Budget 2015: Clarifications regarding increase in Service Tax Rate –

Budget 2015: Clarifications regarding increase in Service Tax Rate –

 

 

Articles Clarifies Doubts Regarding Applicability of Revised Rate of Service Tax of 14% and Applicability of Swachh Bharat Cess, Educational Cess and SHE Cess on the New Service Tax Rate of 14%. Articles also clear the doubts regarding 16% Service Tax Rate after applicability of Swachh Bharat Cess on Taxable Services.

Amid huge expectations and challenges facing the economy, the Hon'ble Finance Minister Shri Arun Jaitley has presented his 1^st Full-year Union Budget for the year 2015-16 on 28^th February, 2015. In his Budget Speech, he has proposed to increase the effective rate of service tax from 12.36% to 14%. This proposal has created doubts in the minds of some assessee's and professionals as well. The objective of this article is to identify various issues/queries relating to proposed rate of service tax and try to clarify the same in simple language. To begin with, I quote the relevant Clause 121 of the Budget Speech as below:-

^"121. Introduction of 6ST is eagerly awaited by Trade and Industry. To facilitate a smooth transition to levy of tax on services by both the Centre and the States, it is proposed to increase the present rate of service tax plus education cess from 12.36% to a consolidated rate of 14%."

 

1. Do I have to charge new rate of service tax from 01-03-2015 onwards like we do in case of changes in rates of central excise?

No, you don't have to charge new rate of service tax from 01-03-2015 onwards as the new rate has not yet come into effect. Till then, the existing rate of 12% (service tax) + 2% (Education Cess on tax) + 1% (SHE Cess on tax) i.e. effective rate of 12.36% shall continue.

 

2. Whether the new enhanced rate of service tax going to be effective from 1^st April, 2015?

No, the proposed service tax rate will not become effective from 01-04-2015. Many service providers and receivers are having the misconception that any change in rate of service tax takes effect from 1^st April of the year. It shall come into effect from a date to be appointed by the Central Government, by way of notification in the Official Gazette, AFTER the enactment of the Finance Bill, 2015. The proposed amendments vide Clause 106 of the Finance Bill, 2015 is quoted as below:-

"106. In section 66B of the 1994 Act, with effect from such date as the Central 6overnment may, by notification in the Official 6azette, appoint, for the words "twelve per cent.", the words ^"fourteen per cent."shall be substituted."

Further, the Tax Research Unit of CBEC has issued instructions vide F. No. 334/5/2015 TRU dated 28-02-2015 and clarified at para 3.3 as quoted below:-

^"3.3 The new Service Tax rate shall come into effect from a date to be notified by the Central 6overnment after the enactment of the Finance Bill, 2015."

It means, that the new service tax rate cannot come into force before the Finance Bill, 2015 get assent from the President of India, after which the government will notify the effective date.

 

3. The Finance Minister's Budget Speech clearly state that it is proposed to increase the present rate of service tax plus education cesses from 12.36% to a consolidated rate of 14% (as quoted above).  Does it mean that once enacted, there won't be any requirement of charging additional Education Cess of 2% and Secondary Higher Education Cess of 1% over service tax of 14%?

Yes, once the new rate is effective, there won't be any requirement of charging 3% education cesses on the service tax.

 

4. Does it mean that the consolidated rate of 14% is inclusive of education cesses? In other words, the tax break-up is 13.59% (service tax) + 0.27% (Education Cess @2%) + 0.14% (SHE Cess @1%) aggregating to 14%?

No, there is no break-up of 14% tax rate which entirely constitute of service tax. The 14% rate has been proposed by substituting 12% in the charging section 66B of the Finance Act, 1994 and being statutory rate, it can~t include any other tax/cess within.

As mentioned in para 3 above, there won~t be any requirement of charging Primary Education Cess of 2% and Secondary Higher Education Cess of 1% on the service tax of 14% because it has been provided vide clauses 179 and 187 respectively of the Finance Bill, 2015 that sections 95 of the Finance Act, 2004 and 140 of the Finance Act, 2007, levying Education Cess and Secondary and Higher Education Cess on taxable services shall cease to have effect from a date to be notified by the Government.

 

5. Ok, now it's clear that 14% is the FINAL effective rate of service tax from the date to be notified by the Central Government?

Yes, subject to Swachh Bharat Cess (SBC) of 2%!!

 

6. What is Swachh Bharat Cess (SBC) and how is that related to service tax?

An enabling provision is being incorporated in the Finance Bill, 2015 (Chapter VI/clause 117) to empower the Central Government 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. This cess shall be levied from such date as may be notified by the Central Government after the enactment of the Finance Bill, 2015. The details of coverage of this Cess would be notified in due course.

