Quick Review of Budget effects - Direct Taxes

[CS Swati Dodhi]

Quick Review of Budget effects - Direct Taxes

1. Relief for Tax Payers in the first slab of Rs. 2 lakhs to Rs.5 lakhs – tax credit of Rs. 2000 to every person with total income upto Rs. 5 lakhs.

2. Surcharge of 10% on persons (other than companies) with the taxable income exceeding Rs 1 crore.

3.Surcharge - increased to 10% from 5% on domestic companies whose taxable income exceed Rs 10 crore.

4.Foreign companies paying a higher rate of corporate tax - surcharge to increase from 2 to 5%  if the taxabale income exceeds Rs. 10 crore.

5. Dividend distribution tax or tax on distributed income, in other cases surcharge increased to 10% from 5%.

6. Additional surcharges to be in force for only one year.

7. Education cess will be at 3 percent as existing.

8. Relaxing eligibility conditions of life insurance policies for persons suffering from disability and certain ailments - Permissible premium rate increased from 10 percent to 15 percent of the sum assured.

9.Eligibility for section 80D of the Income tax Act - Contributions made to schemes of Central and State Governments similar to Central Government Health Scheme.

10. 100 percent deduction for Donations made to National Children Fund.

11. Investment allowance at the rate of 15 percent to manufacturing companies that invest more than Rs. 100 crore in plant and machinery during the period 1.4.2013 to 31.3.2015.

12. Benefit under Section 80- IA - ‘Eligible date’ for projects in the power sector extended from 31.3.2013 to 31.3.2014.

13. Dividend received by an Indian company from its foreign subsidiary - Concessional rate of tax of 15 percent  continue for one more year.

14. No Income tax on Securitisation Trust  -  Tax to be levied at specified rates only at the time of distribution of income for companies, individual or HUF etc. -  No further tax on income received by investors from the Trust.

15. Investor Protection Fund of depositories  - exemption from Income-tax in some cases.

16. Parity in taxation between IDF-Mutual Fund and IDF-NBFC.

17. Pass through status under Income-tax Act - Category IAIF set up as Venture capital fund.

18. Value of the transfer of immovable properties where consideration exceeds Rs. 50 lakhs - TDS at the rate of 1%  -  Agricultural land to be exempted.

19. Profits distributed by unlisted companies to shareholders through buyback of shares - final withholding tax at the rate of 20 percent.

20. Increase the rate of tax on payments by way of royalty and fees for technical services to non-residents from 10 percent to 25 percent.

21. Securities Transaction Tax in respect of certain transaction - Reductions made in rates.

22. Proposal to introduce Commodity Transaction Tax (CTT) in a limited way. Agricultural commodities will be exempted.

23. GAAR  - Modified provisions will come into effect from 1.4.2016.

24. Safe Harbour Rules will be issued after examining the reports of the Rangachary Committee appointed to look into tax matters relating to Development Centres & IT Sector and Safe Harbour rules for a number of sectors.

25. Fifth large tax payer unit to open at Kolkata shortly.

26. Administrative measures such as extension of refund banker system to refund more than Rs. 50,000, technology based processing, extension of e-payment through more banks and expansion in the scope of annual information returns by Income-tax Department.