High Lights of Budget 2014-15
A. DIRECT TAX PROPOSALS: -
1. Tax Exemption limit for individuals earning
Rate
|
Old Position
|
New Position
|
Remark
|
Nil
|
Rs.2.00 Lacs
|
Rs.2.00 Lacs
|
Exempt slab increased by Rs.50,000
|
10%
|
Rs.2.00 Lacs to 5 Lacs
|
Rs.2.50 Lacs to 5 Lacs
| |
20%
|
Rs.5.00 Lacs to 10 Lacs
|
Rs.5.00 Lacs to 10 Lacs
|
No change
|
30%
|
Above Rs.10.00
|
Above Rs.10.00
|
No change
|
2. Investment limit under section 80C of the Income-tax Act raised from Rs. 1 lakh to Rs1.5 lakh. So now you can get exemption upto Rs.1.50 lakhs by investing in LIC, PPF etc
3. Deduction limit on account of interest on loan in respect of self occupied house property raised from Rs. 1.5 lakh to Rs. 2 lakh.
4. PPF savings limited enhanced from Rs. 1 lakh to Rs. 1.5 lakh
5. Conducive tax regime to Infrastructure Investment Trusts and Real Estate Investment Trusts to be set up in accordance with regulations of the Securities and Exchange Board of India.
6. Expenditure on Corporate Social Responsibility are not deductible U/S 37.
7. Limit of investment under capital gain bonds is capped at Rs. 50 lac irrespective of Number of years.
8. Investment allowance at the rate of 15 percent to a manufacturing company that invests more than Rs. 25 crore in any year in new plant and machinery. The benefit to be available for three years i.e. for investments upto 31.03.2017.
9. Investment linked deduction extended to two new sectors, namely, slurry pipelines for the transportation of iron ore, and semi-conductor wafer fabrication manufacturing units.
10. 10 year tax holiday extended to the undertakings which begin generation, distribution and transmission of power by 31.03.2017.
11. Income arising to foreign portfolio investors from transaction in securities to be treated as capital gains.
12. Concessional rate of 15 percent on foreign dividends without any sunset date to be continued.
13. The eligible date of borrowing in foreign currency extended from 30.06.2015 to 30.06.2017 for a concessional tax rate of 5 percent on interest payments. Tax incentive extended to all types of bonds instead of only infrastructure bonds.
14. Introduction of a "Roll Back" provision in the Advanced Pricing Agreement (APA) scheme so that an APA entered into for future transactions is also applicable to international transactions undertaken in previous four years in specified circumstances.
15. Introduction of range concept for determination of arm's length price in transfer pricing regulations.
16. To allow use of multiple year data for comparability analysis under transfer pricing regulations.
17. Long term capital gain tax on debt mutual fund increased from 10% to 20 % & tenor increased from 12 months to 36 months .
18. Income and dividend distribution tax to be levied on gross amount instead of amount paid net of taxes.
19. In case of non deduction of tax on payments, 30% of such payments will be disallowed instead of 100 percent.
20. Government to review the DTC in its present shape and take a view in the whole matter.
21. 60 more Ayakar Seva Kendras to be opened during the current financial year to promote excellence in service delivery.