 

7. 0MG!!! It means that the levy of education cesses has been removed and replaced by 2% cess on service tax to be named as Swachh Bharat Cess making the effective rate of service tax at 16%?

No, it is wrong to say that the levy of education cesses has been removed and replaced by SBC @ 2% on service tax. I quote below the proposed levy of SBC vide Clause 117(2) of Bill:-

^"(2) There shall be levied and collected in accordance with the provisions of this Chapter, a cess to be called the Swachh Bharat Cess, as service tax on all or any of the taxable services at the rate of two per cent on the value of such services for the purposes of financing and promoting Swachh Bharat initiatives or for any other purpose relating thereto."

The new provision clearly says that the new levy of SBC shall be as service tax @ 2% on the VALUE of such services. So, unlike education cesses, which were levied not on value of services but on service tax thereon, SBC is not a tax on service tax. A cess should not be confused with surcharge which is always a tax on tax.

In the Indian context, the Hon'ble Supreme Court, in a ruling in Shinde Brothers Vs. Commissioner, Raichur reported in 1967, said that "the word cess means a tax and is generally used when the levy is for some special administrative expense" citing various examples suggesting the name of the cess explains the object. Thus, cess is a tax which can be collected in any manner but to be utilized only for purposes specified at the time of levy.

Therefore, if the proposed Swachh Bharat Cess is implemented, the Final effective rate of service tax shall be 16% on notified taxable services.

 

8. Whether SBC will be made applicable on all the services?

The Central Government is empowered to issue a notification after the enactment of the Finance Bill, 2015 to impose the new levy on either all the taxable services or on specified services. If selected services are subjected to the new levy of SBC, the issue of classification of service arise which is expected to generate more disputes, litigations and controversies, as has been seen in the past. The effective date of applicability of SBC shall be notified by the government.

 

Author    : Manoj Agarwal Address  : Ganpati Campus, Lal Building Road, Rourkela – 769012 Contact   : +91-9937041788 E:mail      : ServiceTaxExpert@yahoo.com

ITR (TRIB) Volume 38 : Part 2 (Issue dated : 2-3-2015)

 

ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))--PRINT AND ONLINE EDITION

 

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

Capital or revenue receipt --Receipt on sale of carbon credit--Capital in nature--Income-tax Act, 1961-- Prabhu Spinning Mills P. Ltd. v. Deputy CIT (Chennai) . . . 209

International transactions --Transfer pricing--Arm’s length price--Determination--Transactional net margin method--Automobile design and engineering services rendered by U. K. company--Selection of comparables--Indian and foreign transfer pricing regulations accepting non-domestic comparables--Failure by Transfer Pricing Officer to take into account comparable analysis of foreign companies--Matter remanded to Transfer Pricing Officer to examine transfer pricing adjustment afresh--Income-tax Rules, 1962, r. 10B-- Tata Motors European Technical Centre Plc. v. Asst. DIT (International Taxation) (Mumbai) . . . 195

 

PRINT EDITION

Volume 38 : Part 2 (Issue dated : 2-3-2015)

SUBJECT INDEX TO CASES REPORTED

Accounting --Rejection of accounts--Low gross profit rate as compared to previous year--Change in market causing change in gross profit rate--Deletion of disallowance proper--Income-tax Act, 1961-- Himson International P. Ltd. v. Deputy CIT (Ahd) . . . 218

Assessment --Appeal to Commissioner (Appeals)--Disallowances made by Assessing Officer resulting in positive income--Denial of opportunity to claim exemption under section 10A--Claim made for first time before Commissioner (Appeals)--Duty of Assessing Officer to grant exemption statutorily allowable to assessee--Matter remanded to Assessing Officer--Income-tax Act, 1961, ss. 10A, 143(3)-- Himson International P. Ltd. v. Deputy CIT (Ahd) . . . 218

Business expenditure --Disallowance--Foreign travel expenditure--No doubt in details of expenses--Disallowance cannot be made on flimsy ground--Income-tax Act, 1961-- Parle Agro P. Ltd. v. Asst. CIT (Mumbai) . . . 203

----Capital or revenue expenditure--Technical consultancy charges to a foreign company--No material to show no enduring benefit obtained by assessee--Expenditure capital in nature--Income-tax Act, 1961-- Himson International P. Ltd. v. Deputy CIT (Ahd) . . . 218

