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INDIA BUDGET 2016- Key Aspects

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INDIA BUDGET 2016 - Key Aspects

RSM INDIA BUDGET 2016 - Key Aspects

Table of Contents

Executive Summary 1

Chapter 1 : Introduction 8

Chapter 2 : Indian Economy - An Overview 12

Chapter 3 : Tax Rates 15

Chapter 4 : G-20 Countries - Comparative Corporate And Personal Tax Rates 22

Chapter 5 : Tax Incentives For Businesses 23

Chapter 6 : Direct Taxes - Significant Changes 39

6.1 Business Entities

6.2 Personal 46

6.3 Non Residents 49

6.4 Transfer Pricing 51

6.5 General 54

Chapter 7 : Indirect Taxes - Significant Changes 59

7.1 Service Tax 60

7.2 Customs Duty 65

7.3 Central Excise 67

7.4 Central Sales Tax Act 71

Chapter 8 : Other Significant Proposals 72

Chapter 9 : Impact On Select Industries 76

Chapter 10 : DTAA Rates 87

Chapter 11 : TDS Rates 96

Chapter 12 : Direct Tax And Service Tax Compliance Calendar 99

Abbreviations 102

39

RSM 1INDIA BUDGET 2016 - Key Aspects

Executive Summary

1.0 DIRECT TAXES1.1 Effective Tax Rates1.1.1 Personal taxation

nThe Bill proposes no change in personal tax rates and basic exemption limit continues at Rs.2,50,000. However, there is an increase in surcharge from 12% to 15% for Individuals / HUFs having income above Rs. 1,00,00,000. This will result in maximum marginal rate of 35.535% {(30%+15% surcharge thereon)+3% cess} for FY 2016-17 as against 34.608% {(30%+12% surcharge thereon)+3% cess} at present.

1.1.2 Corporate taxation nNew manufacturing domestic companies incorporated on or after 1

March 2016 may opt for corporate tax rate of 25% plus applicable surcharge and cess provided profit linked incentives / investment linked deductions / investment allowance / accelerated depreciation are not claimed.

nCorporate tax rate for relatively smaller domestic companies with turnover not exceeding Rs. 5,00,00,000 (For FYE 31 March 2015) to be 29% plus applicable surcharge and cess.

nCorporate tax rate for other domestic companies remains unchanged @30% plus applicable surcharge and cess.

nSurcharge on corporate tax / MAT of domestic company remain unchanged @7% where income exceeds Rs. 1,00,00,000 not exceeding Rs. 10,00,00,000 and @12% where income exceeds Rs. 10,00,00,000.

nCorporate tax rate for foreign companies remains unchanged @40% plus applicable surcharge and cess.

1.1.3 Partnership firms / LLPnFor total income exceeding Rs. 1,00,00,000, tax is chargeable @34.608%

[(tax rate 30% plus surcharge 12% thereon) plus education cess 3% thereon]. In other cases, effective tax rate remains unchanged @ 30.90%.

nAMT remains unchanged @21.346% [(tax rate 18.50% plus surcharge 12% thereon) plus education cess 3% thereon] in case the adjusted total income exceeds Rs. 1,00,00,000. In other cases, the effective tax rate remains unchanged @ 19.055%.

nDeduction up to 100% of the profits allowed for 3 out of 5 years for start-ups setup during April 2016 to March 2019. However, MAT will apply in such cases.

1.2 Tax Incentives and Proposals for Businesses

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Executive Summary


nDeduction up to 100% of profits allowed to an undertaking in housing project for flats upto 30 sq. meters in 4 metro cities and 60 sq. meters in other cities, approved between June 2016 and March 2019 and completed within 3 years. However, MAT / AMT will apply in such cases.

nIn respect of foreign company engaged in the business of mining of diamonds, it is proposed that no income shall be taxed from the activities confined to display of uncut and unassorted diamonds in a Special Notified Zone.

nThe new tax regime provides pass through treatment of income of the securitisation trust wherein the income would be directly taxable in the hands of its investors. The securitisation trust shall be required to deduct tax at source @25% in case of payment to resident investors which are individual or HUF and @30% in case of others excluding non-residents. In case of payments to non-resident investors, TDS shall be at the rates in force.

nIt is proposed to amend section 10 of the IT Act to provide units located in an International Financial Services Centre for exemption from tax on capital gains to the income arising from transaction undertaken in foreign currency on a recognised stock exchange even when STT is not paid in respect of such transactions. However, MAT shall be chargeable @9%. Further, DDT shall not be applicable.

nPresumptive taxation scheme extended to professionals having gross receipts up to Rs. 50,00 000 with profit deemed to be 50%.

nThe threshold limit of gross receipts for applicability of tax audit in case of professionals, increased from Rs. 25,00,000 to Rs. 50,00,000.

nDeduction under section 80JJAA of the IT Act for additional wages is now available to all assessees who are subject to tax audit.

nConcessional tax rate of 10% for Indian residents on royalty income on gross basis from worldwide exploitation of patents developed and registered in India.

nDividend distributed by SPVs out of its income to the REITs / InvITs, not to suffer DDT.

nNon-banking financial companies shall be eligible for deduction to the extent of 5% of its income in respect of provision for bad and doubtful debts.

nIn order to provide clarity, it is proposed to insert a new section 35ABA in the IT Act to provide for tax treatment of spectrum fee. The spectrum fee will be allowed as a deduction in equal installments over the period for which the right to use spectrum remains in force.

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Executive Summary

nSection 43B of the IT Act is proposed to be amended to include payments made to Indian Railways for use of Railway assets within its ambit.

nOne time window provided for domestic taxpayers to declare undisclosed income or such income represented in the form of any asset by paying tax @30%, surcharge @7.5% and penalty @ 7.5%, aggregating to 45% of the undisclosed income. Declarants will have immunity from prosecution.

nDirect Tax Dispute Resolution Scheme 2016 proposed to be introduced for tax arrears and specified tax where the assessee has the option to settle the case by paying tax, interest and penalty as under:– Where the appeal is pending before the CIT(Appeals), pay tax

arrears along with interest up to date of assessment and no penalty where tax arrears are less than Rs. 10,00,000 whilst 25% penalty where tax arrears exceed Rs. 10,00,000.

– Where appeal is pending before any appellate authorities and tax was determined pursuant to retrospective amendments, only tax amount to be paid and immunity from interest, penalty and prosecution.

nExisting penalty provisions of section 271(1)(c) are rationalized and new section 270A is introduced where it is proposed to levy a penalty @50% of taxes payable on the underreporting of income and @200% of taxes payable on the misreporting of income.

nPetitions of the tax payers seeking waiver of interest and penalty to be disposed off within a year.

nThe AO to grant stay of demand once assessee pays 15% of the disputed demand, while the appeal is pending before CIT(Appeals).

nGovernment to pay interest at 9% p.a. for delay in giving effect to Appellate Order beyond 90 days.

nAs per the Budget speech, section 14A read with rule 8D is proposed to be amended wherein disallowance would be limited to 1% of the average monthly value of investments yielding exempt income, but not exceeding actual expenditure claimed.

nDividend income of more than Rs.10,00,000 p.a. would be liable to tax @10% of gross amount of dividends in the hands of Individuals / HUFs / Firms despite the fact that DDT is already paid by companies declaring such dividends.

nTax to be collected at source @1% on purchase of luxury cars exceeding value of Rs.10,00,000 and purchase of goods and services in cash

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Executive Summary

exceeding Rs.2,00,000.nSTT in case of ‘Options’ increased from 0.017% to 0.05%.nIn addition to existing conditions for availing tax neutral conversion from

Company to LLP, value of total assets as per books in any preceding 3 years not to exceed Rs.5,00,00,000.

nThe time limit for assessment, reassessment, re-computation has been advanced by 3 months.

nGAAR to be effective from 1 April 2017.

nThe tax rebate under section 87A has been increased from Rs. 2,000 to Rs. 5,000 for Individuals having income up to Rs. 5,00,000.

nWithdrawal up to 40% of the corpus at the time of closure to be tax exempt in the case of National Pension Scheme (NPS) and the Annuity fund which goes to legal heir will also be exempt.

nIn case of superannuation funds and recognized provident funds, including EPF, the same norm of 40% of corpus to be tax free will apply in respect of corpus created out of contributions made on or after 1 April 2016.

nHigher rate of TDS for non-provision of PAN in case of non-residents, not to apply where alternative documents are provided by such non-residents.

nEqualization levy of 6% proposed on payment (exceeding Rs.1,00,000 p.a.) made to non-residents not having a PE, in respect of online advertising or space for digital advertising, in case of B2B transactions.

nAny income accruing or arising to a foreign company on account of storage of crude oil in a facility in India and sale of crude oil therefrom to any person resident in India shall not be included in the total income.

nApplicability of rules of POEM for determining the status of residency of a foreign company deferred by 1 year. (Applicable w.e.f. FY 2016-17)

nBased on OECD Action plan 13 of BEPS, it is proposed to provide specificreporting regime in respect of Country by Country reporting and also a standardized master file for all group members of Multinational Enterprises. Penal implications introduced for non-compliance.

nTime limit for assessment, reassessment, re-computation has been advanced by 3 months

nTo facilitate the “Stand Up India Scheme” at least 2 projects per bank

1.3 Personal Taxation

1.4 Proposals for Non-residents

1.5 Proposal for Transfer Pricing

1.6 Other Proposals

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Executive Summary

branch to be approved. This will benefit at least 2,50,000 entrepreneurs.nGovernment to contribute 8.33% for all new employees (where basic

salary is less than Rs.15,000 p.m.) enrolling in EPFO for the first 3 years of their employment. Budget provision of Rs. 1,000 crore for this scheme.

nAmendments in Companies Act to improve enabling environment for start-ups.

nReforms in FDI policy in the areas of Insurance and Pension, ARC, SEs. Further, 100% FDI allowed through FIPB route in marketing of food products produced and manufactured in India.

nTo continue with the ongoing reform programme and ensure passage of the GST bill and Insolvency and Bankruptcy law.

nNew model Shops and Establishments Bill to be circulated to the state governments.

nEffective service tax rate to increase from 14.5% to 15% (including Swachh Bharat Cess) in view of the proposal to levy an additional cess @ 0.5% as Krishi Kalyan Cess w.e.f. 1 June 2016 on all or any of the taxable services.

nExemption to construction and maintenance in relation to various projects, contracts etc., which was removed w.e.f. 1 April 2015 has been restored and given retrospective exemption.

nRate of interest rationalized @24% in case of amount collected but not paid and @15% in all other cases, as against the present rate of 18% to30%, as the case may be.

nLegal services provided by a senior advocate to an advocate or partnership firm of advocates made liable to service tax.

nRationalization of abatement to construction of complex, building civil structure or part thereof @70% as against existing rate of 70% and 75% as the case may be.

nServices provided by mutual fund agent/distributor to mutual fund/asset management company to be liable as forward charge.

nOne Person Company whose aggregate value of services during previous financial year is up to Rs. 50,00,000 or HUF shall be required to pay service tax as per the due date as applicable to individual or partnership firms.

