CBDT has
issued Circular 01/2015 on 21st January 2015 as explanatory notes to
the Provisions of Finance Act , 2014 Applicable for Asst Year 2015-16.
Important Changes are here under:
Rates
of Income Tax as per Finance Act, 2014
Income-tax
is required to be deducted for the financial year 2014-15 (i.e. Assessment Year
2015-16) at the following rates
1.
In the
case of every individual, Hindu undivided Family, AOP, Body of individuals or
artificial juridical person ( other than a co-operative society, firm, local
authority and company):-
A. Normal Rates of Tax:
|
S.no.
|
Total Income
|
For Individual, HUF and AOP
|
For Senior Citizen Age Above 60but less than 80 years
|
For Super Senior above the Age of 80 Years
|
|
1
|
Up to Rs.2.5
Lakhs
|
Nil
|
Nil
|
Nil
|
|
2
|
More than Rs.2.5
lakhs & Upto Rs. 3 Lakhs
|
10%
|
||
|
3
|
More than Rs 3 lakhs & Upto Rs 5 lakhs
|
10%
|
||
|
4
|
More than Rs 5 lakhs & Upto Rs 10 lakhs
|
20%
|
20%
|
20%
|
|
5
|
More than Rs 10 lakhs
|
30%
|
30%
|
30%
|
2.
Co-operative
Societies:-
The rates of Income Tax are as
follows:-
|
Income Chargeable to Tax
|
Rate
|
|
Up to Rs 10000
|
10%
|
|
Rs 10000-Rs 20000
|
20%
|
|
Exceeding Rs 20000
|
30%
|
3. Firms and Local Authorities : Income Tax is @ 30%
Surcharge of Income Tax
The amount of income-tax shall be
increased by a surcharge @10% of the income-tax on payments to an individual
taxpayer, if the total income exceeds Rs 1 crore during FY 2014-15 (AY
2015-16).
However the amount of Surcharge shall
not exceed the amount by which the total income exceeds Rs 1 crore and if
surcharge so arrived at, exceeds such amount (assessee‘s total income minus one
crore) then it will be restricted to the amount of total income minus Rupees
one crore.
Eg. In case of a resident individual age below 60 years,
calculation of Tax liability:-
Total Income Income Tax and Surcharge
ü
Rs 10000000 Rs
28,25,000
ü
Rs 10100000 Rs
28,55,000 + Rs 285500=Rs 3140500 Restricted to Rs 2925000
ü
Rs 10200000 Rs
28,85,000 + Rs 288500=Rs 3173500 Restricted to Rs 3025000
ü
Rs 10400000
Rs 29,45,000
+ Rs 294500=Rs 3239500 Restricted to Rs 3225000
ü
Rs 10500000 Rs
29,75,000 + Rs 297500=Rs 3272500 No Restriction
E.
Cess & SHE Cess on Income tax: 2%
and 1% of the income-tax respectively. No
marginal relief shall be available in respect of E. Cess and SHE Cess.
4.
Companies:-
Domestic Other Than
Domestic
Income
Tax 30%
40%
Surcharge
Taxable income
Exceeding Rs 1 crore but > Rs 10
crores 5% 2%
Exceeding Rs 10 crores 10% 5%
Surcharge on Additional Income-tax :-
Where additional income-tax has to be paid u/s 115-O or 115-QA or 115R
(2) or 115TA of the Act, that is to say, on distribution of dividend by domestic companies or distribution of income by a
· - company
on buy-back of shares from shareholders or
· - mutual fund to its unit holders or
· - securitization trust to its investors
the additional tax so payable
shall be increased by a surcharge of 10% of such tax.
Certain
Amendments with their explanations:-
Raising
the limit of deduction under section 80C of the Income-tax Act
The limit of
deduction U/s 80C has been raised from Rs.1
lakh to Rs.1.5 lakh. So, consequential amendment made in section
80CCE (the payments / contributions made u/s 80C,
80CCC and 80CCD) of the Act. The limit of employer’s contribution to a
pension scheme is retained at Rs. 1 lakh u/s 80CCD.