----Disallowance--Payments liable to deduction of tax at source--Disallowance cannot be made for amounts paid before end of relevant accounting year--Income-tax Act, 1961, ss. 40(a)(ia), 194C-- Ushodaya Enterprises Ltd. v. Deputy CIT (Hyd) . . . 148

----Disallowance--Payments to non-resident--Failure to deduct tax at source--Usance charges on import of raw material--Are interest within provisions of section 2(28A) and accrue in India--Section 195 applicable--Assessee not deducting tax at source--Assessing Officer justified in disallowing payment--Income-tax Act, 1961, ss. 40(a)(i), 195-- Asst. CIT v. Indian Furniture Products Ltd. (Panaji) . . . 174

----Employees’ contribution towards Employees State Insurance--Contribution made before due date for filing return of income--Disallowance cannot be made--Income-tax Act, 1961, s. 139(1)-- Universal Precision Screws v. Asst. CIT (Delhi) . . . 233

----Expenditure incurred towards product development including design charges--Revenue expenditure--Whether expenses pertains to subsequent year or year in question--Must be proved with concrete evidence--Income-tax Act, 1961-- Parle Agro P. Ltd. v. Asst. CIT(Mumbai) . . . 203

----Festival expenses--Assessing Officer cannot step into shoes of businessman to decide whether a particular expenditure necessary or not--Disallowance not sustainable--Income-tax Act, 1961-- Universal Precision Screws v. Asst. CIT (Delhi) . . . 233

----Prior period expenses to be allowed as deduction--Income-tax Act, 1961-- Ushodaya Enterprises Ltd. v. Deputy CIT (Hyd) . . . 148

----Travelling and conveyance expenses--Failure by assessee to produce bills and vouchers supporting expenses incurred--Disallowance restricted--Income-tax Act, 1961-- Himson International P. Ltd. v. Deputy CIT (Ahd) . . . 218

Business loss --Bad debt--Amounts advanced to for purchase of capital assets--Cannot be allowed as bad debts or business loss--Income-tax Act, 1961-- Hindustan Times Ltd. v. Deputy CIT (Delhi) . . . 165

Capital or revenue expenditure -- Expenditure towards permission from Government for using factory premises for other purposes--Factory premises already in use of assessee--Expenditure towards payment including interest cannot be capitalised--Expenditure revenue in nature--Income-tax Act, 1961, s. 37-- Deputy DIT v. Micron Instruments P. Ltd. (Delhi) . . . 242

----Artwork charges--Artwork mainly for advertisement and for use for short duration--No enduring advantage--Not capital expenditure--Income-tax Act, 1961-- Parle Agro P. Ltd. v. Asst. CIT (Mumbai) . . . 203

----Extension of existing business--Failure by authorities to find nature of project undertaken--Suspension of capitalisation of borrowing requiring examination of facts--Matter remanded to Assessing Officer--Income-tax Act, 1961, s. 37-- Hindustan Times Ltd. v. Deputy CIT(Delhi) . . . 165

----Market research expenses for deciding market strategy for promoting its products--Expenses for sustaining market and to push up sales--Revenue expenditure--Income-tax Act, 1961-- Parle Agro P. Ltd. v. Asst. CIT (Mumbai) . . . 203

Charitable purpose --Registration of trusts--Assessee’s primary purpose advancement of objects of general public utility--Remains charitable even if activity incidental or ancillary to main purpose profitable in nature--Denial of registration not justified--Income-tax Act, 1961, s. 12AA-- IP India Foundation v. DIT (Exemptions) (Hyd) . . . 195

Depreciation --Rate of depreciation--Computers--Printers, scanners, modems and routers come within ambit of expression “computer†when used along with computer--Entitled to higher rate of depreciation--Income-tax Act, 1961, s. 32-- Ushodaya Enterprises Ltd. v. Deputy CIT (Hyd) . . . 148

Exemption --Export oriented undertaking--Export turnover--Profits arising out of fluctuation of rates of foreign exchange--Form part of export turnover--Assessee dealing in manufacture and export of fasteners--Sale of scrap--Proceeds not includible in turnover--Income-tax Act, 1961, s. 10B-- Universal Precision Screws v. Asst. CIT (Delhi) . . . 233

----Export oriented undertaking--Profits eligible for exemption--Interest from fixed deposit receipts placed for maintaining margin money--Close nexus with business activity of assessee--To be treated as business income--Eligible for deduction under section 10B--Income-tax Act, 1961, s. 10B-- Universal Precision Screws v. Asst. CIT (Delhi) . . . 233

Income from house property --Deductions--Interest on borrowings--Interest on loan taken for acquiring property--Allowable--Income-tax Act, 1961, s. 24(b)-- Universal Precision Screws v. Asst. CIT (Delhi) . . . 233