nThe limitation period for issuance of show cause notice is proposed to be increased from 18 months to 30 months.

nAmendment in CENVAT Credit Rules, 2004 particularly relating to

2.0 INDIRECT TAXES2.1 Service Tax

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Executive Summary

apportionment of credit between exempted and non-exempted final products/services.

nAmendment in provisions relating to Input Service Distributor (ISD) including extension of this facility to transfer input services credit to outsourced manufacturers under certain circumstances.

nBanking and other financial institution to have an option of reversing CENVAT credit in respect of exempted services on actual basis, in addition to an option of reversal of 50% of CENVAT credit.

nLevy of service tax and excise duty/CVD to be mutually exclusive on informational technology software.

nIt is clarified that point of taxation in case of new levy on services will be as per Rule 5 of Point of Taxation Rules, 2011 and that that transactions other than those falling under two scenarios specified in Rule 5 shall be liable to new levy.

nThe optional service tax rate in case of single premium annuity policies is being rationalized @1.4% of the total premium charged, where the amount allocated for investment is not intimated to policy holder.

nIndirect Tax Dispute Resolution Scheme, 2016 is proposed to be introduced w.e.f. 1 June 2016 for Service Tax, Excise and Customs assessee who has filed an appeal before Commissioner (Appeals) and is pending for adjudication as on 1 March 2016.

nTransportation of goods by a vessel from customs station of clearance in India to place outside India, not to be treated as exempted services for the purpose of CENVAT Credit Rules.

nIt is proposed to levy service tax on transportation of goods by a vessel from outside India up to the customs station in India w.e.f. 1 June 2016.

nNo change in general effective rate of Basic Excise Duty (‘BED’).nInfrastructure Cess as duty of excise ranging from 1% to 4% is being

imposed on motor vehicles (depending upon type of motor vehicle) falling under chapter heading 8703.

nExcise duty of 1% without input tax credit or 12.5% with input tax credit on articles of jewellery (excluding silver jewellery, other than studded with diamonds and some other precious stones) with a higher exemption and eligibility limits of Rs. 6 crores and Rs. 12 crores respectively.

nExcise duty on ready-made garments with retail price of Rs. 1,000 or more, raised to 2% without CENVAT credit or 12.5% with CENVAT credit

nBED on refrigerated containers reduced from 12.5% to 6%.nOption for revising periodical returns to be provided to central excise

2.2 Excise Duty

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Executive Summary

assesses.nChanges in excise duty rates on certain inputs in sectors like information

technology hardware, capital goods, defense production, textiles, mineral fuels & mineral oils, chemicals & petrochemicals, paper, paperboard and newsprint, maintenance repair and overhauling of aircrafts and ship repair.

nReduction in number of returns under central excise by an assessee above a certain threshold from 27 to 13.

nExemption from excise duty on ready mix concrete manufactured at construction sites.

nRate of duty increased from 9% to 9.5% in case of refined gold bars manufactured from gold dore bar, silver dore bar, gold ore or concentrate, silver ore or concentrate, copper ore or concentrate. Excise duty exemption under the existing area based exemptions on refined gold is withdrawn.

nFor refined silver manufactured from silver ore or concentrate, silver dore bar, or gold dore bar, the excise duty exemption under the existing area based exemptions is being withdrawn – rate of duty to increase from 8% to 8.5%.

nNo change in peak rate of Basic Custom Duty (BCD).nBCD on import of imitation jewellery is increased from 10% to 15%.nInterest rate for delayed payment of customs duty has been reduced

from 18% p.a. to 15% p.a.nImport of Printed Circuit Boards (PCBs) of mobile phones and tablet

computers subjected to Customs Duty.nSpecial Additional Duty (SAD) to be levied on import of inputs and raw

materials used in manufacture of personal computers and tablets.nSelf–declaration sufficient for availing duty exemptions to import goods

at concessional rate to be used in manufacture of excisable goods.nCustoms baggage declaration to be filed only by passengers carrying

dutiable or prohibited goods.nCVD increased on gold dore bars from 8% to 8.75%.nCVD increased on silver dore from 7% to 7.75%.

nGas transported through a common carrier pipeline or transport or distribution system and which becomes comingled or fungible, introduced in the system in one state and taken out from the pipeline in the other state is deemed to be sold in the inter-state trade.

2.3 Customs

2.4 Central Sales Tax

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Chapter 1 Introduction

1.1 Background

In the midst of an uncertain global economic outlook, India is emerging as the new ‘global economic hotspot’. The Indian economy is estimated to grow at 7.6% in FY 2015-16 and is expected to grow at 7% to 7.75% in FY 2016-17, making it the fastest growing major economy in the world. Further, India’s other macroeconomic parameters like inflation; fiscal deficit and current account balance have exhibited distinct signs of improvement. The World Economic Forum has said that India’s growth is ‘extraordinarily high’.

The Union Budget 2015 is primarily driven with the objective of accelerating investment in infrastructural sector, fiscal consolidation and reducing litigation. The total investment in infrastructure sector is projected at a whopping Rs. 2,21,000 crores. The fiscal deficit for FY 2015-16 is expected to be at 3.9% of GDP which is expected to come down to 3.5% for FY 2016-17.

The most striking feature of the Budget is the concerted effort at reducing litigation and ease of doing business. The Budget contains “The Direct Tax Dispute Resolution Scheme 2016” which would permit the taxpayers whose appeals are pending before the first appellate authority to pay the tax and interest up to the date of assessment where disputed tax is up to Rs. 10 lacs. In cases where disputed tax exceeds Rs. 10 lacs, 25% of the minimum penalty leviable shall be payable. There will be no further penalty or prosecution nor interest for the period after assessment. The total disputed amount in litigation is estimated at Rs.5.50 lac crores with over 3 lac cases. The Budget also contains “The Income Declaration Scheme 2016” which will provide a window to the taxpayers who have not paid full taxes in the past to ensure compliance by paying 45% of declared income as tax and penalty. This will result in no further interest or penalty or prosecution. The scheme will be open from June 2016 to September 2016 and will be subject to specified conditions. In the case of tax disputes due to retrospective changes of law (such as Vodafone for indirect transfer of shares), it is proposed to permit the settlement of dispute subject to the payment of tax which will ensure complete immunity from interest, penalty and prosecution. This can help restore confidence of international investors.

There is a widespread disappointment on the tax rates. In the last Budget 2015, a roadmap to lower the corporate tax rates over 4 years from 30% to 25% was announced with the phasing out of the tax exemptions. However, the corporate tax rate has been kept unchanged at 30% plus applicable surcharge and cess

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resulting in effective tax rate of 34.608%. The only relief is for specific manufacturing companies set up after 1 April 2016 where a lower rate (i.e. 25% plus applicable surcharge and cess) and Specified small companies having annual turnover of less than Rs. 5 cores (i.e. 29% plus applicable surcharge and cess) would apply, although MAT shall be applicable to them. In turn, it has proposed phased elimination of deductions and exemptions including sunset clause for setting up of SEZ units, infrastructure facilities and developers of SEZs. The Minimum Alternate Tax (MAT) and Dividend Distribution Tax (DDT) rates have remained unchanged at 21.3416% {(18.5%+12% surcharge) x3% cess} and 20.358% {(15%+12% surcharge) x3% cess with grossing up} respectively.

The personal tax rates have remained unchanged except for high income tax payers wherein the surcharge on income-tax is proposed to be increased from 12% to 15% in case income exceeds Rs. 1,00,00,000. This will result in maximum marginal rate of 35.535% {(30%+15% surcharge thereon)+3% cess} for FY 2016-17 as against 34.608% {(30%+12% surcharge thereon)+3% cess} at present. It is also proposed to tax any income by way of dividend in excess of Rs. 10,00,000 in the case of an individual, HUF or a firm who is resident in India @ 10% on gross basis. However, HNIs can heave a sigh of relief that the much talked about long term capital gains tax exemption period for shares sold on the stock exchange continues at 1 year and has not been increased to 3 years. The limit for deduction under Section 80C of Rs. 1,50,000 remains unchanged. Section 80C provides for tax deduction in respect of investment in eligible savings such as Provident fund, ELSS, life insurance premium, housing loan repayment, 5 year bank deposits, NSC, ULIP to promote growth.

Certain Foreign Direct Investment reforms have been announced in areas of Insurance and Pension, Asset Reconstruction Companies, Stock Exchanges, etc. 100% FDI will be allowed through FIPB route in marketing of food products produced and manufactured in India. To incentivize Sovereign Gold Bond and Gold monetization scheme, the capital gains on redemption and interest thereon is proposed to be exempt under the IT Act.

The determination of tax residency of foreign company on the basis of Place of Effective Management (POEM) is proposed to be deferred by 1 year. It is hoped that the Income Computation and Disclosure Standards (ICDS) would also be deferred as per recommendation of the Easwaran Committee. To meet with the commitment to BEPS initiative of OECD and G-20, the Finance Bill, 2016 has included the provision for requirement of country by country reporting for companies with consolidated revenue of more than Euro 750 million. General Anti Avoidance Rules (GAAR) would be effective from 1 April 2017 as proposed earlier. A new provision (section 35ABA) is proposed to be introduced to provide

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clarity for amortization of spectrum fees. For a foreign company engaged in business of mining of diamonds, it is proposed that, no income shall be taxed from the activities confined to display of uncut and unassorted diamonds in a Special Notified Zone.

It is proposed to promote employment generation, incentive available under Section 80JJAA of the IT Act will be available not only to assessees deriving income from manufacture of goods in a factory but to all assessees who are subject to statutory audit under the Act. Thus, a deduction of 30% of the emoluments paid to such employees can be claimed for 3 years for employees whose monthly emoluments do not exceed Rs.25,000. Also, no deduction will be admissible in respect of employees for whom the Government is paying the entire EPS contribution.

Deduction up to 100% of the profits is proposed to be allowed for 3 out of 5 years for start-ups setup during April 2016 to March 2019. Deduction up to 100% of profits is proposed to be allowed to an undertaking in housing project for flats upto 30 sq. metres in 4 metro cities and 60 sq. metres in other cities, approved between June 2016 and March 2019 and completed within 3 years. However, MAT / AMT will apply in both the cases.

Under the existing provisions of the Income-tax Act, tax treatment for the National Pension System (NPS) referred to in section 80CCD is Exempt, Exempt and Tax (EET). It is proposed that withdrawal up to 40% of the corpus at the time of retirement shall be tax exempt in the case of National Pension Scheme. In case of superannuation funds and recognized provident funds, including employees provident Fund, 40% of corpus created out of contributions made on or from 1.4.2016 shall be tax exempt upon withdrawal. It may be pointed out that presently withdrawals from recognized Provident Funds are generally exempt from tax altogether whereas withdrawals from NPS are taxable entirely.

It is proposed to provide for presumptive taxation regime for professionals having gross receipts upto Rs. 50,00,000 per annum wherein profit of 50% shall be deemed to be his income.

