The
Finance Bill, 2015 proposes to make amendments in direct tax provisions by
proposing amendments to the Income-tax Act, 1961, Wealth-tax Act, 1957, Finance
Act, 1994 and Finance (No.2) Act, 2004.
A gist of
the main amendments is given below:-
Direct Taxes
1.
Rates of
tax
It is
proposed that there will be no change in the rate of personal income-tax and
the rate of tax for companies in respect of income earned in the financial year
2015-16, assessable in the assessment year 2016-17.
It is
further proposed to levy a surcharge @12% on individuals, HUFs, AOPs, BOIs,
artificial juridical persons, firms, cooperative societies and local
authorities having income exceeding `.1 crore.
Surcharge
in the case of domestic companies having income exceeding `.1 crore and
upto `.10 crore
is proposed to be levied @ 7% and surcharge @ 12% is proposed to be levied on
domestic companies having income exceeding `.10 crore.
The
education cess on income-tax @ 2% for fulfilment of the commitment of the
Government to provide and finance universalised quality based education and 1%
of additional surcharge called ‘Secondary and Higher Education Cess’ on
tax and surcharge is proposed to be continued for the financial year 2015-16
for all taxpayers.
2. Measures to curb black money
With a
view to curbing the generation of black money in real estate, it is proposed to
amend the provisions of section 269SS and 269T of the Income-tax Act so as to
prohibit acceptance or re-payment of advance in cash of `.20,000 or
more for any transaction in immovable property. It is also proposed to
provide a penalty of an equal amount in case of contravention of such
provisions.
Offence
of making false declaration/documents in the transaction of any business
relating to Customs (section 132 of the Customs Act) to be predicate offence
under PMLA to curb trade based money laundering.
3.
Job
creation through revival of growth and investment and promotion of domestic
‘manufacturing’ and ‘Make in India’
With a
view to obviate the problems faced by small companies and to facilitate the
inflow of technology, it is proposed to amend the provisions of section 115A of
the Income-tax Act so as to reduce the rate of tax on royalty and fees for
technical services from 25% to 10%.
With a
view to facilitating generation of employment, it is proposed to amend the
provisions of section 80JJAA of the Income-tax Act so as to provide that tax
benefit under the said section shall be available to a ‘person’ deriving
profits from manufacture of goods in a factory and paying wages to new regular
workmen. The eligibility threshold of minimum 100 workmen is proposed is to
reduced to fifty.
Additional
depreciation @ 20% is allowed on new plant and machinery installed by a
manufacturing unit or a unit engaged in generation and distribution of
power. However, if the asset is installed after 30th September of
the previous year only 10% of the additional depreciation is allowed. It
is proposed to allow the remaining 10% of the additional depreciation in the
subsequent previous year.
4.
Minimum
government and maximum governance to improve the ease of doing business
It is
proposed to amend the provisions of section 92BA of the Income-tax Act so as to
increase the threshold limit for applicability of transfer pricing regulations
to specified domestic transactions from
`.
5 crore to
`.
20 crore.
It is
proposed to amend the provisions of section 2(15) of the Income-tax Act so as
to include ‘yoga’ as a specific category of activity in the definition of
‘charitable purpose’ and also to provide relief for activities in the nature of
business undertaken by genuine charitable organizations subject to the
condition that aggregate receipts from such activity is less than 20% of the
total receipts.
It is
proposed to exempt the income of Core Settlement Guarantee Fund established by
Clearing Corporations as per mandate of SEBI.
It is proposed
to amend the provisions of section 255 of the Income-tax Act so as to increase
the monetary limit from `.5 lakh to
`.15 lakh,
for a case to be heard by a Single Member Bench of the ITAT.
It is
proposed to amend the provisions of the Income-tax Act so as to provide tax
neutrality on transfer of units of a scheme of a Mutual Fund under the process
of consolidation of schemes of Mutual Funds as per SEBI Regulations, 1996.
It is
proposed to amend the provisions of the Income-tax Act so as to provide a mechanism
to pre-empt the repetitive appeals by the revenue in the same assessee’s case
on the same question of law year after year.
It is
proposed to empower the Board to prescribe rules for grant of relief in respect
of taxes paid in foreign jurisdictions.
It is
proposed to abolish the levy of Wealth-tax with effect from 2016-17 (Assessment
Year) for reducing the compliance burden on the tax payers. The revenue loss on
account of such abolition is proposed to be compensated by increase in the
existing surcharge by 2% in case of domestic companies and all non corporate
taxpayers.
With a
view to rationalise the dispute resolution mechanism available to taxpayer in
the form of Settlement Commission, it is proposed to provide that while making
an application to the Settlement Commission for an assessment year which has
been re-opened by the Assessing Officer, the assessee can make an application
for other assessment years in which the proceedings could be re-opened provided
the return of income for such assessment years has been furnished by the
assessee with a view to obviate the problems faced by small companies and to
facilitate the inflow of technology, it is proposed to amend the provisions of
section 115A of the Income-tax Act so as to reduce the rate of tax on royalty
and fees for technical services from 25% to 10%.