Industrial undertaking --Special deduction under section 80-IC--Profits of undertaking--Subsidies such as transport, power, interest and insurance are part of business profits and gains from industrial undertaking--Deduction allowable--Income-tax Act, 1961, s. 80-IC--Meghalaya Mineral Products v. Asst. CIT (Guwahati) . . . 186

Penalty --Acceptance of loan or deposit otherwise than by account payee cheque or account payee draft--Acceptance of cash by husband from his wife cannot be treated as loan or advance in strict sense--Order cancelling penalty levied under section 271D justified--Income-tax Act, 1961, ss. 271D, 269SS-- Asst. CIT v. Vardaan Fashion (Delhi) . . . 247

----Acceptance of loan or deposit otherwise than by account payee cheque or account payee draft--Firm accepting cash from partner otherwise than by account payee cheque--Firm and partner not two different persons--Payment not of character of loan or deposit in general law--Section 269SS not applicable--Order cancelling levy of penalty under section 271D justified--Income-tax Act, 1961, ss. 271D, 269SS-- Asst. CIT v. Vardaan Fashion(Delhi) . . . 247

----Acceptance of loan or deposit otherwise than by account payee cheque or account payee draft--Scope of section 269SS--No monetary transaction between assessee and creditors--No violation of section 269SS--Order deleting penalty justified--Income-tax Act, 1961, ss. 269SS, 271D-- Asst. CIT v. Vardaan Fashion (Delhi) . . . 247

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961

S. 10A --Assessment--Appeal to Commissioner (Appeals)--Disallowances made by Assessing Officer resulting in positive income--Denial of opportunity to claim exemption under section 10A--Claim made for first time before Commissioner (Appeals)--Duty of Assessing Officer to grant exemption statutorily allowable to assessee--Matter remanded to Assessing Officer-- Himson International P. Ltd. v. Deputy CIT (Ahd) . . . 218

S. 10B --Exemption--Export oriented undertaking--Export turnover--Profits arising out of fluctuation of rates of foreign exchange--Form part of export turnover--Assessee dealing in manufacture and export of fasteners--Sale of scrap--Proceeds not includible in turnover--Universal Precision Screws v. Asst. CIT (Delhi) . . . 233

----Exemption--Export oriented undertaking--Profits eligible for exemption--Interest from fixed deposit receipts placed for maintaining margin money--Close nexus with business activity of assessee--To be treated as business income--Eligible for deduction under section 10B--Universal Precision Screws v. Asst. CIT (Delhi) . . . 233

S. 12AA --Charitable purpose--Registration of trusts--Assessee’s primary purpose advancement of objects of general public utility--Remains charitable even if activity incidental or ancillary to main purpose profitable in nature--Denial of registration not justified-- IP India Foundation v. DIT (Exemptions) (Hyd) . . . 195

S. 24(b) --Income from house property--Deductions--Interest on borrowings--Interest on loan taken for acquiring property--Allowable-- Universal Precision Screws v. Asst. CIT (Delhi) . . . 233

S. 32 --Depreciation--Rate of depreciation--Computers--Printers, scanners, modems and routers come within ambit of expression “computer†when used along with computer--Entitled to higher rate of depreciation-- Ushodaya Enterprises Ltd. v. Deputy CIT (Hyd) . . . 148

S. 37 --Capital or revenue expenditure-- Expenditure towards permission from Government for using factory premises for other purposes--Factory premises already in use of assessee--Expenditure towards payment including interest cannot be capitalised--Expenditure revenue in nature-- Deputy DIT v. Micron Instruments P. Ltd. (Delhi) . . . 242

----Capital or revenue expenditure--Extension of existing business--Failure by authorities to find nature of project undertaken--Suspension of capitalisation of borrowing requiring examination of facts--Matter remanded to Assessing Officer-- Hindustan Times Ltd. v. Deputy CIT (Delhi) . . . 165

S. 40(a)(i) --Business expenditure--Disallowance--Payments to non-resident--Failure to deduct tax at source--Usance charges on import of raw material--Are interest within provisions of section 2(28A) and accrue in India--Section 195 applicable--Assessee not deducting tax at source--Assessing Officer justified in disallowing payment-- Asst. CIT v. Indian Furniture Products Ltd. (Panaji) . . . 174

----Business expenditure--Disallowance--Payments liable to deduction of tax at source--Disallowance cannot be made for amounts paid before end of relevant accounting year--Ushodaya Enterprises Ltd. v. Deputy CIT (Hyd) . . . 148

