000.
e. A 3 per cent education cess is
applicable on income-tax (inclusive of surcharge, if any).
► Deduction under
section 80C on account of savings and investments increased by INR 50,000 from
INR 100,000 to INR 150,000.
► Deduction for
interest on housing loan for self-occupied house property increased by INR
50,000 from INR 150,000 to INR 200,000.
► Rates of corporate
tax remain unchanged for both domestic and foreign companies.
► DDT to be paid after grossing up
net profits distributed by the company or income distributed by mutual fund as
the case may be.
► Concessional rate of withholding
tax on interest on overseas borrowings extended to all LTBs (including LTIB).
Further, the time line for obtaining overseas borrowing has been extended for
three years up to 1 July 2017.
► Specified payments to a
non-resident to be allowed as deduction if tax is deducted during the financial
year and deposited on or before the due date of filing the return of income.
► Disallowance on account of non-deduction / late deduction and
deposition of tax at source extended to cover all payments to a resident on
which tax is deductible. Amount of disallowance to be restricted to 30% of the
amount of expenditure.
► Expenditure incurred on activities related to Corporate Social
Responsibility not to be allowed as deductible expenditure.
► Deduction for investment in new
plant and machinery
It is proposed that 15% of the cost of new plant and machinery
be allowed as deduction in each of the financial years 2014-15, 2015-16 and
2016-17 in which such investment exceeds INR 25 crores in that particular year.
► Capital gain exemption
on investment in a residential house property available only if the investment
is made in one residential house situated in India.
► Multiple year data to be permitted for comparability analysis
under TP.
► Range concept for determination of arm’s length price.
II.
Customs duty
► Peak rate of BCD
remains unchanged at 10%.
► Discretionary powers of CESTAT and
commissioner (appeals) for grant of stay of pre-deposit has been replaced with
a mandatory deposit of 7.5% for first appeal / 10% for second appeal of the
duty demanded or penalty imposed or both. The pre-deposit is
subject to upper ceiling limit of INR 100 million. The amendment is prospective
and not applicable to appeals and stay applications pending for decision prior
to enactment of Finance Bill.
► Discretionary power of CESTAT to
refuse admission of appeal has been increased from the existing limit of INR
50,000 to INR 200,000.
► Advance ruling option made
available to resident private limited companies.
► Free baggage allowance increased
from INR 35,000 to INR 45,000.
III.
Excise duty
► No change in the
basic Excise duty rate of 12.36%.
► Advance ruling option made
available to resident private limited companies.
► Mandatory pre-deposit prescribed
as 7.5% / 10% depending on the stage of appeal.
► Excise Valuation Rules have been amended to prescribe that
the sale price shall be deemed to be the transaction value even if goods are being
sold below cost (if no additional consideration flows from the buyer), provides
relief from the decision of the Supreme Court in case of Fiat India Private
Limited.
IV.
Service tax
► No change in
effective Service tax rate of 12.36%.
► Exemption from Service tax extended to services in relation
to serving of food or beverages by a canteen maintained in a factory having
facility of air conditioning or air heating.
► Advance ruling option available to
resident private limited companies.
► Mandatory pre-deposit prescribed
as 7.5%/10% depending on the stage of appeal.
► Location of service provider to be
the place of supply for an intermediary of goods.
► Powers granted to revenue officers
to undertake search and seizure.
► Graded increase in interest rates
for delay beyond six months (ranging from 24% to 30%).
V.
CENVAT
Credit
► Credit of inputs and input services now required to be availed
within six months from the date of invoice.
► LTUs no longer eligible to transfer credit availed on or after 11
July 2014.
VI.
CST
► No change in CST rate.
VII.
GST
► No GST implementation date announced, however commitment to
introduce GST affirmed.
VIII. Penalty under TP provisions
Penalty for failure to furnish any
document or information under transfer pricing provisions:
► Presently, penalty for failure of
filing or furnishing inaccurate tax withholding/tax collection range from INR
10,000 to INR 100,000. However, there is no mention as to who will levy such
penalty.
► Now, it has been provided that the
Assessing Officer may direct a taxpayer to pay such penalty.
This amendment will be effective
from 1 October 2014.
IX.
Withholding
tax / TDS
Provisions relating to withholding
tax on overseas borrowing:
► Presently, a lower
withholding tax rate of 5% applies on interest in respect of monies borrowed by
an Indian company in foreign currency or by issue of LTIBs at any time on or
after 1 July 2012 but before 1 July 2015 subject to certain conditions.
► Now, the benefit of
concessional rate of withholding tax has been extended to all LTBs including
LTIBs.
► Further, this
benefit of lower withholding tax rate has been extended for overseas borrowing
made up to 1 July 2017.
► Consequential
amendment is also proposed in section 206AA to ensure that this benefit of
lower withholding tax is extended to payment of interest on any LTBs referred
to in section 194LC.
The above amendment will be
effective from 1 October 2014.
Provisions relating to withholding
tax from non-exempt payments made under life insurance policy introduced:
► As per section 194-DA, any sum
received under a life insurance policy, which does not satisfy conditions laid
down in section 10(10D) will now be subject to withholding tax at the rate of
2%.
However, withholding tax would not
be attracted in case the sum paid during the year is less than INR 0.1 million.
The above amendment will be
effective from 1 October 2014.
X.
Other
Changes
► The Government has notified a
minimum pension of INR 1,000 per month for all members subscribing to the
Employee’s Pension Scheme, 1995.
► Further, the wage limit for
mandatory participation in the Employee’s Pension Scheme, 1995 has been
increased from INR 6,500 per month to INR 15,000 per month.
► Employees Provident Fund Organization
will launch the Uniform Account Number Service for contributing members to
facilitate portability of Provident Fund accounts.
► Limit for contribution to the
Public Provident Fund Scheme has been increased from INR 100,000 to INR
150,000.
► Sum of INR 500 crore for developing a Textile mega-cluster at
MYSORE and six other cities.
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