Overview of budget 2015
- 1. R Venkatakrishnan& AssociatesR Venkatakrishnan& AssociatesR Venkatakrishnan& AssociatesR Venkatakrishnan& Associates Chartered Accountants Offices at Chennai Bangalore Hyderabad Salem Devanahalli www.rvkassociates.com
- 2. Overview of Budget 2015
- 3. Economic Highlights • GDP growth in 2015-16 projected 8 to 8.5% • Real GDP growth to be 7.4% • Monetary policy framework with RBI • MUDRA Bank to finance small & Medium entrepreneurs • GAAR implementation deferred – to apply prospectively on or after 1.4.2017 • Jan dhan, Aadhar and Mobile (JAM) for direct benefit transfer • Move to amend the RBI act this year and provide monetary policy committee. • To allow foreign investment in alternative investment funds
- 4. Economic Highlights… cont’d • To establish an autonomous bank board bureau to improve management of public sector banks • To launch national skills mission soon to enhance employability in rural youth • Plans to revamp direct tax regime to make it internationally competitive with rate cuts and sans exemption • Tax-free infrastructure bonds for projects in roads, rail and irrigation projects • Employees PF contributions to be made optional. However employer’s contribution to the PF to continue • To do away with different types of foreign investment and replace them with composite caps • Govt to make Indian Gold Coins to reduce demand of foreign coins
- 6. General • Direct Tax Code is not going to be implemented as most of the aspects are covered n the current Income Tax act itself • Benami Transactions (Prohibition) Bill to be introduced later. • Wealth tax abolished (for all types of assessees) • PAN to be made mandatory for purchase of immovable property above Rs.1 lakh. Advance or return of advance by cash above Rs.20,000 for purchase of immovable property prohibited. • Carrying on Yoga activity is included as an object of general public utility for charitable purposes. • Ceiling on receipts from trading activities to be 20% of total receipts instead of Rs.25 lakhs for charitable organisations
- 7. Individuals, HUF… Tax • No change in rate of personal tax slabs. Surcharge increased to 12% in case income exceeds Rs.1 Crore. 3% Cess to continue. • Health insurance premium (80D) increased from Rs.15000 to Rs.25000 , for senior citizens it is increased from Rs.20000 to Rs.30000 • Seniors citizens above the age of 80 yrs who are not / could not be covered by health insurance be allowed a deduction of Rs.30000 towards medical expenditures. (80D) • Transport allowance increased from Rs.800 to 1600 per month • Additional deduction of Rs.25000/- for differently abled persons.
- 8. Individuals, HUF Tax… cont’d • Contribution to pension fund and new pension scheme increased from Rs.1 lakhs to Rs.1.5 lakhs • Non disclosure / Evasion of tax in relation to foreign assets to have punishment of rigorous Imprisonment upto 10 yrs , penalty 300% & non- compoundable offence. • Non-filing of returns/filing of returns with inadequate disclosure – 7 yrs imprisonment. • Voluntary Disclosure Scheme expected in 3 months time for disclosure of foreign Assets • 100% tax deduction for donation to clean ganga Yojan and Swatch Bharath Yogan (for all assessees)
- 9. Corporate Tax • Rate of corporate tax rate to be reduced from 30% to 25% over next 4 years. • Provision to tackle splitting of reportable transactions • Additional investment allowance (15%) & Additional Depreciation (35%) for new units in AP& Telengana • Rate of Income tax on Royalty & fees for technical services paid to non residents reduced to 10% from 25%
- 10. Corporate Tax… cont’d • Domestic Transfer pricing limit increased to Rs.20 Cr from 5 Cr • Confidence is given that no retrospective taxation as far as possible • Donation to NFCDA to be eligible for 100% deduction u/s 80G • Mere presence of Fund Manager of Offshore Funds shall not constitute of Permanent Establishment
- 12. Goods & Service Tax (GST) As promised, GST to come into effect from 01.04.2016
- 13. Service Tax • Service Tax Rates Increased to 14% from 12.36% (No more Education Cess & SHE Cess) • Enabling provision to levy Swachh Bharat Cess at 2% of the value of taxable service is empowered • Time limit for taking CENVAT Credit on inputs and input services is being increased from six months to one year • Service Tax to be levied on service by way of admission to entertainment event of concerts, non-recognized sporting events, pageants, music concerts, award functions, if the amount charged is more than Rs 500 for right to admission to such an event • Service tax on Services provided by amusement facilities, water parks etc is removed from Negative List. These services will be taxable now
- 14. Service Tax… cont’d • Support Services provided by the Government or local authority to a business entity will be taxable now • Uniform abatement for transport of Goods by Rail, Road & Vessel. Servicetax shall be payable on 30% wherein CENVAT Credit on Inputs, Capital Goods and Services will not be available (w.e.f 1.4.15) • As per the Negative list, ST is not levied on any process amounting to manufacture or production of goods. However, now Service Tax will be levied on contract manufacturing /job work for production of potable liquor for a consideration. • Provision for issuing digitally signed invoices are being added along with the option of presentation of records in electronic form. • Due to increase in ST Rate from 12.36% to 14%, ST on air travel agent, insurance service and service provided by lottery distributor and selling agent will increase proportionately