S. 80-IC --Industrial undertaking--Special deduction under section 80-IC--Profits of undertaking--Subsidies such as transport, power, interest and insurance are part of business profits and gains from industrial undertaking--Deduction allowable-- Meghalaya Mineral Products v. Asst. CIT (Guwahati) . . . 186

S. 139(1) --Business expenditure--Employees’ contribution towards Employees State Insurance--Contribution made before due date for filing return of income--Disallowance cannot be made-- Universal Precision Screws v. Asst. CIT (Delhi) . . . 233

S. 143(3) --Assessment--Appeal to Commissioner (Appeals)--Disallowances made by Assessing Officer resulting in positive income--Denial of opportunity to claim exemption under section 10A--Claim made for first time before Commissioner (Appeals)--Duty of Assessing Officer to grant exemption statutorily allowable to assessee--Matter remanded to Assessing Officer-- Himson International P. Ltd. v. Deputy CIT (Ahd) . . . 218

S. 194C --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Disallowance cannot be made for amounts paid before end of relevant accounting year-- Ushodaya Enterprises Ltd. v. Deputy CIT (Hyd) . . . 148

S. 195 --Business expenditure--Disallowance--Payments to non-resident--Failure to deduct tax at source--Usance charges on import of raw material--Are interest within provisions of section 2(28A) and accrue in India--Section 195 applicable--Assessee not deducting tax at source--Assessing Officer justified in disallowing payment-- Asst. CIT v. Indian Furniture Products Ltd. (Panaji) . . . 174

S. 269SS --Penalty--Acceptance of loan or deposit otherwise than by account payee cheque or account payee draft--Acceptance of cash by husband from his wife cannot be treated as loan or advance in strict sense--Order cancelling penalty levied under section 271D justified--Asst. CIT v. Vardaan Fashion (Delhi) . . . 247

----Penalty--Acceptance of loan or deposit otherwise than by account payee cheque or account payee draft--Firm accepting cash from partner otherwise than by account payee cheque--Firm and partner not two different persons--Payment not of character of loan or deposit in general law--Section 269SS not applicable--Order cancelling levy of penalty under section 271D justified-- Asst. CIT v. Vardaan Fashion (Delhi) . . . 247

----Penalty--Acceptance of loan or deposit otherwise than by account payee cheque or account payee draft--Scope of section 269SS--No monetary transaction between assessee and creditors--No violation of section 269SS--Order deleting penalty justified-- Asst. CIT v. Vardaan Fashion (Delhi) . . . 247

S. 271D --Penalty--Acceptance of loan or deposit otherwise than by account payee cheque or account payee draft--Acceptance of cash by husband from his wife cannot be treated as loan or advance in strict sense--Order cancelling penalty levied under section 271D justified--Asst. CIT v. Vardaan Fashion (Delhi) . . . 247

----Penalty--Acceptance of loan or deposit otherwise than by account payee cheque or account payee draft--Firm accepting cash from partner otherwise than by account payee cheque--Firm and partner not two different persons--Payment not of character of loan or deposit in general law--Section 269SS not applicable--Order cancelling levy of penalty under section 271D justified-- Asst. CIT v. Vardaan Fashion (Delhi) . . . 247

----Penalty--Acceptance of loan or deposit otherwise than by account payee cheque or account payee draft--Scope of section 269SS--No monetary transaction between assessee and creditors--No violation of section 269SS--Order deleting penalty justified-- Asst. CIT v.Vardaan Fashion (Delhi) . . . 247

 

Section 10B ITAT Special Bench Verdict Approved + Imp Verdict On Chapter VI-A Deductions

 

Dear Subscriber,

 

The following important judgements are available for download at itatonline.org.

CIT vs. Hritnik Exports Pvt. Ltd (Delhi High Court)

S. 10B(4): All business profits of the undertaking are eligible for deduction and it is not necessary to show that they have a "direct nexus" with the undertaking

Sub-section (4) of s. 10B does not require an assessee to establish a direct nexus with the business of the undertaking and once an income forms part of the business of the undertaking, the same would be included in the profits of the business of the undertaking. Thus, once an income forms part of the business of the eligible undertaking, there is no further mandate in the provisions of section 10B to exclude the same from the eligible profits

CIT vs. J. B. Boda & Co.P. Ltd (Bombay High Court)

Chapter VI-A deductions are not limited to the business profits but are available to the extent of the Gross Total Income

The only question sought to be canvassed is that out of these deductions the admissible deduction under section 80-O ought to be limited to the extent of Rs.69,70,127 which represents business income. In other words, the income from interest and dividend shall not form part of the gross total income as defined under section 80B(5) of the Act. The submission is misconceived

Regards,

 

Editor,

 

itatonline.org

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HOW TO CLAIM REFUND OF LBT. LBT REFUND IF GOODS SOLD OUTSIDE LOCAL LIMITS(OUTSIDE NASHIK)

IN CASE OF GOODS RE-SOLD OUTSIDE NASHIK WITHIN 6 MONTHS (LOCAL LIMITS); THE DEALER / TRADER CAN CLAIM REFUND OF LBT OR EVEN ADJUST AGAINST THE LBT PAYABLE FOR OTHER MONTHS.