Effective service tax rate (including Swachh Bharat Cess) and the proposed additional levy @ 0.5% as Krishi Kalyan Cess effective 1 June 2016 on the taxable services, would result in effective service tax rate to 15%. This will have far reaching implications. Excise duty of 1% without input tax credit or 12.5% with input tax credit is proposed on articles of jewellery (excluding silver jewellery, other than studded with diamonds and some other precious stones) with a higher exemption and eligibility limits of Rs. 6 crores and Rs. 12 crores respectively.

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A Committee shall be formed to review the implementation of the FRBM Act and give its recommendations on the way forward. As mentioned in the Budget Speech, the Government shall also endeavour to continue with the ongoing reform programme and ensure passage of the Constitutional amendments to enable implementation of the Goods and Service Tax, the passage of Insolvency and Bankruptcy law and other important reform measures which are pending before the Parliament. Amendments in Companies Act are proposed to improve enabling environment for start-ups. Comprehensive central legislation to deal with illicit deposit taking schemes is proposed to be introduced. A new model Shops and Establishments Bill is proposed to be circulated to the state governments and the passenger road transport segment is proposed to be revamped with reforms.

The Budget is a serious Policy Statement for putting India back on the path of long term sustained economic growth and stable tax regime.

In this booklet compiled by us, we intend to offer a broad outline of the highlights of the Union Budget 2016 presented on 29 February 2016. We have discussed the significant proposals of general interest in respect of direct taxes. In respect of indirect taxes and other policy initiatives, only the highlights have been briefly enumerated. Preceding the budget proposals are the macro indicators of Indian economy which provide a backdrop to the legal and financial proposals.

This booklet is not an offer, invitation or solicitation of any kind and it does not purport to be comprehensive, or to render legal, economic or financial advice. This booklet should not be relied upon for taking actions or decisions without appropriate professional advice as the facts of each case have to be studied and the legal position analysed properly before taking any action or decision in the matter. Further, this booklet contains only the proposals and amendments as given in the Finance Bill, 2016, which may be modified before it receives the approval and assent of the Parliament and the President. The proposals regarding direct taxes would become effective from AY 2017-18 (FY 1 April 2016 to 31 March 2017), unless otherwise specified. In this booklet, the terms 'IT Act', 'the Rules' and 'the Bill' are used for the "Income-tax Act, 1961", ''Income-tax Rules, 1962'' and "Finance Bill, 2016" respectively.

While all reasonable care has been taken in preparation of this booklet, we accept no responsibility for any errors it may contain or for any omissions or otherwise or for any loss, howsoever caused or sustained, by the person who relies on it.

1.2 Scope and Limitations

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Chapter 2 Indian Economy – An Overview

2.1 India At A Glance – The Macro-Economic Perspective

GDP - 2015lUS$ 8 trillion in terms of Purchasing

Power Parity (PPP) - 3rd largest in the world

Rapid AdvancementlIndia hailed as a 'bright spot' amidst a

slowing global economy by IMFlThe World Economic Forum has said that

India's growth is 'extraordinarily high’

GDP Growth Rate

l7.6% for FY 2015-16 (Advance Estimate)l7% to 7.75% for FY 2016-17 (Projection)

Demography l1.271 billion (2015) with more than 65%

population aged under 35 yearslWorld’s largest diaspora of 16 million

Forex ReserveslForex Reserves of US$ 350 billion

Exchange Ratel1 US$ = INR 68.616 (as on 29 February

2016)

Market Capitalization (as on 29 February 2016)lUS$ 1.25 trillion

Political SystemlFederal Republic with Parliamentary

democracylLargest Democracy in the world.

2.2 General Review

The global economic outlook is currently very uncertain due to weak growth of world output, declining prices of a number of commodities, turbulent financial markets and volatile exchange rates. In spite of such unsupportive macroeconomic landscape, India has grown at 7.6% in FY 2015-16 and is expected to grow at 7% to 7.75% in 2016-17, making it the fastest growing major economy in the world. Further, India’s other macroeconomic parameters like inflation, fiscal deficit and current account balance have exhibited distinct signs of improvement. As a result, India is emerging as the new ‘global economic hotspot’.

GDP Growth

5.1

2014-15 2015-162013-142012-13 2016-17*

* Projection

6.97.2 7.6 7.759

87654321

0

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The year 2015-16 continues to experience moderation in general price levels in the country following the global trend of declining commodity and producers prices. Headline inflation based on the Consumer Price Index, dipped to 4.9% during 2015-16 (April-January) as against 5.9 % in 2014-15. Similarly, headline Wholesale Price Index inflation was -2.8% in 2015-16 (April-January) as compared to 2.0% in 2014-15.

During 2015-16 (April-January), India’s exports declined year-on-year by 17.6 % to US$ 217 billion owing to sluggish global demand and low global commodity prices. In keeping with the global trends of slow growth, imports have also declined by 15.5 % in 2015-16 (April-January) to US $ 324 billion. Lower imports of petroleum, oil and lubricants were the main reasons for the decline in total imports this year so far. In spite of the decline in exports during 2015-16, India’s BoP position remained comfortable.

During 2015-16 (April-January), the average exchange rate of the Rupee depreciated to INR 65.04/US$ as against INR 60.92/US$ in 2014-15 (April-January).

While 2014-15 saw the Indian equity markets witnessing a dream run to reach an all-time high of 29448.95, 2015-16 has seen substantial erosion with the BSE Sensex reaching a year low of 23,002 as on 29 February 2016.

The new foreign Trade Policy for the period 2015-20, announced on 1 April 2015 focuses on supporting both manufacturing and services exports and improving ease of doing business. It aims to increase India’s exports to US$ 900 billion by 2019-20 and it also provides the road map by the government to align it with the ‘Make in India’ and ‘Digital India’ programmes and to ease trade.

The Indian economy has made substantial improvements in its macroeconomics fundamentals and impressive strides in reducing in key areas, pursuit of fiscal prudence and consolidation, focus on price stability and the resultant benign price situation and comfortable level of external current account.


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Absolute values % change over previous periodItems 2013-14 2014-15 2015-16

2.3 India – Key Economic Indicators

2013-14 2014-15 2015-16

Gross Domestic Product(Rs. thousand crore)

2R 1R 1AE-At constant market prices 9,839 10,552 11,35 6.6 7.2 7.6GVA at basic prices

2R 1R AE(2011-12 prices) 9,084 9,727 10,438 6.3 7.1 7.31At constant market prices

(US $ billion – Annual Average exchange rate) 1,626 1,726 1,745 -4.1 6.1 1.1Food grains production

a(million tons) 265 252 253 3.1 -4.9 0.5Index of industrial production

b(Base: 2004-05 = 100) 172 176 182 -0.1 2.8 3.1Electricity generation

b(billion KWH) 1175 1274 1330 6.0 8.4 4.4Wholesale Price Index

c(Average) 177 181 176 6.0 2.0 -2.8Imports

P(US $ billion) 450 448 379 -8.3 -0.5 -15.5Exports

P(US $ billion) 314 310 256 4.7 -1.3 -17.6Foreign exchange reserves

d(in US $ billion) 304 341 349 4.2 12.3 2.3Average exchange rate

e(Rs/US $) 60.51 61.14 65.03 11.2 1.0 6.4Gross fiscal deficit

f g(of GDP) 4.5 4.0 3.9

1 Calculated based on available figures.2R Second Revised Estimates1R First Revised EstimatesAE Advance Estimatesa 2nd Advance Estimatesb April-December 2015-16c April-January 2015-16

d As at end-January 2016le April-January 2015-16f Provisional Actualsg Budget EstimateP Provisionalna Not available

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Chapter 3 TAX RATES

3.1 Individuals, HUFs, AOPs and BOIs

3.1.1 Tax rates

The Bill proposes certain marginal modifications to the tax structure for individuals, HUFs, AOPs and BOIs. Consequently, the effective proposed and present tax rates for the FYs 2016-17 and 2015-16, in case of individuals, HUFs, AOPs and BOIs are as follows:

Income Slabs(Rs.)

Income Slabs(Rs.)

ProposedTax Rates

Tax Rates

FY 2016-17 FY 2015-16

Nil

10.30% [tax rate 10% plus education cess 3% thereon] of income exceeding Rs. 2,50,000

Rs. 25,750 plus 20.60% [tax rate 20% plus education cess 3% thereon] of income exceeding Rs. 5,00,000

Rs. 1,28,750 plus 30.90% [tax rate 30% plus education cess 3% thereon] of income exceeding Rs. 10,00,000

0 - 2,50,000#

2,50,001# - 5,00,000*

5,00,001 - 10,00,000

10,00,001 - 1,00,00,000

Nil

10.30% [tax rate 10% plus education cess 3% thereon] of income exceeding Rs. 2,50,000

Rs. 25,750 plus 20.60% [tax rate 20% plus education cess 3% thereon] of income exceeding Rs. 5,00,000

Rs. 1,28,750 plus 30.90% [tax rate 30% plus education cess 3% thereon] of income exceeding Rs. 10,00,000

0 - 2,50,000#

2,50,001# - 5,00,000*

5,00,001 - 10,00,000

10,00,001 - 1,00,00,000

Rs. 32,58,920 plus 34.608% [(tax rate 30% plus surcharge 12% thereon) plus education cess 3% thereon] of income exceeding Rs. 1,00,00,000

1,00,00,001^ and aboveRs. 32,58,920 plus 35.535% [(tax rate 30% plus surcharge 15% thereon) plus education cess 3% thereon] of income exceeding Rs. 1,00,00,000

1,00,00,001^ and above

# Basic exemption income slab in case of a resident individual of the age of 60 years or more (senior citizen) & resident individual of the age of 80 years or more (very senior citizens) at any time during the previous year, continues to remain the same at Rs. 3,00,000, Rs. 5,00,000 respectively. The tax for other slabs will change accordingly.

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Chapter 3 TAX RATES


* A resident individual having income upto Rs. 5,00,000 is entitled to a rebate of tax payable [excluding education cess] or Rs. 5,000 (Rs. 2,000 in FY 2015-16) whichever is less.

^ Marginal relief is available to ensure that the additional income tax payable, including surcharge of 15% on the excess of income over Rs. 1,00,00,000 is limited to the amount by which the income is more than Rs. 1,00,00,000. However, no marginal relief shall be available in respect of the education cess.

3.1.2 Proposed tax incidence

The proposed incidence of income-tax for FY 2016-17 on individuals, senior citizens and very senior citizens, having different income levels can be exemplified as follows:

* The tax incidence for HUFs, AOPs and BOIs will be same as that of individuals.

3.2.1 Domestic companies

The Bill proposes to reduce the corporate tax rate to 29% [plus applicable surcharge and education cess thereon], in case of company having total turnover or gross receipts in FY 2014-15 upto Rs.5,00,00,000.

Further, the Bill proposes the tax rate of 25% in case of newly setup domestic company registered on or after 1 March, 2016 engaged solely in the business of manufacture or production of article or thing and not claiming any specified. benefit/deduction.

3.2 Companies

AnnualIncome (Rs.)

Tax Liability (Rs.)

