Union
Budget 2015-16 at a glance
I.
Income Tax
For
Individuals
There is no change in Income Tax slab rates as against for the
F.Y.2014-15.
Wealth Tax has been abolished w.e.f. Financial Year 2015-16 and
onwards.
•
The surcharge for assessees whose total income is more than INR 10 Million is
increased to 12% (as against 10% earlier). Thus, the Maximum Marginal Tax Rate
(‘MMR’) in such cases would increase from 33.99% to 34.61%.
•
Contributions/ investments made by an individual in
the name of girl child to notified securities/schemes will be eligible for
deduction under section 80C.
•
Interest earned on Sukanya Samriddhi account will
also be exempt.
•
For salaried individuals, exemption on account of
transport allowance is proposed to be doubled to INR 1,600 per month from the
existing limit of INR 800 per month.
•
Limit of deduction of Health Insurance Premium
increased from INR 15,000 to INR 25,000 and for Senior Citizens, the exemption will
be INR 30,000.
•
Additional deduction of INR 50,000 for contribution
to new pension scheme is proposed u/s 80CCD.
•
It is proposed that in case of premature withdrawals of INR 30,000 or more,
where employers manage their own private provident fund trust, tax will be
withheld (TDS) @10%. This amendment is proposed to be effective from June 1,
2015.
•
It is proposed that individuals not having taxable income and receiving
payments under LIC upto INR 100,000 can claim relief of non-deduction of tax at
source (TDS) by submitting Form 15G / 15H.
For
Domestic Company / Partnerships
Tax
rates remain unchanged at 30%* (plus applicable surcharge and education cess).
•
The rate of surcharge is increased by 2% to 7% / 12% (as against 5% / 10%
earlier) resulting in an increase in effective tax rates. Note: Effective tax
rate for income upto INR 10 Million remains unchanged at 30.9%.
* It is proposed to reduce corporate tax rates from 30% to 25%
over the next 4 years in a phased manner starting from Financial Year 2016-17
•
The existing provisions provide for a special deduction for employment of new
workmen by an Indian company deriving profits from manufacture of goods in a
factory. The quantum of deduction allowed is 30% of additional wages paid to
new regular workmen employed by the Indian company in such factory for 3 years,
including the year in which such employment is provided. Further, the term
‘additional wages’ is defined to mean wages paid to new regular workmen in
excess of 100 workmen employed during the previous year.
•
It is proposed to extend the benefit of deduction towards additional wages to
all assessees having manufacturing units (rather than restricting it to Indian
companies). Further, to enable smaller units to claim this deduction, it is
proposed to extend the benefit to units employing even 50 regular workmen
(instead of 100 regular workmen).
•
It is proposed to amend the period for which interest is payable under section
234B in case of reassessments and accordingly, the period for which the
interest is to be computed will begin from the 1st day of the assessment year
to the date of the reassessment order.
• Presently, all transporters, irrespective of their size, are
eligible to claim exemption from withholding tax (TDS) by furnishing their PAN
to the deductor/payer. An amendment has been proposed and the exemption shall
now be available only to such transporters who own less than 10 goods carriage
vehicles at any time during the previous year and who have also furnished a
declaration to this effect along with PAN to the deductor/payer. This amendment
will take effect from 1st June 2015.
•
The definition of charitable purpose has been expanded to include ‘yoga’.
II.
Indirect Taxes
Tentative
reiteration of GST rollout by 1st April 2016.
Central Excise & Customs
• General rate of excise duty rounded off to 12.50% as against
the present rate of 12.36% by abolishing 2% education cess and 1% secondary and
higher education cess.
•
Consequently, the Counter Veiling Duty on imports also will become 12.50% or
any other special rates as prescribed by the CBDT.
•
Customs duty cess @3% will continue to attract on all imports.
The above changes will be effective from 1st March 2015.
•
Inputs and capital goods are allowed to be sent directly to job worker’s
premises at the direction of manufacturer or service provider.
Service Tax
• Service Tax rate increased from 12.36 percent to 14 percent and
as soon as the increased tax rate becomes effective, education cess and
secondary and higher education cess will no longer be applicable on service
tax.
• A new chapter VI has been inserted in the Finance bill to levy
Swachh Bharat Cess on all the taxable services @2% of the value of taxable
services. The said SBC may not be eligible for Cenvat Credit as there are no
amendments proposed in this Finance Bill for the Cenvat Credit Rules.
• Based on the above, all the taxable services will cost 16% more towards
Service tax and SBC.
• In
future, all services provided by Government or local authority to business
entities will attract service tax levy.
• To
ease the procedure for Reverse Charge Mechanism, the new Finance Bill proposed
to bring the following services under the full reverse charge mechanism against
the current mode of partial reverse charge mechanism:
◦ Supply of manpower
services; and
◦ Security services.
The above mentioned revised tax rates and amendments will be
effective from a date to be notified by the Central Government after the
enactment of Finance Bill.
Cenvat Credit
•
Time limit for availment of CENVAT credit on inputs and input services
increased from 6 months to 1 year from the date of issuance of invoice, bill or
challan.
•
‘Exempted goods’ to include ‘non-excisable goods’ removed from the factory for
a price, which means that the proportionate CENVAT credit pertaining to inputs
or input services used in or in relation to the manufacture of non-excisable
goods is not allowed.
•
Capital goods can remain with job worker for a period of 2 years (instead of 6
months allowed earlier) without requiring the reversal of CENVAT credit availed
by the manufacturer.
•
Credit of service tax paid by the recipient of service under partial reverse
charge can be taken immediately on payment of tax; there is no need to wait for
the payment of full value of service.
The above changes will be effective from 1 April 2015
Note: I have considered only the changes which are
affecting the Individuals and Employers in normal circumstances. Please refer
the Finance bill or consult for specific cases.
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