HOWEVER, THE DEALER HAS TO KEEP PROPER RECORDS OF MOVEMENTS OF GOODS AND FOLLOW THE PROCEDURE PRESCRIBED UNDER LBT RULES FOR THIS PURPOSE.

FURTHER, IF WHILE DOING THE ACCOUNTING THE SEPARATE LEDGER ARE MAINTAINED FOR LOCAL PURCHASES AND OUTSIDE PURCHASE, LOCAL SALES AND OUTSIDE SALES; THE SAME IS ALSO USEFUL.

MANY DEALERS/TRADERS ARE NOT AWARE ABOUT THIS PROVISION.

THERE WERE NO SUCH PROVISION UNDER OCTROI.

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Income Tax Slabs & Rates FOR FY 2015-16

Budget 2015 & Income Tax
Slabs & Rates for
AY 2016-17 ( FY 2015-16 )
AY 2014-15 ( FY 2013-14 )

Income Tax Slabs & Rates
for Assessment Year 2015-16

Please click on the links below to view the Income Tax Slabs and Rates for the Assessment Year 2015-16 (applicable on income earned during 01.04.2014 to 31.03.2015) for various categories of Indian Income Tax payers.

•	Individual resident (Age below 60 Yrs.) or any NRI/ HUF/ AOP/ BOI/ AJP	•	Firm
•	Senior Citizen	•	Local Authority
•	Super Senior Citizen	•	Domestic Company
•	Co-operative Society	•	Other Company

1. Individual resident aged below 60 years (i.e. born on or after 1st April 1955) or any NRI/ HUF/ AOP/ BOI/ AJP*

   Income Tax :Tax Calculator : AY 2015-16

   Income Slabs		Tax Rates
   i.	Where the taxable income does not exceed Rs. 2,50,000/-.	NIL
   ii.	Where the taxable income exceeds Rs. 2,50,000/- but does not exceed Rs. 5,00,000/-.	10% of amount by which the taxable income exceeds Rs. 2,50,000/-. Less ( in case of Resident Individuals only ) : Tax Credit u/s 87A - 10% of taxable income upto a maximum of Rs. 2000/-.
   iii.	Where the taxable income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-.	Rs. 25,000/- + 20% of the amount by which the taxable income exceeds Rs. 5,00,000/-.
   iv.	Where the taxable income exceeds Rs. 10,00,000/-.	Rs. 125,000/- + 30% of the amount by which the taxable income exceeds Rs. 10,00,000/-.

   Surcharge : 10% of the Income Tax, where taxable income is more than Rs. 1 crore. (Marginal Relief in Surcharge, if applicable)
   Education Cess : 3% of the total of Income Tax and Surcharge.
   * Abbreviations used :
      NRI - Non Resident Individual; HUF - Hindu Undivided Family; AOP - Association of Persons; BOI - Body of Individuals; AJP - Artificial Judicial Person
   
   

2. Senior Citizen (Individual resident who is of the age of 60 years or more but below the age of 80 years at any time during the previous year i.e. born on or after 1st April 1934 but before 1st April 1954)

   Income Tax :Tax Calculator : AY 2015-16

   Income Slabs		Tax Rates
   i.	Where the taxable income does not exceed Rs. 3,00,000/-.	NIL
   ii.	Where the taxable income exceeds Rs. 3,00,000/- but does not exceed Rs. 5,00,000/-	10% of the amount by which the taxable income exceeds Rs. 3,00,000/-. Less : Tax Credit u/s 87A - 10% of taxable income upto a maximum of Rs. 2000/-.
   iii.	Where the taxable income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-	Rs. 20,000/- + 20% of the amount by which the taxable income exceeds Rs. 5,00,000/-.
   iv.	Where the taxable income exceeds Rs. 10,00,000/-	Rs. 120,000/- + 30% of the amount by which the taxable income exceeds Rs. 10,00,000/-.