Individuals(including women)*

Senior Citizens

Very SeniorCitizens

2,50,000 - - -

3,00,000 - - -

4,00,000 10,300 5,150 -

5,00,000 20,600 15,450 -

8,00,000 87,550 82,400 61,800

10,00,000 1,28,750 1,23,600 1,03,000

25,00,000 5,92,250 5,87,100 5,66,500

50,00,000 13,64,750 13,59,600 13,39,000

1,00,00,000 29,09,750 29,04,600 28,84,000

1,50,00,000 51,22,963 51,17,040 50,93,350

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Chapter 3 TAX RATES


Except for the above, there are no changes proposed in the corporate tax rates for FY 2016-17. The effective tax rates and MAT rates for other domestic companies for FYs 2016-17 and 2015-16 are as follows:

Marginal relief is available to ensure that the additional income-tax payable, including surcharge of 7% on the excess of income over Rs. 1,00,00,000, is limited to the amount by which the income is more than Rs. 1,00,00,000. Similarly, marginal relief is available to ensure that the additional income-tax payable, including surcharge of 12% on the excess of income over Rs. 10,00,00,000, is limited to the amount by which the income is more than Rs. 10,00,00,000. However, no marginal relief shall be available in respect of the education cess.

3.2.2 Foreign companies

No changes are proposed in the tax rate and surcharge. As such, the effective tax rates for foreign companies for FYs 2016-17 and 2015-16 are as follows:

DomesticCompany

Effective Tax Rates

FY 2016-17 FY 2015-16 FY 2016-17

Having total income exceeding Rs.

10,00,00,000

Effective MAT Rates

FY 2015-16

34.608% [(tax rate 30% plus

surcharge 12% thereon) plus

education cess 3% thereon]

34.608% [(tax rate 30% plus

surcharge 12% thereon) plus


21.3416% [(tax rate 18.5% plus surcharge 12% thereon) plus




Having total income exceeding Rs.

1,00,00,000 but not exceeding Rs. 10,00,00,000

33.063% [(tax rate 30% plus surcharge 7% thereon) plus


33.063% [(tax rate 30% plus surcharge 7% thereon) plus






Having total income upto Rs.

1,00,00,000

30.90% (tax rate 30% plus

education cess 3% thereon)

30.90% (tax rate 30% plus


19.055% (tax rate 18.5% plus


19.055% (tax rate 18.5% plus


Foreign CompanyEffective Tax Rates

FY 2016-17 FY 2015-16

Having total income exceeding Rs. 10,00,00,000

43.26% [(tax rate 40% plus surcharge 5% thereon) plus education cess 3% thereon]

Having total income exceeding Rs. 1,00,00,000 but not

exceeding Rs. 10,00,00,000


Having total income upto Rs. 1,00,00,000

41.20% (tax rate 40% plus education cess 3% thereon)

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Chapter 3 TAX RATES


Marginal relief is available to ensure that the additional income-tax payable, including surcharge of 2% on the excess of income over Rs. 1,00,00,000, is limited to the amount by which the income is more than Rs. 1,00,00,000.

Similarly, marginal relief is available to ensure that the additional income-tax payable, including surcharge of 5% on the excess of income over Rs. 10,00,00,000, is limited to the amount by which the income is more than Rs. 10,00,00,000. However, no marginal relief shall be available in respect of the education cess.

3.2.3 Tax on Dividend / Income distributed by domestic companies

No changes are proposed in the DDT rates for FY 2016-17 (the effective DDT rates for FY 2016-17 and 2015-16 are tabulated below). However, the Bill proposes to tax dividend at the rate of 10% in the hands of recipient i.e. individual, HUF or Firm, who is resident in India if dividend received is in excess of Rs.10,00,000. The rate (plus surcharge and education cess thereon) is on gross basis on the amount of dividend.

The effective DDT rates for FY 2016-17 and 2015-16 are as follows:

No changes are proposed in the tax rates. The effective tax rates for partnership firms/LLPs for FYs2016-17 and 2015-16 are as follows:

Marginal relief is available to ensure that the additional income-tax payable, including surcharge of 12% on the excess of income over Rs.1,00,00,000, is limited to the amount by which the income is more than Rs.1,00,00,000. However, no marginal relief shall be available in respect of the education cess.

3.3 Partnership Firms/LLPs

Dividend DistributionTax Rate

Effective Tax Rates

FY 2016-17 FY 2015-16

Rate of DDT on the amount of dividend received by the

shareholders

20.3576% [(tax rate 15% plus surcharge 12% thereon) plus education cess 3% thereon considering the grossing up

provisions]

PartnershipFirms / LLPs

Effective Tax Rates

FY 2016-17 FY 2015-16





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Chapter 3 TAX RATES


3.4 AMT on Non-corporate Assessees

3.5 Tax on Dividend Distributed by Mutual Funds

AMT continues on non-corporate assessees such as partnership firms, sole proprietorships, AOPs, HUFs, BOIs, etc. AMT is to be calculated on adjusted total income (if the adjusted total income of such person exceeds Rs. 20,00,000) if the regular income tax payable by such person is less than AMT. No change has been proposed in the AMT rates. However, surcharge rate for assessees other than firms is proposed to be increased from 12% to 15% in case the total income exceeds Rs. 1,00,00,000. As such, the effective tax rates for FYs 2016-17 and 2015-16 are as follows:

Marginal relief is available to ensure that the additional income-tax payable, including surcharge of 12% / 15% (as applicable) on the excess of income over Rs. 1,00,00,000, is limited to the amount by which the income is more than Rs. 1,00,00,000. However, no marginal relief shall be available in respect of the education cess.

No change has been proposed in the income distributed by mutual funds. However, surcharge rate for Individuals, HUF, AOP, BOI etc. is proposed to be increased from 12% to 15% in case the total income exceeds Rs. 1,00,00,000. As such, the effective tax rates for FYs 2016-17 and 2015-16 are as follows:

Non-corporateassessee

Effective AMT Rates

FY 2016-17 FY 2015-16

Individuals, HUF, AOP, BOI etc. having total income exceeding

Rs. 1,00,00,000

21.9133 % [(tax rate 18.50% plus surcharge 15% thereon) plus education cess 3% thereon]

21.3416% [(tax rate 18.50% plus surcharge 12% thereon) plus education cess 3% thereon]

Firms / Others - having total income exceeding

Rs. 1,00,00,000

21.3416% [(tax rate 18.50% plus surcharge 12% thereon) plus education cess 3% thereon]


19.055% (tax rate 18.50% plus education cess 3% thereon)

42.07%* (considering the grossing up

provisions)


provisions)


provisions)


provisions)

Income distributed by a money market mutual fund or a liquid mutual fund to- an Individual or a HUF

- others

Type of IncomeEffective Tax Rate

FY 2016-17 FY 2015-16

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Chapter 3 TAX RATES


* The tax rates are inclusive of surcharge of 15% and education cess of 3% for Individual and HUF and surcharge of 12% and education cess of 3% thereon for others i.e. company, Firm, local authorities and co-operative society.

No change being proposed, the effective tax rate for distributed income of domestic companies for buy-back of shares for FY 2016-17 and FY 2015-16 are as follows:

The bill proposes that tax on distributed income by Securitization Trust would not be applicable from 1 June 2016 and the same would be included as income in the hands of the investor directly.

3.8.1 Co-operative societies

No change is proposed in the tax rate. As such, the tax rates for co-operative

3.6 Tax on Distributed Income of Domestic Company for Buy-back of Shares:

3.7 Tax on distributed income by Securitization Trust:

3.8 Other Entities

Rate of TaxEffective Tax Rates

FY 2016-17 FY 2015-16

On the distributed income of domestic company

23.072%* [(tax rate 20% plus surcharge 12% thereon) plus education cess 3% thereon]

Type of IncomeEffective Tax Rate

FY 2016-17 FY 2015-16


provisions)


provisions)


provisions)


provisions)

Income distributed by a mutual fund (including debt fund) other than a money market mutual fund or a liquid mutual fund to-an Individual or a HUF

- others

6.12%* (considering the grossing up provisions)

6.12%* (considering the grossing up provisions)

Income distributed by a mutual fund to non-residents (not being company) under infrastructure debt scheme

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Chapter 3 TAX RATES


societies for FYs 2016-17 and 2015-16 are as follows:

Marginal relief is available to ensure that the additional income-tax payable, including surcharge of 12% on the excess of income over Rs. 1,00,00,000, is limited to the amount by which the income is more than Rs. 1,00,00,000. However, no marginal relief shall be available in respect of the education cess.

3.8.2 Local authorities

No change is proposed in the tax rate. As such, the tax rates for local authorities for FYs 2016-17 and 2015-16 are as follows

Marginal relief is available to ensure that the additional income-tax payable, including surcharge of 12% on the excess of income over Rs. 1,00,00,000 is limited to the amount by which the income is more than Rs. 1,00,00,000. However, no marginal relief shall be available in respect of the education cess.

It is proposed to insert a new section 115BBF of the IT Act to provide that if the total income of the eligible assessee includes any income by way of royalty in respect of a patent developed and registered in India, then such royalty shall be taxable at the rate of 10% (plus applicable surcharge and cess) on the gross amount of royalty. No expenditure or allowance in respect of such royalty income shall be allowed under the IT Act.

An eligible assessee means a person resident in India, who is the true and first inventor of the invention and whose name is entered on the patent register as the patentee in accordance with Patents Act, 1970.

3.9 Taxation of Income from Patents

Income slab(Rs.)

Effective Tax Rates

FY 2016-17 FY 2015-16

0 - 10,000 10.30%

10,001 - 20,000 Rs. 1,030 plus 20.60% of income exceeding Rs. 10,000

20,001 - 1,00,00,000 Rs. 3,090 plus 30.90% of income exceeding Rs.20,000

Above 1,00,00,000 Rs. 34,57,339 plus 34.608% of income exceeding Rs. 1,00,00,000

Local authoritiesEffective Tax Rates

FY 2016-17 FY 2015-16



Having total income up to Rs. 1,00,00,000


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Chapter 4 G-20 Countries - Comparative Corporate And Personal Tax Rates


The G-20 economies comprising of 19 countries and the EU, account for almost 90% of the global GDP, 80% of world trade (including EU intra-trade) and two-third of the world population. Considering the significance of these economies and in order to provide an indicative overview of the prevailing tax rates in these key economies, a brief comparative matrix is tabulated below.

Notes:1. The above rates are MMR and inclusive of provincial or local taxes as may be applicable to domestic

companies / resident individuals in respective countries.2. The taxation regime for personal taxes is progressive for all the G-20 economies except Russia and

Saudi Arabia.3. Corporate tax @ 33.06% is indicative effective rate of tax. In addition, size based business tax is also

levied on companies.4. Corporate Tax @ 20% is payable on the pro-rata income to the extent of non-resident shareholding.

Saudi and the Gulf Cooperation Council (GCC) nationals or companies owned by them have to pay Zakat (i.e. a religious tax) at 2.5%.

5. Corporate tax comprises of federal tax (35%) as well as state and local government taxes which vary from state to state. Personal tax comprises of federal tax (39.6%) and further each state and local government can also levy tax on income.

6. The above rates are general rates to provide a comparative matrix. The detailed regulations in the relevant countries need to be referred for determining exact rates.

