Union Budget 2015-16 & 2014-15 Key Features and Highlights - Income Tax, Service Tax

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(A) Key Highlights - Income Tax

1. Rates of Income Tax, Surcharge and Cess
There is no change in the rate of income tax, surcharge , education and SHE cess. The rates for AY 2015-16 will remain the same as in AY 2014-15.

2. Income Tax basic exemption Slabs enhanced
The new income tax basic exemption limits has been increased. The revised limits are as under:

(a)    For Individuals (both male or female) HUF, AoP or BoI:

Up to Rs. 250000/-	Nil
From 250001 to Rs. 500000	10%
From 500001 to Rs. 1000000	20%
Above Rs. 1000000	30%

(b)    Senior Citizens (60 years or more but less than 80 years)

Up to Rs. 300000/-	Nil
From 300001 to Rs. 500000	10%
From 500001 to Rs. 1000000	20%
Above Rs. 1000000	30%

(c)    Super Senior Citizens (80 Years or more)
3. Investment Limit for Deduction u/s 80C increased
The investment limits has been increased from Rs. 1.00 lacs to rs.1.50 lacs. (wef AY 2015-16)

4. Extention of section 80CCD deduction benefits to private sector employees (w.e.f. AY 2015-16
Benefit extended for employees in the private sector, joining the New Pension Scheme (NPS) for deduction of amount so paid not exceeding 10% of salary

5. Housing Loan Interest deduction limit increased
The limit for claiming deduction for interest paid on housing loan for self occupied house has been raised from rs. 1.50 lacs to Rs. 2.00 lacs (w.e.f.  AY 2015-16)

6. Grossing up for payment of Dividend Distribution Tax (DDT) u/s 115O
The current rate for DDT is 15%.The method of computation for every 85 rupees of” dividend paid or distributed” by a company would be as under:

Dividend Distributed (say 100-15)	Rs. 85/-
Grossing up for 15%	Rs. 100/- (Rs. 85 / 0.85)
DDT @ 15%	Rs. 15/-
Tax payable u/s 115O	Rs. 15/-
Dividend to be distributed/paid	Rs. 85/-

Similar treatment is proposed for distribution of income to unit holders under section115R. the amendment shall be applicable wef 01-10-2014.

7. Holding period qualifying for LTCA by unlisted securities and units of MF increased
Anunlisted security and a unit of a mutual fund (other than an equity oriented mutual fund) shall be a short-term capital asset if it is held for not morethan thirty-six months. (wef AY2015-16)

8. Taxation regime for Real State Investment Trust (REIT) and Infrastructure Investment Trust (INVIT) 
Specific taxation regime provided for taxation of the income in the hands of such trusts and the taxability of the income distributed by such business trusts in thehands of the unit holders of such trusts. (wef 01/10/2014)

9. Investment Allowanceto Manufacturing Company-section 32AC

(a) Period of investment in plant and machinery extended to 31-03-2017

(b) Deduction to be if the investment is more than Rs.25 crore in a previous year.

(c) The assessee who is eligible to claim deduction under the existing combined threshold limit of Rs.100 crore for investment made inprevious years 2013-14 and 2014-15 shall continue to be eligible to claim deduction under the existing provisions contained in sub-section (1) of section 32AC even if its investment in the year 2014-15 is below the proposed new threshold limit of investment of Rs. 25 crore during the previous year (wef AY2015-16)

10. Extention of Sunsetdate under section 80IA for Power Sector
The start date for eligible activity extended  up to 31st March, 2017 i.e. till the end of the 12th Five Year Plan.

11. Capital Expenditure on Scientific Business u/s 35AD (w.e.f.AY 2015-16)

(a) Two new businesses added:

     (i) laying and operating a slurry pipeline for the transportation of iron ore;

     (ii) setting up and operating a notified semi conductor wafer fabrication manufacturing unit,.

(b) Capital asset to be used for minimum 8 years.

(c) Withdrawal of exemption if asset is used for other pruposes

(d) Deduction u/s 10AA shall not be available

12. Concessional withholding Tax on overseas borrowings (w.e.f. 01/10/2014)
Concessional withholding tax rate of 5% u/s 194LC shall now also apply to any long-term bond, rather then long term infrastructure bond only. Period of borrowing also extended by two years to 30/06/2017

13. Roll Back AdvancePricing Agreement Provisions u/s 92CC (w.e.f. 01/10/2014)

14. Alternate MinimumTax (w.e.f. AY 2015-16)
For computing adjusted total income, that total income shall be increased by the deduction claimed under section 35AD

15. Advance received fortransfer of capital assets to be taxable (w.e.f. AY2015-16)
Amount received as advance or otherwise in the course of negotiations for transfer of a capital asset. shall be taxable as ‘income from other  sources’

16. TDS on Non-exempt payments under Life Insurance Policy (w.e.f. AY2015-16)
Rate of 2% provided for deduction at source. No deduction to be made if  the aggregate sum paid in a financial year is less than Rs. 1 lacs

17. Rationalization ofthe definition of International transaction (w.e.f. AY2015-16)

18. Rationalization ofexemptions available to charitable institutions (w.e.f. AY2015-16)

(a) Section 10(23C) and Section 10 made mutually exclusive (other than agricultural income)

