Highlights of the Budget Speech By Ved Jain and Associates
February, 29th 2016
Direct Tax 1. No changes in slab rates for individual taxation 2. Tax rebate for individuals having income upto Rs. 5,00,000 under section 87A raised from Rs. 2000 to Rs. 5000 3. Deduction of rent for non-salaried u/s 80GG increased to 60,000 from 24000 per annum, 4. Turnover limit u/s 44AD is increase to Rs. 2 crores form Rs. 1 crores 5. The presumptive taxation scheme extended to professionals with gross receipts up to Rs. 50 lakh with profit deemed to be 50%; 6. Accelerated depreciation wherever provided in IT Act will be limited to maximum 40% from 1.4.2017 7. Benefit of deductions u/s 35 for Research would be limited to 150% from 1.4.2017 and 100% from 1.4.2020 8. Benefit of section 10AA to new SEZ units will be available to those units which commence activity before 31.3.2020; 9. The weighted deduction under section 35CCD for skill development will continue up to 1.4.2020; 10. New manufacturing companies incorporated on or after 1.3.2016 to be given an option to be taxed at 25% + surcharge and cess provided they do not claim profit linked or investment linked deductions investment allowance or accelerated depreciation. 11. Lower the corporate tax rate for the next financial year i.e companies with turnover not exceeding Rs 5 crore, to 29% plus surcharge and cess; 12. Startups setup during April, 2016 to March, 2019 to be eligible for 100% deduction of profits for 3 out of 5 years. MAT to be still applicable; 13. 10% rate of tax on income from worldwide exploitation of patents developed and registered in India by a resident; 14. Complete pass through of income-tax to securitization trusts including trusts of ARCs. Securitisation trusts required to deduct tax at source; 15. Period for getting benefit of LTCG regime in case of unlisted companies is proposed to be reduced from 3 to 2 years; 16. NBFC shall be eligible for deduction to the extent of 5% of its income in respect of provision for bad and doubtful debts; 17. Deduction under Section 80JJAA ( Deduction for wages of Additional workmen) of the Income Tax Act will be available to all assesses who are subject to statutory audit under the Act; 18. 100% deduction for profits to an undertaking in housing project for flats upto 30 sq. metres in four metro cities and 60 sq. metres in other cities, approved during June 2016 to March 2019 and completed in three years. MAT to apply; 19. Deduction for additional interest of 50,000 per annum for loans up to Rs. 35 lakh sanctioned in 2016-17 for first time home buyers, where house cost does not exceed Rs. 50 lakh; 20. Additional tax @ 10% of gross amount of dividend will be payable by the recipients receiving dividend in excess of Rs 10 lakh per annum; 21. Surcharge to be raised from 12% to 15% on persons, other than companies, firms and cooperative societies having income above Rs. 1 crore; 22. Higher rate of Tax for non-furnishing of PAN not to apply to Non-residents 23. Tax to be collected at source at the rate of 1 % on purchase of luxury cars exceeding value of Rs. 10 lakh and purchase of goods and services in cash exceeding two lakh; 24. STT in case of ‘Options’ is proposed to be increased from .017% to .05%; 25. Domestic taxpayers can declare undisclosed income or such income represented in the form of any asset by paying tax at 30%, and surcharge at 7.5% and penalty at 7.5% ie. 45%. Declarants will have immunity from prosecution; 26. Surcharge levied at 7.5% of undisclosed income will be called Krishi Kalyan surcharge to be used for agriculture and rural economy; 27. New Dispute Resolution Scheme to be introduced. No penalty in respect of cases with disputed tax up to Rs. 10 lakh. Cases with disputed tax exceeding Rs. 10 lakh to be subjected to 25% of the minimum of the imposable penalty. Any pending appeal against a penalty order can also be settled by paying 25% of the minimum of the imposable penalty and tax interest on quantum addition; 28. Penalty rates rationalized to 50% of tax in case of underreporting of income and 200% of tax where there is misreporting of facts; 29. Disallowance will be limited to 1% of the average monthly value of investments yielding exempt income, but not exceeding the actual expenditure claimed under rule 8D of Section 14A of Income Tax Act; 30. Automatic stay of demand when assessee pays 15% of disputed demand & issue is pending before CIT(A); 31. Expansion in the scope of e-assessments to all assessees in 7 mega cities in the coming years and also ‘e-Sahyog’ to be expanded to reduce compliance cost.
Indirect Tax 32. Krishi Kalyan Cess, @ 0.5% on all taxable services, w.e.f. 1 June 2016, Input tax credit of this cess will be available for payment of this cess; 33. Exemption from service tax on construction of affordable houses up to 60 square metres under any scheme of the Central or State Government including PPP Schemes; 34. Exemption of service tax on services provided under Deen Dayal Upadhyay Grameen Kaushalya Yojana and services provided by Assessing Bodies empanelled by Ministry of Skill Development & Entrepreneurship; 35. Additional options to banking companies and financial institutions, including NBFCs, for reversal of input tax credits with respect to non- taxable services; 36. Reduce service tax on Single premium Annuity (Insurance) Policies from 3.5% to 1.4% of the premium paid in certain cases; 37. Exemption of Service tax on general insurance services provided under ‘Niramaya’ Health Insurance Scheme launched by National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disability; 38. Revision of return extended to Central Excise assesses; 39. Customs Act to provide for deferred payment of customs duties for importers and exporters with proven track record 40. Basic custom and excise duty on refrigerated containers reduced to 5% and 6% 41. Customs Single Window Project to be implemented at major ports and airports starting from beginning of next financial year; 42. Filing of baggage Declaration only for those carrying dutiable goods 43. Increase in free baggage allowance for international passengers; 44. Infrastructure cess, of 1% on small petrol, LPG, CNG cars, 2.5% on diesel cars of certain capacity and 4% on other higher engine capacity vehicles and SUVs. No credit of this cess will be available nor credit of any other tax or duty be utilized for paying this cess; 45. Excise on readymade garments with retail price of Rs. 1000 or more raised to 2% without input tax credit or 12.5% with input tax credit; 46. Clean Energy Cess’ levied on coal, lignite and peat renamed to ‘Clean Environment Cess’ and rate increased from Rs. 200 per tonne to Rs. 400 per tonne; 47. Excise duties on various tobacco products other than beedi raised by about 10 to 15%; 48. Monetary limit for deciding an appeal by a single member Bench of ITAT enhanced from Rs. 15 lakhs to ` 50 lakhs. 49. 11 new benches of Customs, Excise and Service Tax Appellate Tribunal (CESTAT);
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