Sr. Country Corporate Tax Rate Personal Tax Rate [Note 1] [Notes 1 and 2]

2. Australia 30% 49%3. Brazil 34% 27.50%4. Canada 31% 50%5. China 25% 45% 6. France 38.11% 45%7. Germany 32.98% 47.50%8. India 34.608% 35.535%9. Indonesia 25% 30%

10. Italy 31.40% 43%11. Japan [Note 3] 33.06 % 55%12. Mexico 30% 35%13. Russia 20% 13%14. Saudi Arabia [Note 4] 0% 0%15. South Africa 28% 40%16. South Korea 24.20% 41.80%17. Turkey 20% 35%18. United Kingdom 20% 45%19. United States of America

No.

[Note 5] 35% 39.60%

1. Argentina 35% 35%

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Chapter 5 Tax Incentives For Businesses

The IT Act provides for far reaching tax holidays and other tax incentives for businesses. We have briefly enumerated below, the significant tax holidays and incentives available to businesses along with the nature of deductions, eligibility criteria, quantum of deduction and period for which the deductions are available. The tax holidays and incentives are subject to fulfillment of specified conditions. The Finance Bill 2016 has set-out a plan to gradually phase out exemptions, deductions and incentives in order to bring down the rate of corporate tax to 25% as announced in Budget Speech 2015. The changes proposed by the Finance Bill, 2016 are highlighted in BOLD font.

(As updated up to the Finance Bill, 2016)

Section Details of Exemption / Deduction ^ Period Quantum of Deduction

10AA First 5 yearsNext 5 years

Next 5 years+

100%50%50%

New eligible unit set up in SEZ on or after 1 April 2005nExemption is available to the entrepreneur as referred

to in Section (2j) of SEZ Act, 2005 for profits derived from export of articles or things or services, manufactured, or produced or provided by an eligible unit.

nThe profits and gains derived from on-site development of computer software (including services for development of software) outside India shall be deemed to be the profits and gains derived from the export of computer software outside India.

nThe benefit is also available to units engaged in cutting and polishing of precious and semi-precious stones.

nThe deduction under this section is to be computed in the same proportion, which the export turnover of the eligible unit bears with the total turnover of the said unit.

nThe eligible units availing these deductions will be subject to MAT / AMT @ 18.50% (plus applicable surcharge and education cess)

nMAT / AMT paid shall be allowed to be carried forward upto 10 years and credit of MAT / AMT paid shall be available for set-off against the tax as per normal provisions in subsequent years.

nIn case deduction has been claimed under section 10AA for the specified business mentioned in section 35AD(8)(c), no deduction under section 35AD shall be available in the same or any other assessment year in respect of such specified business.

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Section Details of Exemption / Deduction ^ Period Quantum of Deduction

nIt is proposed that no deduction shall be available to units commencing manufacture or production of article or thing / providing services on or after 1 April 2020.

+ The deduction is allowed only on creation of a specified reserve, which is required to be utilized for specified purposes.

33AB Available for every AY

Up to 40% of profits or amount

deposited, whichever is

less

Tea / Coffee / Rubber / development allowancenDeduction is available to assessee engaged in the

business of growing and manufacturing tea, coffee or rubber in India.

nFor claiming the deduction, the amount has to be deposited in a special account with NABARD or any Deposit Account opened by the assessee and approved by the Tea Board or Coffee Board or Rubber Board within 6 months from the end of the financial year or before the due date of furnishing the return of income, whichever is earlier.

nThe amount has to be utilized by the assessee for specified purposes.

33ABA Available for every AY

Up to 20% of profits or amount

deposited, whichever is

less.

Site Restoration Fund – Petroleum or Natural GasnDeduction is available to assessee engaged in the

business of prospecting for, or extraction or production of petroleum or natural gas or both in India and in relation to which the Central Government has entered into an agreement with such assessee.

nFor claiming the deduction, the amount has to be deposited in a special account with SBI opened by the assessee and approved by the Ministry of Petroleum and Natural Gas before the end of the financial year.

nThe amount has to be utilized by the assessee for specified purposes.

Section

32(1)(iia)

Additional DepreciationnGeneral rate of depreciation for plant and machinery is 15% (other than certain specified

types of plant and machinery).nAn assessee engaged in the business of manufacture or production of any article or

thing or in the business of generation or generation and distribution or transmission of power can claim the additional depreciation of 20% on the cost of new plant and machinery (other than ships and aircraft) which are acquired and installed after 31 March 2005.

nFurther, higher additional depreciation @ 35% (instead of above 20%) in respect of the actual cost of eligible new machinery or plant acquired and installed by a manufacturingundertaking or enterprise which is set up in the notified backward area of the State of

Eligibility Criteria, Quantum and Period of Deduction ^

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Section

Andhra Pradesh or Telangana or Bihar or West Bengal on or after the 1 April 2015 and ending before the 1 April 2020. The eligible machinery or plant is mentioned in existing proviso to section 32(1)(iia) of the IT Act.

nThe above additional depreciation shall be allowed only to the extent of 50% (i.e. 10% or 17.5%) if the machinery is put to use for a period less than 180 days in the year of its acquisition and installation and the balance 50% shall be allowed in the immediate next year.

Eligibility Criteria, Quantum and Period of Deduction ^

32AC(1A)

(1B)

(2)

Investment in new plant or machinerynWhere a company is engaged in the business of manufacture or production of an article

or thing, acquires new assets in any financial year exceeding Rs. 25,00,00,000 and such assets are installed before 31 March 2017, then there shall be allowed a deduction of 15% of the actual cost of such new assets over and above the normal depreciation under section 32 of the IT Act in the year in which such assets are installed.

nThe said deduction is available for investment made in new plant and machinery up to 31 March 2017.

nIn case any new asset is sold or otherwise transferred within a period of 5 years, the deduction allowed above shall be deemed to be the income chargeable under the head ‘Profits and Gains of business or profession’ of the financial year in which such new asset is sold or otherwise transferred (In addition to taxability of gains on transfer of such new asset).

32AD Investment in new plant or machinery in certain statesnAdditional investment allowance of an amount equal to 15% of the cost of new asset

acquired and installed by an assessee, if:I. It sets up an undertaking or enterprise for manufacture or production of any article

or thing on or after 1 April 2015 in any notified backward areas in the State of Andhra Pradesh or Telangana or Bihar or West Bengal; and

ii. The new assets are acquired and installed for the purposes of the said undertaking or enterprise during the period 1 April 2015 to 31 March 2020.

nThe above deduction will be allowed over and above the existing deduction under section 32AC of the IT Act.

nIn case any new asset is sold or otherwise transferred within a period of 5 years, the deduction allowed above shall be deemed to be the income chargeable under the head ‘Profits and Gains of business or profession’ of the financial year in which such new asset is sold or otherwise transferred (In addition to taxability of gains on transfer of such new asset).

35AC Expenditure on eligible projects or schemenDeduction is available for expenditure incurred for promoting social and economic

welfare.nAny assessee can claim deduction as under:

nIt is proposed that no deduction shall be available for expenditure incurred on or after 1 April 2017.

To whom payment should be madeAssessee Direct ExpenditureCompany Public sector company, or a local authority

or to an association or institution approved by the National Committee for carrying out any eligible project or scheme

A company can also directly incur expenditure in respect of eligible project and scheme

Others Same as above Not permitted

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Section Eligibility Criteria, Quantum and Period of Deduction ^

35AD Deduction in respect of expenditure on specified businessesnAny expenditure of capital nature (other than expenditure incurred on the acquisition of

any land or goodwill or financial instrument) incurred, wholly and exclusively, during the year for specified business shall be allowed as deduction subject to the specified provisions.

nSpecified business and the year (in which the operations to be commenced) for availing deduction under this section are tabulated as under:

Specified BusinessSr. No

Specified year of Commencement

1 Setting up and operating a cold chain facility From 1 April 2009 onwards *2 Setting up and operating a warehousing facility for

storing agricultural produceFrom 1 April 2009 onwards *

3 Laying and operating a cross-country natural gas or crude or petroleum oil pipeline network for distribution, including storage facilities being an integral part of such network

From 1 April 2007 onwards

4 Building and operating a hotel of 2 star or above category as classified by the Central Government anywhere in India

From 1 April 2010 onwards **

5 Building and operating a hospital with at least 100 beds for patients anywhere in India

From 1 April 2010 onwards *

6 Developing and building a housing project under a scheme for slum redevelopment or rehabilitation framed by the Central or State Government, as the case may be, and which is notified by the Board in this behalf in accordance with the guidelines as may be prescribed


7 The Business of developing and building a housing project under a scheme for affordable housing framed by the Central Government or a State Government, as the case may be, and notified by the Board in this behalf in accordance with the guidelines as may be prescribed


8 Production of fertilizers in India through a new plant or a newly installed capacity in an existing plant


9 Setting up and operating an inland container depot or a container freight station notified or approved under the Customs Act, 1962


10 Bee-keeping and production of honey and beeswax From 1 April 2012 onwards

11 setting up and operating a warehousing facility for storage of sugar


12 Laying and operating a slurry pipeline for transportation of iron ore


13 Setting up and operating a semiconductor wafer fabrication manufacturing unit, if such unit is notified by the Board in accordance with the prescribed guidelines


* Specified business referred at Sr. No. 1, 2, 5, 7 and 8 in the above table commencing operations on or after 1 April 2012 shall be eligible for deduction of 150% of capital expenditure

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35CCA Deduction for payment towards rural development programmesn100% Deduction is allowed subject to fulfillment of certain conditions for any sums paid to:

i. An association or institution for carrying out any programme of rural developmentii. An association or institution for training of persons for implementation of rural

development programmeiii. National Fund for Rural Developmentiv. National Urban Poverty Eradication Fund

35CCC Weighted deduction of expenditure incurred on agriculture extension projectnThis section provides for weighted deduction of 150% of the expenditure incurred on

agricultural extension project. The conditions for eligibility of agricultural extension project have been provided under Rule 6AAD and Rule 6AAE of the IT Rules.

nFurther, where a deduction under this section is claimed and allowed for any assessment year, in respect of any expenditure on agricultural extension project, no deduction shall be allowed in respect of such expenditure under any other provisions of the IT Act for the same or any other assessment year.


