budget on direct taxes 2014 (private & confidential) vinod k.mehta & co. b-5 satyam shopping...

BUDGET ON DIRECT TAXES 2014

(Private & Confidential)

VINOD K.MEHTA & CO.B-5 SATYAM SHOPPING CENTRE,M.G.ROAD,GHATKOPAR(E),MUMBAI-400077.TEL:022-21024280EMAIL ID: [email protected], [email protected]

www.vkmehta.com

mailto:[email protected]

TOTAL INCOME

Individual, HUF

Individual (> 60yrs & < 80 yrs)

Individual ( > 80 yrs )

UP TO Rs. 2,50,000

NIL Nil Nil

Rs. 2,50,001 TO Rs. 3,00,000

10 % Nil Nil

Rs. 3,00,001 TO Rs. 5,00,000

10 % 10 % Nil

Rs. 5,00,001 TO Rs. 10,00,000

20 % 20 % 20 %

Above Rs. 10,00,000

30 % 30 % 30 %

Slab Rates

Particulars Rate of Tax

For Company , Firm & LLP 30 % flat on Total Income

Surcharge in Income Tax

Particulars Existing Proposed

Individual /HUF/ Firm/ Co-op Soc./ Local Auth.

10% If TI > 1 Cr. 10% If TI > 1 Cr.

Domestic Company 5% If TI > 1Cr10% If TI > 10 Cr

5% If TI > 1 Cr & < 10 Cr10% If TI > 10 Cr

Other than Domestic Co.

2% If TI > 1Cr5% If TI > 10 Cr

2% If TI > 1Cr & < 10 Cr5% If TI > 10 Cr

Non-Resident Person 10% if TI > 1Cr 10% if TI > 1Cr

Dividend Distribution Tax – Change in Manner of Computation

Particulars Existing Calculation

Proposed Calculation

Dividend 85 85

DDT 12.75(15% on Net Rs. 85)

15(15% on Gross Rs. 100)

Cost to Company 97.75 100

Thus , Tax Liability on DDT increased by 2.25 %

Applicable W.E.F. 1st October 2014.

Classification for Short – Term Capital Asset

TYPE OF COMPANY Existing Period Of Holding

Proposed Period of Holding

Unlisted & Private Company

12 Months or less 36 months or less

Listed on a recognized Stock Exchange

12 Months or less 12 months or less

Debt Oriented fund 12 Months or less 36 Months or less

Equity Oriented Fund 12 Months or less 12 Months or less

Applicable W.E.F 01st April 2015 i.e. from A.Y. 2015-16 and Subsequent years.

The Period of Holding for treating Capital Gain as Short Term has been Changed for UNLISTED Shares and DEBT Oriented Mutual Fund as under :

Long term Capital Gains on Debt Oriented Listed Mutual Fund

Particulars Existing Tax Rate Proposed Tax Rate

Mutual Funds (Other than equity Oriented)

10 % without Indexation OR20 % with Indexation

20 % with Indexation

Mutual Funds (Equity Oriented )




Tax rate on sale of Long Term Listed Mutual Fund (other than Equity oriented Mutual Fund) is proposed to be increased from 10% to 20 %. The summarized impact is as under :

INVESTMENT ALLOWANCE TO A MANUFACTURING COMPANY


Investment in P & M 100 Crore 25 Crore

Deduction Rate 15 % 15 %

Due Date of Investment

31.03.2015 31.03.2017

In order to encourage the companies engaged in business of manufacture and production of an article or thing to invest substantial amount in acquisition and installation of plant & machinery the following amendments has been made .

Applicable W.E.F 01st April 2015 i.e. from A.Y. 2015-16 and subsequent years.

SUN-SET DATE U/S 80IA FOR POWER SECTOR


Terminal Date For Deduction of Profit & Gains

31.03.2014 31.03.2017

Sunset Clause for Claiming deduction under section 80-IA for power sector undertaking has been extended to 31st March , 2017


RAISING THE LIMIT U/S 80C


80C 1 Lakh 1.5 Lakhs

The maximum deduction limit under section 80 C is proposed to increase from Rs. 1 Lakh to Rs. 1.5 Lakhs

The investments qualify for deduction , include life insurance premium, contributions to provident fund, schemes for deferred annuities etc.