(b) For computing a pplication of income, depreciation shall be excluded

19. Rationalization of provisions related to cancellation of registration of trusts us/ 12AA (w.e.f. 01/10/2014)
Ambit for cancellation increased. Now registration of trust can be cancelled if:
(i) its income does not enure for the benefit of general public;
(ii) it is for benefit of any particular religious community or caste (in case it is established after commencement of the Act);
(iii) any income or property of the trust is applied for benefit of specified persons like author of trust, trustees etc.; or
(iv) its funds are invested in prohibited modes ,

20. Exemption u/s 11 and12 to trust/institution for period before registration (w.e.f. 01/10/2014)
(a) Exemption shall be available foran earlier assessment year for which registration was pending with Assessing Officer.
(b) No reopening of the case for earlier year shall be done on this ground
(c) This provision not to apply to cases where registration was denied subsequently

21. No Income Taxdeductions for expenses by companies on CSR (w.e.f. AY2015-16)

The deductions on only those CSR expenditure which is of the nature described in section 30 to section 36 of the Act shall be allowed

22. Disalowance of Expenses for non deduction of tax at source (w.e.f. AY2015-16)
(a) For claming deduction of payments to non-residents, time limit for payment of TDS shall be date of filing of ITR
(b) The disallowance u/s 40(a)(ia) shall be restricted to 30% of the amount of expenditure claimed
(c) The disallowance u/s 40(a)(ia) shall apply to all expenses currently not specifiedon which tax is required to be deducted at source.

23. Uniform rates for Business of Playing Hiring and Leasing Goods Carriage u/s 44AE (w.e.f. AY2015-16)
Uniform presumptive rate of Rs.7,500/ p.m. provided for all types of goods carriage without any distinction between Heavy Goods Vehicle and vehicle other than HGV

24. Accounting Standardsare meant for computation    (w.e.f. AY2015-16)
Accounting Standards notified u/s 145 are not meant for maintenance of books.These computation and disclosure standards shall be used for computation of income.

25. SpeculativeTranzactions in commodity derivatives   (w.e.f. AY 2014-15)
Eligible transaction in respect of trading in commodity derivatives carried out in a recognised association and chargeable to commodities transaction tax shall not be considered to be a speculative transaction.

26. Year of Taxabilityof compensation received in compulsory acquisition (w.e.f. AY2015-16)
The amount of compensation received in pursuance of an interim order of the court,Tribunal etc. shall be taxable in the previous year in which the final order of such court, Tribunal or other authority is made.

27.Capital gainexemption benefit u/s 54 restricted to one residential house (w.e.f. AY2015-16)
Section 54(1) amended to provide that relief is available if the investment is made inone residential house.

28. Capital gain exemption benefit u/s 54EC–relief is restricted to 50 lacs in whole (w.e.f. AY2015-16)
Relief under section 54EC shall be 50 lacs including the financial year in which the original asset or assets are transferred and the subsequent financial year

29. New Income taxAuthorities (w.e.f. 01/06/2013)
Principal Chief Commissioner of Income-tax”, “Principal Commissioner of Income-tax”, “Principal Director General of Income-tax” and “Principal Director of Income-tax”  to be new authorities

30. Survey – Power toretain books and documents u/s 133A (w.e.f. 01/10/2014)
(a) Periodof retention without approval extened to 15 days
(b) Power to survey for verifying TDS Compliances

31. Mutual Funds,Securitisation Trusts and Venture Capital Companies or Venture Capital Funds tofile return of income (w.e.f. AY 2015-16)

32. Power to call forInformation – New Section 133C (w.e.f. 01/10/2014)
For verification of information in its possession relating to any person,prescribed income-tax authority, may, issue a notice and call for information or documents.

33. Valuation of property, investments etc.  u/s 142A (w.e.f. 01/10/2014)
(a) Valuation Officer to estimate the value after taking into account the evidence produced by the assessee and any other evidence in his possession after giving an opportunity of being heard to the assessee.
(b)Time between reference to valuation officer and submission of his report to be excluded from time of completion of assessment.

34. Acceptance/repayment of Loans or Deposits u/s 269SS/269TT by ECS (w.e.f. 01/10/2014)
Any acceptance or repayment of any loan or deposit by use of electronic clearing system through a bank account shall not be prohibited under the said sections

35. Fine for failure toproduce books of account (w.e.f. 01/10/2014)
Section 276D amended to providefor a fine as against the present rate based fine for days under default.

36. Provisional attachment of property us/ 281B (w.e.f. 01/10/2014)
Chief Commissioner, Commissioner, Director General or Director may extend the period of provisional attachment for maximum two years or upto sixty days.

37. Annual Information Return (w.e.f. AY 2015-16)
(a) Prescribed reporting financial institution covered for reporting.
(b) Inaccuracy in AIR noticed by the furnisher to be reported in 10 days
(c) Due diligence to be carried out when specified
(d) New penalty of Rs. 50000/- prescribed u/s 271FAA for various defaults.

38. Assessment of otherpersons in search cases (w.e.f. 01/10/2014)
Satisfaction of jurisdictional Assessing Officer has been imported before assessment of other persons.

(B) Key Highlights – Service Tax  Click Here >>