B. INDIRECT TAXES PROPOSALS: -
1. Cheaper : -
Item Name
|
2013-14
|
2014-15
|
Computer TV LAD LCD19"below
|
10%
|
Nil
|
Solar Energy Plant Machinery
|
5% reduced
| |
EVA Sheet & back Sheet & Flat Copper Wire PV
Ribbons
|
5%
|
Nil
|
Forged steel rings
|
10%
|
5%
|
Anthracite coal, bituminous coal, coking coal, steam
coal and other coal
|
2.5%
|
2%
|
Ship scrap
|
5%
|
2.5%
|
Export precious and semi-precious stones
|
10%
|
Nil
|
Food packaging
|
10%
|
6%
|
Footwear
|
12%
|
6%
|
Plastic waste
|
10%
|
Nil
|
2. Costlier
Item Name
|
2013-14
|
2014-15
|
Stainless Steel
|
5%
|
7.5%
|
Metallurgical coke
|
0%
|
2.5%
|
Diamonds
|
0%
|
2.5%
|
Readymade Garments
|
3%
|
5%
|
Bauxite
|
10%
|
20%
|
Cigarettes
|
11%
|
72%
|
Panmasala
|
12%
|
16%
|
Tobacco
|
50%
|
55%
|
Gutkha and Chewing tobacco
|
60%
|
70%
|
3. General
i. 24X7 customs clearance facility extended to 13 more airports in respect of all export goods and to 14 more sea ports in respect of specified import and export goods to facilitate cargo clearance.
ii. 'Indian Customs Single Window Project' to facilitate trade, to be implemented.
iii. The scheme of Advance Ruling in indirect taxes to be expanded to cover resident private limited companies. The scope of Settlement Commission to be enlarged to facilitate quick dispute resolution.
iv. Customs and Central Excise Acts to be amended to expedite the process of disposal of appeals.
C. Service Tax: -
1. No change in basic rate
2. New Services Covered :
i. Sale of space or time for advertisements in broadcast media, extended to cover such sales on other segments like online and mobile advertising.
ii. Service provided by radio-taxis brought under service tax.
iii. Services by air-conditioned contract carriages and technical testing of newly developed drugs on human participants brought under service tax.
3. Beneficial Provisions:
i. Services provided by Indian tour operators to foreign tourists in relation to a tour wholly conducted outside India to be taken out of the tax net and Cenvat credit for services of rent-a-cab and tour operators to be allowed to promote tourism.
ii. Service tax exempted on loading, unloading, storage, warehousing and transportation of cotton, whether ginned or baled.
iii. Services provided by the Employees' State Insurance Corporation for the period prior to 1st July 2012 exempted, from service tax.
iv. Exemption available for specified micro insurance schemes expanded to cover all life micro-insurance schemes where the sum assured does not exceed 50, 000 per life insured.
v. For safe disposal of medical and clinical wastes, services provided by common biomedical waste treatment facilities exempted.
D. GENERAL:
1. Women Safety:
• Outlay of Rs. 50 crores for a pilot scheme on road safety
o Another 150 crores to be spent by MHA on safety on women in larger cities Beti Bachao, Beti Padhao Yojana' - 100 crores
o 8000 crores for national housing banking programme – for rural housing
o 100 crores for training sportsmen and women for upcoming Commonwealth and Asian Games
2. Education:
o All 6 additional AIIMS have become operational Plan to set up 4 more AIIMS in Andhra Pradesh, West Bengal, Vidharbha and Purvanchal.
o Rs. 500 crore allocated Pandit Madan Mohan Malviya New Teacher's Training Programme launched. 5 more IITs and IIMs to be set up - Rs. 500 crores allocated
o FTII Pune, SRFTI Kolkata will be accorded the status of institute of national importance
• 100 Crores for modernizing Madrasas
3. Agriculture:
• Urgent need for investment in agro-technology and development.