   Surcharge : 10% of the Income Tax, where taxable income is more than Rs. 1 crore. (Marginal Relief in Surcharge, if applicable)
   Education Cess : 3% of the total of Income Tax and Surcharge.
   
   

3. Super Senior Citizen (Individual resident who is of the age of 80 years or more at any time during the previous year i.e. born before 1st April 1934)

   Income Tax :Tax Calculator : AY 2015-16

   Income Slabs		Tax Rates
   i.	Where the taxable income does not exceed Rs. 5,00,000/-.	NIL
   ii.	Where the taxable income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-	20% of the amount by which the taxable income exceeds Rs. 5,00,000/-.
   iii.	Where the taxable income exceeds Rs. 10,00,000/-	Rs. 100,000/- + 30% of the amount by which the taxable income exceeds Rs. 10,00,000/-.

   Surcharge : 10% of the Income Tax, where taxable income is more than Rs. 1 crore. (Marginal Relief in Surcharge, if applicable)
   Education Cess : 3% of the total of Income Tax and Surcharge.
   
   

4. Co-operative Society

   Income Tax :Tax Calculator : AY 2015-16

   Income Slabs		Tax Rates
   i.	Where the taxable income does not exceed Rs. 10,000/-.	10% of the income.
   ii.	Where the taxable income exceeds Rs. 10,000/- but does not exceed Rs. 20,000/-.	Rs. 1,000/- + 20% of income in excess of Rs. 10,000/-.
   iii.	Where the taxable income exceeds Rs. 20,000/-	Rs. 3.000/- + 30% of the amount by which the taxable income exceeds Rs. 20,000/-.

   Surcharge : 10% of the Income Tax, where taxable income is more than Rs. 1 crore. (Marginal Relief in Surcharge, if applicable)
   Education Cess : 3% of the total of Income Tax and Surcharge.
   
   

5. Firm

   Tax Calculator : AY 2015-16
   Income Tax : 30% of taxable income.
   Surcharge : 10% of the Income Tax, where taxable income is more than Rs. 1 crore. (Marginal Relief in Surcharge, if applicable)
   Education Cess : 3% of the total of Income Tax and Surcharge.
   
   

6. Local Authority

   Income Tax : 30% of taxable income.
   Surcharge : 10% of the Income Tax, where taxable income is more than Rs. 1 crore. (Marginal Relief in Surcharge, if applicable)
   Education Cess : 3% of the total of Income Tax and Surcharge.
   
   

7. Domestic Company

   Tax Calculator : AY 2015-16
   Income Tax : 30% of taxable income.
   Surcharge : The amount of income tax as computed in accordance with above rates, and after being reduced by the amount of tax rebate shall be increased by a surcharge
   • At the rate of 5% of such income tax, provided that the taxable income exceeds Rs. 1 crore. (Marginal Relief in Surcharge, if applicable)
   • At the rate of 10% of such income tax, provided that the taxable income exceeds Rs. 10 crores.
   Education Cess : 3% of the total of Income Tax and Surcharge.
   
   

8. Company other than a Domestic Company

   Income Tax :Tax Calculator : AY 2015-16
   • @ 50% of on so much of the taxable income as consist of (a) royalties received from Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern after the 31st day of March, 1961 but before the 1st day of April, 1976; or (b) fees for rendering technical services received from Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern after the 29th day of February, 1964 but before the 1st day of April, 1976, and where such agreement has, in either case, been approved by the Central Government.
   • @ 40% of the balance
   Surcharge :
   The amount of income tax as computed in accordance with above rates, and after being reduced by the amount of tax rebate shall be increased by a surcharge as under
   • At the rate of 2% of such income tax, provided that the taxable income exceeds Rs. 1 crore. (Marginal Relief in Surcharge, if applicable)
   • At the rate of 5% of such income tax, provided that the taxable income exceeds Rs. 10 crores.
   
   
   
   Education Cess : 3% of the total of Income Tax and Surcharge.

Marginal Relief in Surcharge

When an assessee's taxable income exceeds Rs. 1 crore, he is liable to pay Surcharge at prescribed rates mentioned above on Income Tax payable by him. However, the amount of Income Tax and Surcharge shall not increase the amount of income tax payable on a taxable income of Rs. 1 crore by more than the amount of increase in taxable income.