35CCD Weighted deduction of expenditure incurred on skill development projectnAny expenditure (not being expenditure in the nature of cost of any land or building)

incurred on skill development project shall be eligible for weighted deduction of 150% in the hands of a company. The conditions of eligibility of skill development project have been provided under Rule 6AAF to Rule 6AAH of the IT Rules.




incurred. It is proposed that deduction shall be restricted to 100% of capital expenditure incurred on or after 1 April 2017.** Where the assessee builds a hotel of 2 star or above category as classified by the Central Government and subsequently, while continuing to own the hotel, transfers the operation thereof to another person, the said assessee shall be deemed to be carrying on the ‘specified business’ of building and operating hotel as referred at Sr. No. 4 in the above table, with retrospective effect from AY 2011-12.nAny asset, in respect of which a deduction is claimed and allowed under this section, shall

be used only for the specified business for a period of 8 years beginning with the financial year in which such asset is acquired or constructed.

nWhere such asset is used for any purpose other than the specified business, then, the total amount of deduction so claimed and allowed in any financial year in respect of such asset (after reducing the depreciation allowable under section 32 of the IT Act on deduction allowed under section 35AD of the IT Act), shall be deemed to be income of the assessee chargeable under the head ‘Profits and gains of business or profession’.

nWhile computing AMT, adjusted total income shall be increased by the deduction claimed under section 35AD of the IT Act as reduced by the amount of depreciation allowable under section 32 of the IT Act.

nIn case deduction has been availed under section 35AD of the IT Act on account of capital expenditure incurred for the purposes of specified business in any assessment year, no deduction under section 10AA of the IT Act or under the provisions of Chapter VI-A or under any other provisions of the IT Act shall be available in the same or any other assessment year in respect of such specified business.

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nFurther, where a deduction under this section is claimed and allowed for any assessment year in respect of any expenditure on skill development project, no deduction shall be allowed in respect of such expenditure under any other provisions of the IT Act for the same or any other assessment year.


Section Details of Deduction ^

35(1)(i)

35(1)(ii)

35(1)(iia)

35(1)(iii)

35(1)(iv)

35(2AA)

35(2AB)

Proposed Quantum of deduction of

sum paid / expenditure

incurred

ExistingQuantum of deduction of


incurred

Weighted deduction on various expenditure incurred on scientific researchAny expenditure (not being in nature of capital expenditure) laid or expended on scientific research related to business carried on by the assessee.Any sum paid to an approved research association, (which has its object of undertaking scientific research) or to a university, college or other institution to be used for scientific research. Any sum paid to an approved company to be used by it for scientific research. Such approved company will not be entitled to claim weighted deduction under section 35(2AB) of the IT Act. However, deduction to the extent of 100% of the sum spent as revenue expenditure on scientific research, which is available under section 35(1)(I) of the IT Act will continue to be allowed.Any sum paid to approved research association (which has its object of undertaking research) or university, college or other institution to be used for research in social science or statistical research.Any capital expenditure (other than expenditure on land and building) incurred on scientific research related to the business carried on by the assessee.Any sum paid to a National Laboratory or a University or an Indian Institute of Technology or a specified person with a specific direction that the said sum shall be used for scientific research undertaken under a programme approved by the prescribed authority, Any expenditure incurred up to 31 March 2017 (other than expenditure on cost of land and building), on in-house research and development facility, as approved by the prescribed authority, incurred by the company, engaged in the business of bio-technology or manufacture or production of article or thing (except those specified in the Eleventh Schedule).

100%

175%

125%

125%

100%

200%

200%

100%

150%*100%**

100%***

100%***

100%

150%*100%**

150%*100%**

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Section Details of Deduction ^ Proposed Quantum of deduction of


incurred

ExistingQuantum of deduction of


incurred

Deduction under the said section shall be allowed only if the company enters into an agreement with the prescribed authority for co-operation in such research and development facility and fulfills prescribed conditions with regard to maintenance and audit of accounts and also furnishes prescribed reports.

* From FY 2017-18 to FY 2019-20 ** From FY 2020-21 onwards*** From FY 2017-18 onwards

Section Eligibility Criteria, Quantum and Period of Deduction54G Capital gains arising on transfer of plant, machinery, land, building or any rights in land /

building effected in course of or in consequence of the shifting of an industrial undertaking situated in an urban area to any area (other than an urban area) shall be eligible for exemption. This exemption shall be least of the following:

nAmount of capital gains;nAmount of capital gains utilized within a period of 1 year before or 3 years after the

date of transfer of the above assets, for purchase of new plant and machinery, land and building and for shifting expenses, subject to specified conditions.

Exemptions from Capital Gains in certain cases ^

54GA Capital gains arising on transfer of plant, machinery, land, building or any rights in land / building effected in course of or in consequence of the shifting of an industrial undertaking situated in an urban area to any SEZ shall be eligible for exemption. This exemption shall be least of the following:

nAmount of capital gains;nAmount of capital gains utilized within a period of 1 year before or 3 years after the

date of transfer of the above assets, for purchase of new plant and machinery, land and building and for shifting expenses, subject to specified conditions.

54GB nLong term capital gains shall be exempt in the hands of an individual or an HUF on sale of a residential property (house or plot of land) on or before 31 March 2017 in case of re-investment of the net consideration in the equity of a newly start-up SME company in the manufacturing sector and the SME company utilizes the said funds for purchase of new plant and machinery, subject to the certain conditions.

nIt is proposed to amend section 54GB so as to provide that long term capital gains arising on account of transfer of a residential property before 31 March 2019 shall not be charged to tax if such capital gains are invested in subscription of shares of a company which qualifies to be an eligible start-up.

nIndividual or HUF should hold more than 50% shares of the company and such company should utilize the amount invested to purchase new asset (including computers or computer software for technology driven eligible start-up) before due date of filing of return by the investor.

nEligible start-up and eligible business shall have the same meanings as assigned in section 80-IAC(4).

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Section Eligibility Criteria, Quantum and Period of Deduction

Exemptions from Capital Gains in certain cases ^

54EC nCapital gain on transfer of a long term capital asset shall be exempt from tax, if an assessee invests, within a period of 6 months from the date of transfer of a long-term capital asset, the capital gains in the specified asset. The specified asset must be held for a period of 3 years from the date of its acquisition. This exemption shall be least of the following:– Investment in specified assets viz. bonds issued by NHAI and the RECL. The

investment is restricted up to Rs. 50,00,000 per assessee per financial year. – Amount of capital gains.

nFurther, the exemption in respect of capital gains upon aforesaid investments made during the financial year in which the original asset or assets are transferred and in the subsequent financial year shall not exceed Rs. 50,00,000.

Section Eligibility Criteria, Quantum and Period of Deduction / Exemption ^

10(34)/ 10(35)

Dividend referred to in section 115-O and income received in respect of units of mutual fund or shares shall not be included in the total income of assessee (other than individual, HUF and firm earning dividend income from shares exceeding Rs. 10,00,000 in a financial year).

10(34A)

Any income arising to an assessee, being a shareholder on account of buy back of shares as referred in section 115QA (not being listed on a recognized stock exchange) by the company shall not be included in the total income of assessee.

10(38) Capital gain arising from transfer of long term capital asset being an equity share in a company or a unit of an equity oriented fund or unit of a business trust, on which securities transaction tax is charged, is exempt from tax. However, this exemption is not available for computation of MAT.

54EE nCapital gain on transfer of a long term capital asset shall be exempt from tax, if an assessee invests the capital gains in the specified assets within a period of 6 months from the date of transfer of a long-term capital asset.

nThis exemption shall be least of the following:- Investment in specified assets viz. a unit or units, issued before the 1 April, 2019 of

fund notified by the Central Government. - Rs. 50,00,000 per assessee per financial year - Amount of capital gains.

nFurther, the exemption in respect of capital gains upon aforesaid investments made during the financial year in which the original asset or assets are transferred and in the subsequent financial year shall not exceed Rs. 50,00,000.

nThe specified asset must be held for a period of 3 years from the date of its acquisition. Further, in a case an assessee takes any loan or advance on the security of such specified asset, he shall be deemed to have transferred such specified asset on the date on which such loan or advance is taken.

9(1)(i) -Explan-

ation (1)(e)

It is proposed to provide that in the case of a foreign company engaged in the business of mining of diamonds, no income shall be taxed from the activities which are confined to the display of uncut and unassorted diamond in any special notified zone by the Central Government.

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Section Eligibility Criteria, Quantum and Period of Deduction / Exemption ^It is further proposed that any long term capital gains arising out of transaction undertaken on a recognised stock exchange located in any International Financial Services Centre and where the consideration for such transaction is paid or payable in foreign currency shall also be exempt under the said section. Further, MAT under section 115JB shall be applicable at the concessional rate of 9% plus applicable surcharge and cess.

10(48A)

It is proposed to provide that any income accruing or arising to a foreign company on account of storage of crude oil in a facility in India and sale of crude oil therefrom to any person resident in India shall not be included in the total income subject to approval of Central Government.

115BBD

Any dividend declared, distributed or paid by the specified foreign company to Indian company shall be taxable at a concessional tax rate of 15%.

115BBF It is proposed to provide that any royalty income earned by resident patentee in India in respect of a patent developed and registered in India shall be taxable at the concessional rate of 10% (plus applicable surcharge and cess) on the gross amount of royalty.

115-O In computing DDT liability, dividend declared by the domestic holding company to its shareholders shall be reduced to the extent of:

i. Dividend received from the domestic subsidiary company during the year on which DDT has already been paid by subsidiary under this section.

ii. Dividend received from the specified foreign subsidiary during the year on which tax is payable by the holding company under section 115BBD of the IT Act.

It is proposed that no tax on distributed profits shall be chargeable in respect of the total income of a company, being a unit of an International Financial Services Centre, deriving income solely in convertible foreign exchange.

Sr. No.

Nature of Activity and Location Number ofYears

Deductions of Profits derived by Newly Established Industrial Undertakings / Infrastructure Projects / Facilities / Developers of SEZs / Banking units, etc.( Sections - 80-IA / 80- IAB / 80-IAC/ 80- IB / 80-IBA/ 80- IC / 80- ID / 80- IE / 80JJA /80LA) ^

Type ofOrganization

Quantumof Deduction

1. Specified Infrastructure Projects [Section 80-IA(4)(i)Enterprise being company or consortium of companies registered in India or any authority or board or a corporation or any other body established or constituted under any Central or State Act, for carrying on business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining of any infrastructure facility (such as road including toll road, bridge, rail system, highway project, water supply project, water treatment system, irrigation project, sanitation and sewage system or solid waste management system, airport, port, inland waterways and inland ports or navigational channel in the

Company / Any other

body established or

constituted under any Central or State Act

100% For any 10 consecutive

years out of first 15 years

(20 years for road, bridge, rail

system, highway project, water

supply project, water treatment system, irrigation project, sanitation

and sewerage system or solid

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Sr. No.


Type ofOrganization

Quantumof Deduction

sea) commencing its operations on or after 1 April 1995. Widening of an existing road by constructing additional lanes as a part of highway project is also regarded as a new infrastructure facility eligible for deduction as per Circular No. 4/2010 dated 18 May 2010. Deduction shall not be available to a person executing above referred activities as a works contract. It is proposed that no deduction shall be available if the specified activity commences on or after 1 April 2017.

waste management

system).

2. Telecommunication Service Providers[Section 80-IA(4)(ii)]Any undertaking which starts providing telecommunication services, whether basic or cellular, including radio paging, domestic satellite service or network of trunking, broadband network and internet services on or after 1 April 1995 but before 31 March 2005. Deduction shall not be available to a person executing the above referred services as a works contract.

All 100%30%

First 5 yearsNext 5 years

Any 10 consecutive


3. Development of Industrial Park[Section 80-IA(4)(iii)]Any undertaking which begins to develop or develops and operates or maintains and operates an industrial park which has commenced operations during 1 April 1997 to 31 March 2011.Deduction shall not be available to person executing the above referred services as a works contract.

