The Finance Minister, Mr.
Arun Jaitley, presented the Union Budget for 2015-16 on 28th
February, 2015. We hereby present the highlights of the same for your quick
perusal.
1. Income Tax
1.1 Individuals
1.1.1 No change in Income Tax Slab
Rates. The old tax slabs continue, as reproduced hereunder.
|
Total Income (Rs.)
|
Tax Rate (AY 2016-17)
|
|
0
– 2,50,000
|
Nil
|
|
2,50,000
– 5,00,000
|
10%
|
|
5,00,000
– 10,00,000
|
20%
|
|
Above
10,00,000
|
30%
|
|
|
|
|
Basic
Exemption Limit for Senior Citizens between the age of 60 to 80 years is Rs.
3,00,000, and that for Super Senior Citizens above the age of 80 years is Rs.
5,00,000.
|
|
Surcharge
of 10% of Income Tax if Net Income exceeds Rs. 1 crore subject to Marginal
Relief.
|
|
E.
Cess of 2% and S.H.E. Cess of 1% on Income Tax and Surcharge continue.
|
|
Rebate u/s 87A for a resident individual whose
income does not exceed Rs. 5,00,000 = 100% of Income Tax calculated before E.Cess
or Rs. 2,000 whichever is less.
|
1.1.2 Additional
Surcharge of 2% of the Income Tax has been levied on the Super Rich having
Total Income exceeding Rs. 1 crore.
1.1.3 Section 80D: The deduction limit for
spending on medical insurance premium has been raised from Rs. 15,000 to Rs. 25,000
for individuals and HUF, and from Rs. 20,000 to Rs. 30,000 for senior citizens.
1.1.4 Medical
expenditure up to Rs. 30,000 to be allowed for super senior citizens (over 80
years) under Section 80D.
1.1.5 Section 80DDB:
Limit of deduction raised to Rs. 80,000 for expenditure incurred on medical
treatment of certain chronic and protracted diseases for super senior citizen
(over 80 years). A prescription from a specialist doctor must be obtained for
claiming this deduction.
1.1.6 Section 80DD and
80U: Limit of deduction on account of medical treatment of a dependent
suffering from disability raised from Rs. 50,000 to Rs. 75,000. In case of
severe disability, the limit has been raised from Rs. 1,00,000 to Rs. 1,25,000.
1.1.7 Section 80CCD:
Additional deduction of Rs. 50,000 for contribution made towards National
Pension Scheme, raising the limit to Rs. 1,50,000.
1.1.8 Sukanya Samriddhi
Account Scheme: It is a small savings instrument for the welfare of a girl
child, investment in which will be eligible for deduction under Section 80C.
The interest accruing on the deposit and withdrawal as per the specified Rules
will be exempt from tax.
1.1.9 Section 80G:
100% deduction in respect of donations made to the Swachh Bharat Kosh, the
Clean Ganga Fund and the National Fund for Control of Drug Abuse.
1.1.10 Exemption
limit of Transport Allowance doubled from Rs. 800 per month to Rs. 1600 per
month.
1.2 Corporate Assessees and Partnership Firms
1.2.1 Corporate Tax Rate proposed to be
reduced from 30% to 25% over the next 4 years in a phased manner.
1.2.2 Certain exemptions may be
withdrawn for corporate assessees, details of which will be announced in due
time.
1.2.3 No change in tax rates for
Partnership Firms.
1.2.4 The definition of “company resident in India” has been amended to
provide that any company incorporated outside India shall be regarded as a
resident in India in a previous year if its place of effective management, at any time during the year, is in
India. Further, it is proposed to define the 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 made.
1.3 Other Important Points
1.3.1 Wealth Tax abolished.
1.3.2 Withholding Tax Rates on payments
for Royalties and Fees for Technical Services have been reduced from 25% to
10%.
1.3.3 Threshold limit for applicability
of Domestic Transfer Pricing provisions increased from Rs. 5 crores to Rs. 20
crores.
1.3.4 Quoting of PAN mandatory for all
transactions above Rs. 1,00,000.
1.3.5 Cash acceptance of more than Rs 20,000 for
purchase of immovable property to be prohibited.