Deduction
from income from house property
There has been appreciation in the
value of house property and cost of finance has also gone up so, section 24(b) has provided to increase the limit of deduction on account
of interest in respect of property referred to
section 23(2) of the Income-tax Act from Rs.1.50 Lac to Rs 2.00 Lac .
Roll back
provision in Advance Pricing Agreement Scheme
For solving the issues relating to the
calculation of ALP Roll back mechanism is made. Sec. 92CC of the I.Tax Act has
been amended to provide for roll back mechanism in the Advance Pricing
Agreement scheme. The “roll back” provisions refer to the applicability of the
methodology of determination of Arm's Length Price, or the ALP, to be applied
to the international transactions which had already been entered into in a
period prior to the period covered under an APA.
Extension
of tax benefits under section 80CCD of the I.Tax Act to private sector
employees
For employees in the private sector,
the date of joining the service is not relevant for joining the New Pension
Scheme, So Now amended Sec. 80CCD provide that the condition of the date of
joining the service on or after 1.1.2004 is not applicable to them for the
purposes of deduction under the said section.
Capital
gains arising from transfer of an asset by way of compulsory acquisition
There was uncertainty about the year
in which the amount of compensation received in pursuance of an interim order
of the court is to be charged to tax, due to court orders.
Sec. 45(5) of the Income-tax Act, has
been amended to provide that the amount of compensation received in pursuance
of an interim order of the court/ Tribunal/other authority shall be deemed to
be the income chargeable under the head ‘Capital gains’ in the previous year in
which the final order of such court, Tribunal or other authority is made.
Transfer
of Government Security by one non-resident to another nonresident
Explanation:
- To facilitate listing and trading of Government
securities outside India. A new clause(viib) has been inserted in Sec 47 of the
I.Tax Act so as to provide that any transfer of a capital asset, by a non-resident to another non-resident
shall not be considered as transfer for the purpose of charging capital gains.
Disallowance
of expenditure for non- deduction of tax at source
Explanation:-Only up to
the amount of TDS the expenditure should be disallowed when tax is not
deducted, before amendment full amount is disallowed which is not fair on the
part of Tax payer.
So, Section 40(a)(ia) amended to
provide that the disallowance shall be restricted to 30% of the amount of
expenditure claimed in case of non-deduction of TDS or non-payment of TDS on payments made to
residents liable for TDS.
Corporate
Social Responsibility (CSR)
Sec.
37(1) : Any expenditure by an assessee on the activities relating to CSR
shall not be deemed to have been incurred for the purpose of business and hence
shall not be allowed as deduction . However, the CSR expenditure which is of
the nature described in section 30 to section 36 of the Income-tax Act shall be
allowed as deduction under those sections subject to fulfillment of conditions specified.
Explanation:-
CSR expenditure include
All expenditure including contribution to
corpus projects or programs relating to CSR activities.
·
CSR expenditure, being an application of
income, is not incurred wholly and exclusively for the purposes of carrying on
business. So,CSR expenditure are not allowed as deduction for the purposes of
computing taxable income of a company.
·
By CSR Companies are helping the Government to
share the burden of social services. If such expenses are allowed as tax deduction,
this would result in subsidizing of around one-third of such expenses by the
Government by way of tax expenditure.
Taxability
of advance for transfer of a capital asset
Prior to the amendment any advance
retained or received was reduced from Cost of acquisition of the asset / the written
down value / the fair market value of the asset.
New
Section 56(2)(ix) : Any sum of money, received as an advance
or otherwise in the course of negotiations for transfer of a capital asset
shall be taxable under the head ‘income from other sources’ if such sum is forfeited
and the negotiations do not result in transfer of such capital asset.
Capital
gains exemption on investment in Specified Bonds
Explanation:
-
A proviso in section 54EC (1) of the
Income-tax Act has been inserted to provide that the investment made by an
assessee in the long-term specified asset, out of capital gains arising from
transfer of one or more original assets, during the financial year in which the
original asset or assets are transferred and in the subsequent financial year does not exceed fifty lacs rupees.
Contributed by Ms Tanya Gagneja