All 100% Any 10 consecutive


4.(a) Power Undertakings [Section 80-IA(4)(iv)]nUndertaking set up in any part of India for

the generation or generation and distribution, of power, which has commenced operations during 1 April 1993 to 31 March 2017.

nUndertaking which starts transmission or distribution by laying a network of new transmission or distribution lines between 1 April 1999 and 31 March 2017.



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Sr. No.


Type ofOrganization

Quantumof Deduction

4.(b) Undertakings for revival of Power Generating Units[Section 80-IA(4)(v)]Undertaking owned by Indian Company (formed before 30 November 2005 and notified before 31 December 2005) set up for reconstruction or revival of a power generating unit, which has commenced operations in power before 31 March 2011.Deduction shall not be available to person executing the above referred activities as a works contract.

Indian Company

100% Any 10 consecutive


5. Developer of SEZ[Section 80-IAB]Any assessee being developer of a SEZ notified by the Central Government after 1 April 2005 can claim deduction under section 80-IAB.It is proposed that no deduction shall be available if the specified activity commences on or after 1 April 2017.



nUndertaking which undertakes substantial renovation and modernization of the existing network of transmission or distribution lines between 1 April 2004 and 31 March 2017.

nDeduction shall not be available to a person executing the above referred activities as a works contract.

6. Start-up Undertaking[Section 80-IAC]nUndertaking being an eligible start-up in

business which involves innovation, development, deployment or commercialisation of new products, processes or services driven by technology or intellectual property.

nThe total turnover of the company should not exceed Rs. 25,00,00,000 in any of the previous years beginning on or after 1 April 2016 and ending on 31 March 2021.

nIt holds a certificate of eligible business from the Inter-Ministerial Board of

Company incorporated

between 1 April 2016 to 1

April 2019

100% Any 3 consecutive


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Sr. No.


Type ofOrganization

Quantumof Deduction

Certification as notified in the Official Gazette by the Central Government.

nIt is not formed by the transfer to a new business of machinery or plant previously used for any purpose (except if such transfer value does not exceed 20% of the total value of plant and machinery).

nIt is not formed by splitting up, or the reconstruction, of a business already in existence.

7. Scientific and Industrial Research Company[Section 80-IB(8A)]Any company registered in India with its main object being scientific and industrial research and development which is for the time being approved by the DSIR at any time after 31 March 2000 but before 1 April 2007.

Company 100% First 10 years

8. Production of mineral oil and natural gas[Section 80-IB(9)]nAny undertaking which is engaged in

refining of mineral oil and begins such refining on or after 1 October 1998 but not later than 31 March 2012 subject to specified conditions.

nThe tax holiday is also available in respect of profits arising from commercial production of natural gas from blocks which are licensed under the VIII Round of bidding for award of exploration contracts under the New Exploration Licensing Policy announced by the Government of India and IV Round for Coal Bed Methane and begins commercial production of natural gas on or after 1 April 2009.

It is proposed that no deduction shall be available if the specified activity commences on or after 1 April 2017.

All 100% First 7 years

9. Undertaking engaged in processing /preservation / transportation of specified food items[Section 80-IB(11A)]nAn undertaking deriving profit from the

integrated business of handling, storage

Company

Others

100%30%

100%25%



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Sr. No.


Type ofOrganization

Quantumof Deduction

and transportation of food grains subject to such business beginning its operations on or after 1 April 2001.

nThe benefit is extended to undertakings engaged in the business of processing, preservation and packaging of fruits and vegetables.

nFurther, the benefit is extended to the undertakings engaged in the business of meat and meat products or poultry or marine or dairy products which begin to operate such business on or after 1 April 2009.

10. Operating and Maintaining Hospital [Section 80-IB(11C)]nAny undertaking engaged in the business

of operating and maintaining a hospital in India other than specified excluded areas.

nThe undertaking shall be eligible for the deduction if such hospital is constructed in accordance with the local regulations in force; and has at least 100 beds for patients.

nThe said tax benefit is available to a hospital which is constructed and has started or starts functioning at any time during the period beginning 1 April 2008 and ending on 31 March 2013.


11. Affordable Housing Project[Section 80-IBA]nAny undertaking engaged in the business

of developing and building housing projects approved by the competent authority between 1 June 2016 and 31 March 2019.

nThe project should be completed within a period of 3 years from the date of approval.

nIn case of multiple approvals, the date of first approval shall be considered for the calculation of the time limit of completion of project.

All 100% Not Applicable

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Sr. No.


Type ofOrganization

Quantumof Deduction

nThe deduction is allowed subject to fulfillment of various conditions like minimum area of land, minimum floor area ratio of land, maximum built-up area of residential and commercial unit etc.

nSeparate books of account in respect of the housing project

nNot more than 1 residential unit is allotted to any individual or the spouse or the minor children of such individual.

nDeduction shall not be available to a person executing the housing project as works contract.

12. Undertakings in special category states[Section 80-IC]nUndertakings and enterprises, which

begins to manufacture or produce any article or thing which is not specified in Thirteenth Schedule or undertakings and enterprises, which manufactures or produces any article or thing which is not specified in Thirteenth Schedule and undertake substantial expansion of existing undertakings.Undertakings and enterprises, which begin to manufacture or produce any article or thing which is specified in Fourteenth Schedule or commences any operation specified in that Schedule or undertakings and enterprises, which manufactures or produces any article or thing which is specified in Fourteenth Schedule or commence any operation specified in that Schedule and undertake substantial expansion.i. If located in Sikkim, from 23

December 2002 to 31 March 2007.ii. If located in North Eastern States*,

from 24 December 1997 to 31 March 2007.

iii. If located in Himachal Pradesh and Uttaranchal, from 7 January 2003 to 31 March 2012.

* States of Assam, Tripura,Meghalaya, Mizoram, Nagaland,Manipur and Arunachal Pradesh.

All 100% First 10 years}Company First 5 years

Next 5 years100%30%

Others First 5 yearsNext 5 years

100%25%

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Sr. No.


Type ofOrganization

Quantumof Deduction

13. Convention Centre and Hotels in notified areas[Section 80-ID]nAny undertaking engaged in business of

hotels in specified area of the National Capital Territory subject to fulfillment of certain conditions: a. Engaged in the business of hotel

located in specified area; orb. Engaged in the business of building,

owning and operating a convention centre located in specified area,which has started its operationsfrom 1 April 2007 to 31 July 2010.

nThe aforesaid deduction has been extended to any undertaking engaged in the business of hotel located in specified districts having 'World Heritage Sites' if such hotel is constructed and has started functioning during the period beginning 1 April 2008 and ending on 31 March 2013.

nThe benefit is available to 2 star, 3 star or4 star hotels.


14. Undertakings in North Eastern States[Section 80-IE]nNew undertakings and enterprises, which

begin to manufacture or produce any eligible article or thing or provide any services or undertake substantial expansion or carry on any eligible business in any of the North Eastern states beginning from 1 April 2007 to 31 March 2017.

nThe eligible businesses for this purpose are hotel (not below 2 star category), adventure and leisure sports including ropeways, providing medical and health services in the nature of nursing home with a minimum capacity of 25 beds; running an old-age home; operating vocational training institute for hotel management, catering and food craft, entrepreneurship development, nursing


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Sr. No.


Type ofOrganization

Quantumof Deduction

and para-medical, civil aviation related training, fashion designing and industrial training; running information technology related training centre; manufacturing of information technology hardware and bio-technology.

15. Deduction of Additional Wages[Section 80JJAA]nDeduction of an amount equal to 30% of

additional employee cost of any new employee (whose total emolument is less than or equal to Rs. 25,000 per month).

nHowever, no deduction shall be allowed in respect of employees for whom the entire contribution under notified Employees' Pension Scheme is paid by the Government.

nThe minimum number of days of employment in a financial year is reduced from 300 days to 240 days. Further, the condition of 10% increase in number of employees each year is proposed to be deleted.

nIn the case of an existing business, emoluments are to be paid by an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account.

* 30% of employees’ cost in case of firstyear of business

All assessee covered under

tax audit provisions

30% of additional employee

cost of new employee *

3 AYs including the AY relevant to

the FY in which such employment

is provided

16. Offshore banking unit in SEZ and International Financial Services Centre[Section 80LA] Income from:nOffshore banking unit in SEZ or nThe business referred to in section 6(1) of

the Banking Regulation Act, 1949 or nAny unit of the International Financial

Services Center from its approved business.

Scheduled Bank or any

bank incorporated by or under the law of a

country outside India

or a unit of an International

Financial Services Center.

100% First 5 years (beginning with

the year in which prescribed

permissions are obtained)

Next 5 years50%

*The above deduction, exemption, incentive and allowance are subject to fulfillment of specified conditions mentioned in the IT Act.

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Chapter 6 Direct Taxes – Significant Changes

6.1 Business Entities6.1.1 100% deduction of the profit and gains derived from

eligible start-up business It is proposed to insert new section 80IAC in the IT Act to provide deduction of 100% of the profits and gains derived by an eligible start-up from eligible business for any 3 consecutive assessment years out of 5 years beginning from the year in which the eligible start-up business is incorporated.Eligible start-up means a company engaged in eligible business which fulfills the following conditions, nIt is incorporated on or after 1 April 2016 but before 1 April 2019nThe total turnover of the company should not exceed Rs. 25,00,00,000 in

any of the previous years beginning on or after 1 April 2016 and ending on 31 March 2021

nIt holds a certificate of eligible business from the Inter-Ministerial Board of Certification as notified in the Official Gazette by Central Government.

6.1.2 Incentivise builders undertaking affordable housing projectsIt is proposed to insert section 80-IBA in the IT Act so as to provide for 100% deduction of the profits of an assessee developing and building affordable housing projects if the housing project is approved by the competent authority after 1 June 2016 but on or before 31 March 2019 subject to certain specified conditions.

6.1.3 Tax on income from Patents It is proposed to insert a new section 115BBF in the IT Act so as to provide that, where the total income of the eligible assessee being resident in India and who is the true and first inventor of the invention includes any income by way of royalty in respect of a patent developed and registered in India, then such royalty shall be taxable @10% (plus applicable surcharge and cess) on the gross basis. No expenditure or allowance in respect of such royalty income shall be allowed under the IT Act.

6.1.4 Tax incentive for employment generationAs per the existing provisions of Section 80JJAA of the IT Act, deduction is allowed @ 30% of additional wages paid to new regular workmen in a factory for 3 years where the assessee is engaged in the business of manufacture of goods in a factory and 'workmen' are employed for not less than 300 days in a previous year. Further, benefits are allowed only if there is an increase of at least 10% in total number of workmen employed on the last day of the preceding year.It is proposed to substitute this section and provide that the deduction under the said provisions to the extent of 30% of additional employee cost incurred in the course of such business in the previous year, for 3 assessment years shall be available to those assessee to whom section 44AB (tax audit) applies.