Example :

In case of an individual assesseee (< 60 years) having taxable income of Rs. 1,00,01,000/-

1.	Income Tax	Rs. 28,30,300
2.	Surcharge @10% of Income Tax	Rs. 2,83,030
3.	Income Tax on income of Rs. 1 crore	Rs. 28,30,000
4.	Maximum Surcharge payable (Income over Rs. 1 crore less income tax on income over Rs. 1 crore)	Rs. 700/- (1000 - 300)
5.	Income Tax + Surcharge payable	Rs. 28,31,000
6.	Marginal Relief in Surcharge	Rs. 2,82,330/- (2,83,030 - 700)

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Regards,
-------
CA.C.V.PAWARPATIL DAWARE GIRASE PAWAR & ASSOCIATES

CHARTERED ACCOUNTANTS

0253-2319641. M-9423961209

INDIAN CA - NURTURED IN INDIA, GROOMED FOR THE WORLD

FIRST CUT HIGHLIGHTS OF BUDGET 201

First cut Highlights of Budget 2014                                                

28/02/2015

 

·       Mudra Bank (with 20000 crore capital) to finance Micro Financing activity for priority to entrepreneurs in SC & ST category in SME sector.

·        Bringing fresh Bankruptcy code in this fiscal year.

·       To utilise vast Postal network for Banking venture.

·       Creating universal securities system for poor and unprivileged. PMs Insurance Scheme Accident death insurance Rs. 2 Lacs for Rs. 12 per year for poor.

·       Atal Pension Fund  aimed at Indians above 60 years.

·       PMs Jeevan Bima – Rs. 2 Lacs – premium Rs. 330 per year.

·       Sr. Citizen Welfare Fund via unclaimed PPFs – living below Poverty Line.

·       Poor Sr. Citizen shall get free medical equipments

·       Visa on arrival scheme to be increased to 150 nations.

·       NBFCs above Rs. 500 cr to be covered under SARFAESI.

·       Tax free Infra bonds in Rail, Road and Infrastructure to be issued.

·       FMC to be merged with SEBI to strengthen regulation.

·       Amendment in RBI Act in this Fiscal w.r.t. monetary policy.

·       To amend section 6 of FEMA for capital account transactions.

·       Alternate Investment Funds – for facilitating domestic investment- to allow foreign investment in AIF. To do away with distinction between FPI &  FDI.

·       EPF contribution to be voluntary.

·       Gold monetisation scheme to allow depositors earn interest.

·       PSU bank Broad Bureau to be set up this year.

Taxation

·       GST to be implemented from 1^st April, 2016

·       Rate of Corporate tax to be at 25% over next four years from present 30%, with phased removal of exemptions from next financial year.

·       Comprehensive new law to track black money, which is stashed in foreign countries.

·       Undisclosed foreign assets / income shall be looked up very rigorously and shall be prosecuted.

·       More comprehensive law for prosecuting domestic Black Money.

·       FEMA will be rejigged to include black money provisions.

·       PAN is compulsory for sale above Rs. 1 Lakh for immovable property. Cash not allowed over Rs. 20,000/-.

·       GAAR applicability deferred for next 2 year.

·       To facilitate technology – tax on royalty reduced from 25% to 10%.

·       Indirect taxes – Basic Custom Duty – fully exempt on RM for IT bound manufacturing.

·       Wealth Tax – to be abolished and it is replaced with 2 % surcharge on Income tax payer having income over Rs. 1 crore.

·       Domestic threshold limit increased from 5 crores to 20 crores.

·       Increase in limit of deduction of Health Insurance u/s 80D from Rs. 15000 to Rs. 25000.

·       Sr. Citizen additional deduction u/s 80D from 10k to 30k.

·       For Sr. Citizens above 80 years and not covered by health insurance – deduction of Rs.30,000 on their medical treatment every year.

·       For Sr. Citizen limit of Rs. 60000 with respect to specified decease of serious nature enhanced to Rs. 80000.

·       Additional deduction for differently abled of Rs. 25,000/- under 80DD & 80 U.

·       Additional deduction u/s 80CCD of Rs. 50,000/- for contribution to the new pension fund.

·       Transport allowance exemption increased to Rs. 1600 per month from 800 per month.

·       Individual tax benefits up to Rs.  4,44,000/-.

·       Tax relief for Yoga institutions (covered under Charitable Purpose).

·       Deduction on contribution to pension fund and the new pension scheme increased from Rs 1 lakh to Rs 1.5 lakh

·       Service tax not chargeable for Yoga classes.

·       Service tax rate set to 14%

·       Deduction of 100% under 80G for donations under Swachha Bharat Abhiyaan & Ganga Cleaning Project.

·       No Direct Tax Code.

·       Central Excise and Service Tax registration to be in done in 2 days.

·       In case of offshore fund management, mere presence of the fund manager in India will not be treated as his permanent establishment in India.