• 100-crore Agri-Infrastructure fund Horticulture University in Telangana and Haryana
o 50-crores for indigenous cattle breeding. 8 lakh crores set aside for Agriculture credit Allocation of 5000 crores to address the need to scientific warehousing\ Long-term rural credit fund to be set up in NABARD with initial support of 5000 crores Overall performance
Budget – 2014 has proposed the following income tax rates
For Individuals below 60 years age (including Woman Assessees):
Income
|
Tax Rate
|
Upto 2,50,000
|
Nil
|
250,000 to 5,00,000
|
10% of the amount exceeding 250,000
|
500,000 to 10,00,000
|
Rs.25,000 + 20% of the amount exceeding 5,00,000
|
10,00,000 & above
|
Rs.1,25,000 + 30% of the amount exceeding 10,00,000
|
For Individuals aged 60 years and above but below 80 years (Senior Citizen):
Income
|
Tax Rate
|
Upto 3,00,000
|
Nil
|
3,00,000 to 5,00,000
|
10% of the amount exceeding 3,00,000
|
5,00,000 to 10,00,000
|
Rs.20,000 + 20% of the amount exceeding 5,00,000
|
10,00,000 & above
|
Rs.1,20,000 + 30% of the amount exceeding 10,00,000
|
For Individuals aged 80 years and above (Very Senior Citizen):
Income
|
Tax Rate
|
Upto 5,00,000
|
Nil
|
5,00,000 to 10,00,000
|
20% of the amount exceeding 5,00,000
|
10,00,000 & above
|
Rs.1,00,000 + 30% of the amount exceeding 10,00,000
|
Plus 3% education cess on the tax calculated as above. Further, limit to get deduction under section 80C is increased to Rs. 1,50,000/- from Rs. 1,00,000/-
Now, we will study certain income scenarios based on above mentioned budget proposals.
Person with Age of less than 60 years
| ||||
scenario - 1
|
scenario - 2
|
scenario - 3
|
scenario - 4
| |
Gross Total Income
|
2,70,000
|
3,70,000
|
4,20,000
|
4,20,000
|
Less:Deductions u/s. 80C
Eligible upto Rs. 1,50,000/- |
0
|
1,00,000
|
1,00,000
|
1,50,000
|
Taxable Income
|
2,70,000
|
2,70,000
|
3,20,000
|
2,70,000
|
Tax on above income
|
2,000
|
2,000
|
7,000
|
2,000
|
Less: Rebate u/s 87A
|
2,000
|
2,000
|
2,000
|
2,000
|
Tax after Rebate
|
0
|
0
|
5,000
|
0
|
Add: Education Cess 3%
|
0
|
0
|
150
|
0
|
Total Tax Liability
|
0
|
0
|
5,150
|
0
|
Person with Age of 60 years or more but less than 80 years
| ||||
scenario - 1
|
scenario - 2
|
scenario - 3
|
scenario - 4
| |
Gross Total Income
|
3,20,000
|
4,20,000
|
4,70,000
|
4,70,000
|
Less:Deductions u/s. 80C
Eligible upto Rs. 1,50,000/- |
0
|
1,00,000
|
1,00,000
|
1,50,000
|
Taxable Income
|
3,20,000
|
3,20,000
|
3,70,000
|
3,20,000
|
Tax on above income
|
2,000
|
2,000
|
7,000
|
2,000
|
Less: Rebate u/s 87A
|
2,000
|
2,000
|
2,000
|
2,000
|
Tax after Rebate
|
0
|
0
|
5,000
|
0
|
Add: Education Cess 3%
|
0
|
0
|
150
|
0
|
Total Tax Liability
|
0
|
0
|
5,150
|
0
|
Person with Age of 80 years or more
| ||||
scenario - 1
|
scenario - 2
|
scenario - 3
|
scenario - 4
| |
Gross Total Income
|
5,00,000
|
5,10,000
|
6,10,000
|
6,60,000
|
Less:Deductions u/s. 80C
Eligible upto Rs. 1,50,000/- |
0
|
0
|
1,00,000
|
1,50,000
|
Taxable Income
|
5,00,000
|
5,10,000
|
5,10,000
|
5,10,000
|
Tax on above income
|
0
|
2,000
|
2,000
|
2,000
|
Less: Rebate u/s 87A
|
0
|
0
|
0
|
0
|
Tax after Rebate
|
0
|
2,000
|
2,000
|
2,000
|
Add: Education Cess 3%
|
0
|
60
|
60
|
60
|
Total Tax Liability
|
0
|
2,060
|
2,060
|
2,060
|
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