DEDUCTION FROM INCOME FROM HOUSE PROPERTY


Interest On Borrowed Capital

1.5 Lakh 2 Lakhs

The maximum deduction Limit in respect of Interest on Home Loan for Self Occupied Property is proposed to raise from 1.5 Lakhs to 2 Lakhs.


Taxability of advance forfeited for transfer of a capital asset

Proposed :

It is proposed to provide for the taxability of any sum of money,

◦ Received as an advance or otherwise in the course of negotiations for transfer of a capital asset.

And

◦ Such sum shall be chargeable to income-tax under the head ‘income from other sources’ if such sum is forfeited and the negotiations do not result in transfer of such capital asset.


TDS Applicable to Maturity Proceed under non-exempt life insurance policy

Existing :

Any sum received under a life insurance policy, is exempt subject to fulfillment of conditions specified under section. 10(10D).

Proposed :

It is proposed to insert a new section in the Act to provide for deduction of tax at the rate of 2 per cent. on sum paid (if it is more than Rs 1 Lac)under a life insurance policy, including the sum allocated by way of bonus, which are NOT EXEMPT under section 10(10D) of the Act.


Corporate Social Responsibility It is proposed to treat any expenditure incurred by an Assessee on the activities relating to corporate social responsibility as per Companies Act, 2013 as not allowable business expense and hence shall not be allowed as deduction .

However, the CSR expenditure which is of the nature described in section 30 to section 36 of the Act shall be allowed deduction under those sections subject to fulfillment of conditions, if any, specified therein.

Thus , CSR will be NON Deductible and has to be incurred on Income After Tax (Like Dividend).


Disallowance of expenditure for non-deduction of TDS


Non-Payment or Non- Deduction of TDS payments u/s 40(a)(ia)

100 % Disallowance 30 % Disallowance

Existing :In case of non-deduction or non-payment of tax deducted at source (TDS) from certain payments made to residents, the entire amount of expenditure on which tax was deductible is disallowed under section 40(a)(ia) .

Proposed : In case of non-deduction or non-payment of TDS on payments made to residents as specified in section 40(a)(ia) of the Act, the disallowance shall be restricted to 30% of the amount of expenditureclaimed.


Business of Plying, Hiring or Leasing Goods Carriages

The existing provisions of section 44AE of the Act provides for presumptive taxation in the case of an Assessee who is engaged in the business of plying, hiring or leasing goods carriages and not owning more than ten goods carriages at any time during the previous year.

Income from the said business is calculated as under:

Types of Goods Carriages

EXISTING Amt of Presumptive Income

PROPOSED Amt of Presumptive Income

Heavy Goods Vehicle(HGV)

Rs. 5000 for every Month

Rs. 7,500 for Every Month

Vehicles Other than HGV

Rs. 4500 for every Month

Rs. 7,500 for Every Month


Speculative Transaction in respect of Commodity Derivatives

Proposed :

It is proposed to provide that eligible transaction in respect of trading in commodity derivatives carried out in a recognized association AND Chargeable to commodities transaction tax under Chapter VII of the Finance Act, 2013

shall not be considered to be a speculative transaction.

Applicable retrospectively from 01st April 2014 i.e. from A.Y. 2014-15 and subsequent years.

Capital Gains Exemption if Investment in a Residential Property Existing:

Under the provisions of section 54 & 54F , Long term capital gain was exempted if , invested (purchased) with in a period of

a) one year before OR

b) Two years after the date of transfer (i.e. realization of capital gain) OR

c) with in period of 3 years constructs Residential House .

It was not specified about the Location of Residential Property (Whether in India Or Abroad).

Proposed :It has been proposed to restrict the exemption only if , the property is acquired in INDIA.

It is also proposed to allow the said exemption , if Invested in ONE House OnlyApplicable W.E.F 01st April 2015 i.e. from A.Y. 2015-16 and subsequent

years.

budget on direct taxes 2014 (private & confidential) vinod k.mehta & co. b-5 satyam shopping...

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