1.3.6 Penalty of Rs. 1,00,000 to be
imposed for incorrect particulars furnished in Form 15CA, 15CB for foreign
remittances.
1.3.7 Advancement of “yoga” has been
added in the definition of charitable activities allowed to be carried out by
charitable trusts.
1.3.8 Activities carried out by Fund
Managers of offshore funds in India shall not constitute a business connection
of such offshore funds in India subject to the fulfillment of prescribed
conditions. (This change has been proposed as many Fund Managers are carrying
out their operations from outside India as till now, the presence of Fund Manager
in India leads to the Fund being taxed as “resident in India” on the basis of
control and management being in India.)
1.3.9 Implementation of GAAR postponed
by 2 years and GST postponed by 1 year.
2. Service
Tax
2.1 Rate of Service Tax on the value of
all services is proposed to increase from existing 12.36% (including Education
Cess and SHE Cess) to flat rate of 14%
w.e.f. date of enactment of Finance Bill, 2015.
2.2 The definition of “consideration” has been amended to include “any reimbursable expenditure or cost incurred by the service provider and charged.”
2.3 It has been
proposed that all services other than services specified in Section 66D(i) to
(ii) when provided by Government, or a local authority to a business entity be
charged to Service Tax. Thus making all services
provided by the Government to a Business Entity taxable (effective date to
be notified).
2.4 Further
w.e.f. 1st April, 2015, services of construction, erection,
commissioning, installation, completion, fitting out, repair, maintenance,
renovation, or alteration of certain
specified building of Government, a local authority or a governmental
authority have been made taxable in relation to following buildings:
- a civil structure or any other original works
meant predominantly for use other than for commerce, industry, or any other
business or profession;
- a structure meant predominantly for use as (i)
an educational, (ii) a clinical, or (iii) an art or cultural establishment;
- a residential complex predominantly meant for
self-use or the use of their employees or other persons specified in the
Explanation 1 to clause 44 of section 65 B of the said Act.
2.4 For Travel Agents paying Service Tax as per Rule 6 of the Service Tax
Rules, 2014, booking tickets for passenger travel by air, the rate of Service
Tax has been increased from 0.6% to 0.7% of the Basic Fare in the case of
domestic travel, and from 1.2% to 1.4% of the Basic Fare in the case of
international bookings.
2.5 Exemption to folk artistes has been restricted and shall be available only when
the consideration charged for such performance is not more than Rs. 1,00,000
and such service is not provided as a brand ambassador.
2.6 Services of
transportation of foodstuff by rail
or a vessel or a GTA has been restricted and shall now be
available in relation to milk, salt and food grain including flours, pulses and
rice. Accordingly, transportation of all other foodstuff including tea, coffee,
jaggery, sugar, milk products, edible oil, etc. shall be taxable.
2.7 Services of transportation of goods of exporters by Goods Transport Agency (GTA)
in a goods carriage from any container freight station or inland container
depot or directly from the place of removal to a land customs station has been made exempt.
2.8 Manpower supply and security services when provided by an
individual, HUF, or partnership firm to a body corporate are being brought to
full reverse charge from partial reverse charge mechanism.
2.9 The Central Government has been
empowered to impose a Swachh Bharat Cess
on all or any of the taxable services at a rate of 2% on the value of such
taxable services.
2.10
Service Tax to be levied on the service provided by way of access to amusement facility providing fun or recreation in amusement
parks and other such places. Further, service provided by way of admission to a
museum, zoo, national park, wild life sanctuary and a tiger reserve is being
exempted.
2.11
Services provided by mutual fund agents,
mutual fund distributors and agents of lottery distributor are being brought under
reverse charge consequent to withdrawal of the exemption on such services.
3. Other
Important Points
3.1 Central Excise duty raised to
12.5%.
3.2 Custom Duty to be reduced on
22 items.
3.3 The limit for availment of CENVAT
credit extended to 1 year from the date of invoice.
3.4 In order to encourage digitization,
the Government has allowed assesses to maintain records in electronic form
subject to authentication through digital signatures.
3.5 Import tax on iron and steel
increased to 15 percent from 10 percent.