- 15. Service Tax… cont’d • Service tax under Reverse Charge Mechanism (RCM) for supply of Manpower to be taxed at 100% instead of 75% • RCM is applicable on Service tax on Mutual fund agents and lottery distributors • Abatement on Service tax on Air travel other than economy class will be reduced from 60% to 40% (w.e.f 1.4.15) • Condition of availing CENVAT Credit on RCM only after making payment to the service provider is deleted. Accordingly, CENVAT Credit can be claimed on accrual basis. • Service-tax exemption to construction, erection, commissioning or installation of original works pertaining to an airport or port withdrawn • Transportation of agricultural produce to remain exempt from Service-tax • Penalty provisions under Section 73 & Section 76 & Section 78 has been amended to bring in more clarity
- 16. Excise Duty • Online Central Excise/Service Tax Registration within two working days • Ad Valorem Duty of Excise Increased to 12.50% from 12% (Education Cess & SHE Cess is no more applicable) • Excise duty on leather footwear, of Retail Sale Price of more than Rs.1000 per pair is being reduced from 12% to 6%. • Duty of Excise on Mineral water and aerated waters, containing sugar or other sweetening matter or flavoured increased form 12% to 18% • Duty of excise on cigarettes is being increased by 25% for cigarettes of length not exceeding 65 mm and by 15% for cigarettes of other lengths. Increase in duty rates is also proposed on cigars, cheroots and cigarillos • Excise duty on cut tobacco is being increased from Rs 60 per kg to Rs 70 per kg
- 17. Excise Duty… cont’d • Additional Duty of Excise (commonly known as Road Cess) levied on Petrol and High Speed Diesel Oil is being increased from Rs 2 per litre to Rs 8 per litre • Excise duty on wafers for manufacture of integrated circuit (IC) modules for smart cards is being reduced from 12% to 6%, • Excise duty structure for mobiles phones is being changed from 1% without CENVAT credit or 6% with credit to 1% without credit or 12.5% with credit • Excise duty on Tablet Computers 2% without CENVAT credit or 12.5% with credit
- 18. Excise Duty… cont’d • Excise duty structure of NIL without CENVAT credit or 12.5% with credit is being prescribed for solar water heater and system • Excise duty on sacks and bags of polymers of ethylene, other than for industrial use, is being increased to 15%. • Artificial heart exempt from basic custom duty of 5% and CVD. • Inputs for use in the manufacture of LED drivers and MCPCB for LED lights, fixtures and LED lamps from 12% to 6% • Concessional customs and excise duty rates on specified parts of Electrically Operated Vehicles and Hybrid Vehicles, presently available upto 31.03.2015, is being extended upto 31.03.2016 • Excise duty on chassis for ambulances is being reduced from 24% to 12.5%
- 19. Customs Duty • Motor vehicle for transport of ten or more person including vehicle for transport goods, including driver increased from 10% to 40% • Motor vehicle for transport of ten or more person including vehicle for transport goods, including driver increased from 10% to 20% • The tariff rate of basic customs duty on goods that is iron and steel and articles of iron or steel, is being increased from 10% to 15% • The tariff rate of Basic Customs Duty on Commercial Vehicles is being increased from 10% to 40% • Basic Customs Duty and CVD is being fully exempted on artificial heart (left ventricular assist device) • Improving the quality of life and public health through Swachh Bharat Initiatives. • The Schedule rate of Clean Energy Cess levied on coal, lignite and peat is being increased from Rs. 100 per tonne to Rs. 300 per tonne. The effect rate of Clean Energy Cess is being increased from Rs. 100/- tonne to 200/tonne
- 20. Other Laws
- 21. Prevention of Money Laundering Act • Definition of “proceeds of crime” to include property taken or held outside India • Limit specified under Part B for Scheduled offences increased from Rs.30 lakhs or more to Rs.100 lakhs or more • False declaration, false documents, etc. under section 132 of Customs Act, 1962 have been included as Part B of Scheduled offence
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- 23. Disclaimer This information contained herein is of general nature and is not an exhaustive analysis of the topics covered. Further, contents of this document are subject to approval of Finance Bill by the Parliament and its assent by the President of India. This document is prepared only as guiding tool reflecting highlights of Union Budget 2015. While every care has been taken in the preparation of this document, it may contain inadvertent errors for which we shall not be held responsible. No one should act on such information without appropriate professional advice. We accept no responsibility for loss arising from any action taken or not taken by anyone using this material and information.