Highlights of Union Budget 2015- Direct Tax Perspective

Section /Schedule

Head

Amendment/New Provision

Effective date

Part III to Schedule I

Advance taxes & TDS u/s 192

Advance taxes for the FY 2015-16 and TDS u/s 192 from salary shall be made at the following rates:

• In case of Individuals, HUF, AOP/BOI & Artificial juridical person:

# In case of individual being woman resident in India and below the age of 60 years at any time during the PY, the basis exemption limit has been retained at Rs. 250,000 [in par with men assesses].

# In case of individual, being resident in India, who is age of 60 years or more but less than 80 Years at any time during the PY, the basic exemption limit is same i.e., Rs. 3,00,000.

@ In case of individual, being resident in India, who is age of 80 years or more at any time during the PY, the basic exemption limit is same at Rs. 5,00,000.

In case of Partnership firms [Including LLP], the rate of tax shall be 30%.

In case of companies, the rate of taxes shall be same as specified in the Finance Act 2014. Surcharge shall be levied @ 7% [earlier 6%] [2% in case of non domestic company] in case of domestic companies if total income exceeds Rupees One Crore but does not exceed Rs 10 Crores. If Total Income exceeds Rupees Ten Crores, surcharge shall be levied @ 10% [5% in case of non domestic company]

Surcharge has been increased to 12% in all cases if total income of the assessee exceeds Rs. One crore subject to marginal relief.

Education cess and SHEC shall be continued to be levied in all cases.

1-4-2015

195

TDS on Payment to Non resident

•TDS on amount paid to Non Resident Person [other than Company] shall be increased by surcharge of 12% where the income paid or likely to be paid and subject to deduction exceeds one crore rupees.

1-4-2015

269SS

Loan accepted or taken

•Section 269SS has been amended so as to include the following:

-No Person shall take or accept from any other person any specified sum otherwise than by way of account payee cheque or account payee bank draft or use of electronic clearing system through a bank account-

- if such specified sum or aggregate amount of such sum so taken or accepted; AND

-any sum taken or accepted earlier by such person from the depositor and remaining unpaid as on the date of taking such specified sum,

Is Rs 20,000 or More

For the purposes of this section –

“Specified Sum” means any sum or money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place.

1-6-2015

269T

Repayment of Loan

• Section 269T has been amended so as to provide that no person shall repay any specified advance received by it otherwise than by way of account payee cheque or bank draft or by way of ECS, if the aggregate amount of specified advances including interest are Rs 20,000 or more

• The specified advance shall mean any sum of money in the nature of an advance, by whatever name called, in relation to transfer of an immovable property whether or not the transfer takes place.

1-6-2015

Chapter XA

GAAR

• Provisions relating to General Anti Avoidance Tax has been deferred and made applicable to Income of FY 2017-18

1-4-2015

32AD

Additional Investment Allowance

• Additional Investment Allowance of amount equal to 15% of the cost of new asset acquired and installed by the assessee if -

-he sets he sets up an undertaking or enterprise for manufacture or production of any article or thing on or after 1st April, 2015 in any notified backward areas in the State of Andhra Pradesh and the State of Telangana; AND

- the new assets are acquired and installed for the purposes of the said undertaking or enterprise during the period beginning from the 1st April, 2015 to 31st March, 2020

This deduction is available over and above the existing deduction available under Section 32AC of the Act.

1-4-2015

32(1) (iia)

Additional Depreciation

• Additional Depreciation @ 35% of the Cost of New Plant & Machinery shall be allowed to manufacturing undertaking or enterprise which is set up in notified backward area of State of Andhra Pradesh and Telangana.

1-4-2015

194LD

TDS on Interest to FII and QFI

• Lower Withholding tax at the rate of 5% in case of interest payable to FII and QFI on their investments in Government Securities and Rupee denominated Corporate Bonds has been extended upto 30th June 2017

1-6-2015

115A

Tax on Royalty and Fees for Technical Services

• Tax on Royalty or Fees for technical services paid to non resident tax payer has been reduced to 10% of Gross Amount of Such Income

1-4-2015

80JJAA

Deduction for employment of new workmen

• Deduction @ 30% of additional wages paid to new regular workmen employed by Indian Company [deriving profits from manufacture of goods in a factory] shall be allowed for three AYs.

• Section is amended to as to extend the said benefit to all categories of assessees having manufacturing units

• Section is amended to provide benefit of deduction to small assessees employing 50 Workmen. [Additional Wages mean the wages paid to new regular workmen in excess of 50 Workmen employed during the previous year]

1-4-2015

Second Proviso to Section 32(1)

Depreciation

• If any new asset is acquired and put to use for less than 180 days during the year, additional depreciation shall be allowed @ 50% in year of acquisition and installation and balance 50% in immediately succeeding previous year

1-4-2015

9

• Recommendation of Shome Committee implements as regards taxability of income arising from transfer of capital asset being share or interest in a entity or company incorporated outside india where share or interest derives, directly or indirectly, its value from assets located in India.