With a
view to facilitating generation of employment, it is proposed to amend the
provisions of section 80JJAA of the Income-tax Act so as to provide that tax
benefit under the said section shall be available to a ‘person’ deriving
profits from manufacture of goods in a factory and paying wages to new regular
workmen. The eligibility threshold of minimum 100 workmen is proposed is to
reduced to fifty.
Additional
depreciation @ 20% is allowed on new plant and machinery installed by a
manufacturing unit or a unit engaged in generation and distribution of
power. However, if the asset is installed after 30th September of
the previous year only 10% of the additional depreciation is allowed. It
is proposed to allow the remaining 10% of the additional depreciation in the
subsequent previous year.
5.
Improving
the quality of life and public health through Swachh Bharat Initiatives
It is
proposed to provide that the donations (other than the CSR contributions made
in accordance with section 135 of the Companies Act, 2013) made to Swachch
Bharat Kosh (by both resident and non-resident) and Clean Ganga Fund (by
resident) shall be eligible for 100% deduction under section 80G of the
Income-tax Act.
6.
Benefits
to middle class taxpayers
With a
view to encourage savings and to promote health care among individual
taxpayers, a number of measures are proposed to be taken by way of incentives
under the Income-tax Act. The same are enumerated below:-
It is
proposed to provide that investment in Sukanya Samriddhi Scheme will be eligible
for deduction u/s 80C and any payment from the scheme shall not be liable to
tax.
It is
proposed to increase the limit of deduction u/s 80D of the Income-tax Act from `.15,000 to
`.25,000 on
health insurance premium (in case of senior citizen from `.20,000 to
`.30,000).
It is also proposed to allow deduction of expenditure of similar amount in case
of a very senior citizen not eligible to take health insurance.
It is
proposed to increase the limit of deduction in case of very senior citizens u/s
80DDB of the Income-tax Act on expenditure on account of specified diseases
from `.60,000 to
`.80,000.
It is
proposed to increase the limit of deduction u/s 80DD of the Income-tax Act in
respect of maintenance, including medical treatment of a dependant who is a
person with disability, from `.50,000 to
`.75,000.
It is also proposed to increase the limit of deduction from `.1 lakh to
`.1.25 lakh
in case of severe disability.
It is
proposed to increase the limit of deduction u/s 80U of the Income-tax Act in
case of a person with disability, from `.50,000 to `.75,000.
It is also proposed to increase the limit of deduction from `.1 lakh to
`.1.25 lakh
in case of severe disability.
It is
proposed to increase the limit of deduction u/s 80CCC of the Income-tax Act on
account of contribution to a pension fund of LIC or IRDA approved insurer from `.1 lakh to
`.1.5 lakh.
It is
proposed to increase the limit of deduction u/s 80CCD of the Income-tax Act on
account of contribution by the employee to National Pension Scheme (NPS) from `.1 lakh to
`.1.50
lakh. It is also proposed to provide a deduction of upto `.50,000
over and above the limit of `.1.50 lakh
in respect of contributions made to NPS.
It is
proposed to amend the provisions of section 197A of the Income-tax Act so as to
provide the facility of filing self-declaration of non-deduction of tax by the
recipients of taxable maturity proceeds of life insurance policy.
Under the
existing provisions of the Income-tax Act, an individual buying an immovable
property from a resident is required to deduct tax but is not required to
obtain TAN for depositing the tax so deducted. With a view to extend the
same facility to an individual or HUF purchasing an immovable property from a
non-resident, it is proposed to relax the requirement of obtaining TAN by the
individual or HUF who is required to deduct tax on acquisition of immovable
property from a non-resident.
It is
proposed to provide that donation made to National Fund for Control of Drug
Abuse (NFCDA) shall be eligible for 100% deduction under section 80G of the
Income-tax Act.
Details
of tax deductions referred to in para 99.
· Deduction
u/s 80C `.1,50,000
· Deduction
u/s 80CCD `.50,000
· Deduction
on account of interest
on house property loan
(Self occupied property) `.2,00,000
· Deduction
u/s 80D on health Ins `.25,000
· Exemption
of transport allowance `.19,200
Total
`.4,44,200
7.
Stand
alone proposals to maximise benefits to the economy
With a
view to providing a uniform method of computation of period of stay in Indian
for the purposes of determination of ‘resident’ status in the case of a India
seafarer, whether working on a Indian-ship or foreign-ship, it is proposed to
provide an enabling power to CBDT to prescribe the same in the rules.
In search
cases, it is proposed to allow seized cash to be adjusted towards the
assessee’s tax liability under his settlement application.
With a
view to ensuring proper deduction of tax on payments made to non-residents, it
is proposed to amend the provisions of section 195 of the Income-tax Act so as
to provide for enabling power to the CBDT for capturing information about
prescribed foreign remittances which are claimed to be not chargeable to tax.
Mr. K.K. Juneja
Advocate