1-4-2015

92BA

Specified Domestic Transaction

• The limit of aggregate of specified domestic transaction entered into by assessee in the previous year has been increased to Rs 20 Crores for the transaction to be treated as ‘Specified Domestic Transaction’

1-4-2015

2(15)

Definition of Charitable Activity

• Definition of Charitable Purpose has been amended to provide that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity, unless,-

(i) such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility; and

(ii) the aggregate receipts from such activity or activities, during the previous year, do not exceed twenty percent. of the total receipts, of the trust or institution undertaking such activity or activities, for the previous year

1-4-2015

255(3)

Disposal Limits of Single Bench of ITAT

• A Bench constituting single member may dispose a case where total income of assessee as computed by AO does not excees Rs 15 Lakhs [Earlier Rs 5 Lakhs]

1-6-2015

Wealth tax Act 1957

• Levy of Wealth tax under Wealth Tax Act, 1957 is abolished w.e.f. 1-4-2015

• It is also proposed that information relating to assets which is currently required to be furnished in the wealth-tax return shall be captured by suitably modifying income-tax return.

1-4-2015

80C

Deduction

• Any sum paid or deposited during the year in Sukanya Samriddhi Scheme in the name of any Girl Child of any individual or in the name of girl child for whom such individual is a legal guardian, shall be eligible for deduction under this section

1-4-2014

Retrospective

10(11A)

Exemption

• An payment from any account opened in accordance with the Sukanya Samriddhi Account Rules, 2014 shall not be included in the total income of the assessee. As a result, the interest accruing on deposits in, and withdrawals from any account under the scheme would be exempt.

1-4-2014

Retrospective

80D

Mediclaim

• Deduction Limit has been raised to Rs 20,000 for Individuals and HUFs and Rs 30,000 for Senior Citizens

• If Very Senior Citizens [being resident in India and aged 80 years or More] do not have any health Insurance and any medical expenditure is incurred in respect of very senior citizen, such expenditure not exceeding Rs 30,000 shall be allowed as deduction.

1-4-2015

80DDB

Deduction for medical treatment of certain chronic and protracted disease

• Relaxation has been given as regards obtaining a certificate from Doctors working in a Government Hospital. it is proposed to amend section 80DDB so as to provide that the assessee will be required to obtain a prescription from a specialist doctor for the purpose of availing this deduction.

• Further, a higher deduction of Rs 80,000 shall be allowed for expenses incurred on medical treatment of very Senior Citizen [being resident in India and aged 80 years or More]

1-4-2015

80DD and 80U

Deduction for Person with Disability

• Deduction Limits u/s 80U and 80DD has been increased from Rs 50,000 to Rs 75,000 for person with disability.

• Deduction Limit has been increased from Rs 1,00,000 to Rs 1,25,000 for persons with severe disability

1-4-2015

80CCC

Deduction for Annuity Plan of LIC

• Deduction Limit Increased from Rs 1,00,000 to Rs 1,50,000 within the overall limit prescribed us 80CCE

1-4-2015

80CCD

Contribution to NPS

• Deduction Limit has been increased from Rs 1,00,000 to Rs 1,50,000

• Additional Deduction of Rs 50,000 provided in respect of any amount paid for contribution made by any individual assessees to NPS

1-4-2015

203A

TAN

• Section 203A amended to provide that the requirement of obtaining and quoting TAN shall not apply to notified deductors and collectors.

1-6-2015

80G

Deduction for donations made

•100% deduction allowed for donation made to National Fund for Control of Drug Abuse

1-4-2015

80G

Deduction for donations made

• 100% Deduction allowed for donations made by DOMESTIC DONORS to Clean Ganga Fund [Any sum paid by way of CSR u/s 135 of Companies Act, 2013 will not be eligible for deduction.

• 100% Deduction allowed for donations made by anu Donor to Swacch Bharat Kosh [Any sum paid by way of CSR u/s 135 of Companies Act, 2013 will not be eligible for deduction[

1-4-2014

Retrospective

9

Interest to Non Residents

• in the case of a non-resident, being a person engaged in the business of banking, any interest payable by the permanent establishment in India of such non-resident to the head office or any permanent establishment or any other part of such non-resident outside India shall be deemed to accrue or arise in India and shall be chargeable to tax in addition to any income attributable to the permanent establishment in India and the permanent establishment in India shall be deemed to be a person separate and independent of the non-resident person of which it is a permanent establishment and the provisions of the Act relating to computation of total income, determination of tax and collection and recovery would apply

1-4-2015

11

Accumulation of Income by Charitable Trusts

• Accumulation of income other than 15% shall be allowed provided prescribed Form 10 is filed before due date of filing return of income.

• Benefit of accumulation of 15% of Income shall not be available if return of income is not filed within due date of filing of return of income

1-4-2015

115JB

• MAT

• Share of a Member of AOP, in the income of the AOP, on which no income–tax is payable in accordance with the provisions of section 86 of the Act, shall be excluded while computing the MAT liability of the member [Company] under 115JB of the Act

• The expenditures, if any, debited to the profit and loss account, corresponding to such income (which is being proposed to be excluded from the MAT liability) are also proposed to be added back to the book profit for the purpose of computation of MAT.

1-4-2015

151

Saction for Notice for Reassessment

• No Notice u/s 148 shall be issued by any AO upto Four Years from the end of relevant assessment year without the approval of Joint Commissioner

• No Notice u/s 148 shall be issued by any AO beyond Four Years from the end of relevant assessment year without the approval of Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner

1-6-2015

263

Revision

• The amendment provides that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner,—

(a) the order is passed without making inquiries or verification which, should have been made;

(b) the order is passed allowing any relief without inquiring into the claim;

(c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or

(d) the order has not been passed in accordance with any decision, prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person.

1-6-2015

194C(6)

TDS on Payment to Transporters

• Relaxation from non deduction of TDS shall be allowed only to payment made to such transporters who are engaged in the business of transport and who is eligible to compute income as per provisions of Section 44AE of the Act [i.e., a person who is not owning more than 10 goods carriage at any time during the previous year] AND who has given a declaration to this effect along with his PAN.

• TDS has to be deducted in all other cases of payments made to transporters [Whether payment made by person engaged in business of transport or otherwise

1-6-2015

194A

TDS on Interest

• The definition of Time Deposit has been amended to include Recurring Deposit within its purview.

• TDS to be deducted if Interest payment on Time Deposit exceeds Rs 10,000

• Co Operative Banks shall be required to deduct tax at source on Interest Payment on Time Deposits of its members.

• Computation of Interest Income for the purposes of deduction of tax under Section 194A of the Act shall be made with reference to income credited or paid by the banking company or co operative bank or public company which has adopted core banking solutions. The threshold limit of interest per payee for the purposes of TDS shall be computed bank wise and not branch wise.

• Deduction of tax on interest paid on compensation amount awarded by the Motor Accident Claim Tribunal shall be made only AT THE TIME OF PAYMENT if the amount of payment or aggregate of such payments exceeds Rs 50,000

1-6-2015

200A

Processing of TDS Returns

• Section amended to provide computation of fee payable under Section 234E of the Act at the time of processing of TDS Statement under Section 200A of the Act

1-6-2015

206C

TCS

• Section amended to allow collector of tax at source to furnish TCS Correction Statement

1-6-2015

195

TDS on Payment to Non resident

• Penalty of Rs 1,00,000 shall be levied in case of non furnishing of information or furnishing of incorrect information of prescribed sum except where reasonable cause is shown

1-6-2015

6

Residence of Person

A person being a company shall be resident in India in any previous year, if-

-it is an Indian Company; or

-its place of effective management, at any time in that year, is in India

• place of effective management to mean a place where key management and commercial decisions that are necessary for the conduct of the business of an entity as a whole are, in substance made.

• In due course, a set of guiding principles to be followed in determination of POEM would be issued for the benefit of the taxpayers as well as, tax administration.

1-4-2015

288

Auditor Disqualification

• Section 288 of the Act is amended to provide that an Chartered Accountant who is not eligible to be appointed as auditor of a company as per the provisions of sub-section (3) of section 141 of the Companies Act, 2013 shall not be eligible for carrying out any audit or furnishing of any report/certificate under any provisions of Income Tax Act in respect of that company.

• In case of Non Companies, a Chartered Accountant shall not be eligible for carrying out any audit or furnishing of any report/certificate in following cases –

-In case assessee is HUF, if he is a member of such HUF

-In case assessee is AOP, if he is a member of such AOP

-In case assessee is a Firm, if he is a partner of such firm

-In case assessee is a trust or institution, if he is amongst any person referred to in clause (a), (b),(c) and (cc) of Section 13(3);

-If he is relative of any person enlisted hereinbefore

-If he is officer or employee of any assessee

-If he is a partner, or in employment, of any officer or employee of the assessee

-If he has any business relation of prescribed nature, whether directly or indirectly, with the assessee

-If he has become insolvent

-if he has been convicted by a court for any offence involving fraud

-If he has been convicted by a court of an offence involving fraud and a period of ten years has not elapsed from the date of such conviction.

-If he or his relative or partner-

1. Is holding any security of, or interest in, the assessee [Exemption of Value of Rs 1,00,000 provided to a RELATIVE ONLY].

2. Is indebted to the assessee [Exemption of Value of Rs 1,00,000 provided to a RELATIVE ONLY].

3. Has given any guarantee or provided any security in connection with the indebtedness of any third person to the assessee. [Exemption of Value of Rs 1,00,000 provided to a RELATIVE ONLY].

1-6-2015

271

Penalty for concealment of income

• “Amount of Tax Sought to be evaded” shall be sum of tax sought to be evaded under general provisions and tax sought to be evaded under Section 115JB or 115JC.

1-4-2015