6.1.5 Tax incentives to units in International Financial Services Centre

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It is proposed to amend section 10 of the IT Act to provide for exemption from tax on capital gains to the income arising from transaction undertaken in foreign currency on a recognised stock exchange located in an IFSC even when STT is not paid in respect of such transactions.It is further proposed that in case ofunits located in IFSC and deriving its income solely in convertible foreign exchange would be exempt, though MAT shall be chargeable @ 9% and DDT shall not be applicable in respect of such entitiesFurther, it is proposed to exempt from levy of STT and CTT in respect of taxable transactions entered into by any person on a recognized association located in unit of IFSC where the consideration for such transaction is paid or payable in foreign currency.The above amendments related to exemption from STT and CTT will be effective from 1 June 2016.

6.1.6 Exemption from DDT on distribution made by an SPV to Business Trust (REITs and InvITs)In order to rationalize the taxation regime for business trusts (REITs and InvITs) and their investors, it is proposed to provide a special dispensation and exemption from levy of DDT subject to specified conditions. The amendment will be effective from 1 June 2016.

6.1.7 Tax treatment of spectrum fee for purchase of spectrumIn order to provide clarity on whether spectrum fee paid for purchase of spectrum is eligible for depreciation under section 32 of the IT Act or whether it is in the nature of a 'license to operate telecommunication business' and eligible for deduction under section 35ABB of the IT Act, it is proposed to insert a new section 35ABA in the IT Act to provide for tax treatment of spectrum fee. The section seeks to provide: nany capital expenditure incurred and actually paid by an assessee on

acquisition of any right to use spectrum for telecommunication services by paying spectrum fee, will be allowed as a deduction in equal instalments over the period for which the right to use spectrum remains in force.

nwhere the spectrum is transferred and proceeds of the transfer are less than the expenditure remaining unallowed, a deduction equal to the expenditure remaining unallowed as reduced by the proceeds of transfer, shall be allowed in the previous year in which the spectrum has been transferred.

nif the spectrum is transferred and proceeds of the transfer exceed the amount of expenditure remaining unallowed, the excess amount shall be chargeable to tax as profits and gains of business in the previous year in which the spectrum has been transferred.

nunallowed expenses in a case where a part of the spectrum is transferred would be amortised.

nunder the scheme of amalgamation, if the amalgamating company sells

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or transfer the spectrum to an amalgamated company, being an Indian company, then the provisions of this section will apply to amalgamated company as they would have applied to amalgamating company if later has not transferred the spectrum.

6.1.8 The Direct Tax Dispute Resolution Scheme, 2016In order to reduce the huge backlog of cases and to enable the Government to realize its dues expeditiously, it is proposed to bring the Direct Tax Dispute Resolution Scheme, 2016 in relation to tax arrears and specified tax. The salient features of the proposed scheme are as undernThe scheme be applicable to "tax arrears" which is defined as the

amount of tax, interest or penalty determined under the IT Act or the WT Act in respect of which appeal is pending before the Commissioner of Income tax (Appeals) or the Commissioner of Wealth tax (Appeals) as on 29 February 2016.

nThe pending appeal could be against an assessment order or a penalty order.

nThe declarant under the scheme be required to pay tax at the applicable rate plus interest up to the date of assessment.

nHowever, in case of disputed tax exceeding Rs.10,00,000, 25% of the minimum penalty leviable shall also be required to be paid.

nIn case of pending appeal against a penalty order, 25% of minimum penalty leviable shall be payable along with the tax and interest payable on account of assessment or reassessment.

nConsequent to such declaration, appeal in respect of the disputed income and disputed wealth pending before the Commissioner (Appeals) shall be deemed to be withdrawn.

In addition to the above, the scheme proposes that person may also make a declaration in respect of any tax determined in consequence of or is validated by an amendment made with retrospective effect in the IT Act or WT Act, as the case may be, for a period prior to the date of enactment of such amendment and a dispute in respect of which is pending as on 29 February 2016 (referred to as specified tax). For availing the benefit of the Scheme, such declarant shall be required to withdraw any writ petition or any appeal filed against such specified tax before the Commissioner (Appeals) or the Tribunal or High Court or Supreme Court, before making the declaration and shall also be required to furnish a proof of such withdrawal. Further, if any proceeding for arbitration conciliation or mediation has been initiated by the declarant or he has given any notice under any law or agreement entered into by India, whether for protection of investment or otherwise, he shall be required to withdraw such notice or claim for availing benefit under this Scheme.It is proposed that person making declaration in respect of specified tax shall be required to furnish an undertaking in the prescribed form and verified in the prescribed manner, waiving the right, whether direct or indirect, to seek or pursue any remedy or claim in relation to the specified tax which otherwise be

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available to them under any law, in equity, by statute or under an agreement, whether for protection of investment or otherwise, entered into by India with a country or territory outside India. It is proposed that no appellate authority or Arbitrator or Conciliator or Mediator shall proceed to decide an issue relating to the specified tax in the declaration in respect of which an order is made by the designated authority or in respect of the payment of the sum determined to be payable.It is proposed that where the declarant violates any of the conditions referred to in the scheme or any material particular furnished in the declaration is found to be false at any stage, it shall be presumed as if the declaration was never made under this Scheme and all the consequences under the IT Act or WT Act under which the proceedings against declarant were or are pending, shall be deemed to have been revived.The declarant under the scheme shall get immunity from institution of any proceeding for prosecution for any offence under the IT Act or the WT Act. In case of specified tax, the declarant shall also get immunity from imposition of penalty under the IT Act or the WT Act. However, in case of tax arrears immunity from penalty is proposed to be of the amount that exceeds the penalty payable as per the scheme. The scheme provides waiver of interest under the IT Act or the WT Act in respect of specified tax. However, waiver of interest in respect of tax arrears is to the extent the interest exceeds the amount of interest referred in the scheme.In the following cases a person shall not be eligible for the scheme:- nCases where prosecution has been initiated before 29 February 2016.nSearch or survey cases where the declaration is in respect of tax arrears. nCases relating to undisclosed foreign income and assets.nCases based on information received under DTAA under section 90 or

90A of the IT Act where the declaration is in respect of tax arrears. nPerson notified under Special Courts Act, 1992.nCases covered under Narcotic Drugs and Psychotropic Substances Act,

Indian Penal Code, Prevention of Corruption Act or Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974.

6.1.9 The Income Declaration Scheme, 2016An opportunity is proposed to be provided to persons who have not paid full taxes in the past to come forward and declare the undisclosed income and pay tax, surcharge and penalty of such undisclosed income declared. For this, the Income Declaration Scheme, 2016 is proposed to be brought into effect from 1 June 2016 and will remain open up to the date to be notified by the Central Government in the official gazette. The scheme is proposed to be made applicable in respect of undisclosed income of any financial year up to FY 2015-16. Tax is proposed to be charged @ 30% on the declared income as increased by surcharge @ 25% of tax payable (to be called the Krishi Kalyan cess) and a penalty @ 25% of tax payable aggregating to 45% on undisclosed income

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declared under the scheme.It is proposed that following cases shall not be eligible for the scheme:nwhere notices have been issued under section 142(1) or 143(2) or 148 or

153A or 153C ornwhere a search or survey has been conducted and the time for issuance

of notice under the relevant provisions of the IT Act has not expired ornwhere information is received under an agreement with foreign countries

regarding such income orncases covered under the Black Money Act, 2015 ornpersons notified under Special Court Act, 1992 orncases covered under Indian Penal Code, the Narcotic Drugs and

Psychotropic Substances Act, 1985, the Unlawful Activities (Prevention) Act, 1967, the Prevention of Corruption Act, 1988.

It is proposed that payment of tax, surcharge and penalty may be made on or before a date to be notified by the Central Government in the Official Gazette and non-payment up to the date so notified shall render the declaration made under the scheme void.It is proposed to provide that declarations made under the scheme shall be exempt from wealth-tax in respect of assets specified in declaration. It is also proposed that no scrutiny and enquiry under the IT Act and Wealth-tax Act be undertaken in respect of such declarations and immunity from prosecution under such Acts be provided. Immunity from the Benami Transactions (Prohibition) Act, 1988 is also proposed for such declarations subject to certain conditions.It is proposed to provide that where a declaration under the scheme has been made by misrepresentation or suppression of facts, such declaration shall be treated as void.It is also proposed that nothing contained in the Scheme shall be construed as conferring any benefit, concession or immunity on any person other than the person making the declaration under this Scheme. In cases where any declaration has been made but no tax and penalty referred to the scheme has been paid within the time specified, the undisclosed income shall be chargeable to tax under the IT Act in the previous year in which such declaration is made.

6.1.10 Presumptive taxation scheme for professionals A new Section 44ADA of the IT Act is proposed for assessees engaged in any profession referred to in Section 44AA(1) or any other profession as notified by the Board and whose total gross receipts does not exceed Rs. 50,00,000 in a previous year, at a sum equal to 50% of the total gross receipts, or, as the case may be, a sum higher than the aforesaid sum earned by the assessee. The scheme will only apply to resident individual, HUF and partnership firm excluding LLP. Further, the assessee will not be required to maintain books of account under section 44AA(1) of the IT Act and get the accounts audited under section 44AB

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in respect of such income unless, the assessee claims that the profits and gains from the aforesaid profession are lower than the profits and gains deemed to be his income under section 44ADA(1) and his income exceeds the maximum amount which is not chargeable to income tax.

6.1.11 Increase in threshold limit for tax audit for persons having income from professionIt is proposed to increase the threshold limit for tax audit from Rs.25,00,000 to Rs.50,00,000 in case of profession.

6.1.12 Increase in threshold limit for presumptive taxation scheme for persons having income from business.It is proposed to increase the threshold limit of Rs. 1,00,00,000 to Rs. 2,00,00,000 in case of eligible assessee engaged in eligible business. The eligible assessee shall be required to pay advance tax and it is proposed that advance tax may be paid by 15 March of the FY. Further, the expenditure in the nature of salary, remuneration, interest, etc. paid to the partner as per Section 40(b) of the IT Act shall not be deductible while computing the income under Section 44AD. It is also proposed that where an eligible assessee declares profit for any previous year in accordance with Section 44AD and he declares profit for any of the 5 consecutive assessment years relevant to the previous year succeeding such previous year not in accordance with the provisions of Section 44AD(1), he shall not be eligible to claim the benefit of the provisions of this section for 5 assessment years subsequent to the assessment year relevant to the previous year in which the profit has not been declared.

6.1.13 Taxation of non-compete fees and exclusivity rights in case of professionSection 28(va) of the IT Act is proposed to be amended to bring the recurring nature of non-compete fees received / receivable in relation to not carrying out any profession, within the scope of section 28 of the IT Act i.e. the charging section of profits and gains of business or profession. Further, it is also proposed to amend the proviso to section 28(va) of the IT Act to clarify that receipts for transfer of right to carry on any profession, which are chargeable to tax under the head ‘Capital gains’, would not be taxable as profits and gains of business or profession. It is also proposed to amend section 55 of the IT Act so as to provide that the 'cost of acquisition' and 'cost of improvement' for working out ‘Capital gains’ on capital receipts arising out of transfer of right to carry on any profession shall also be taken as 'NIL’.

6.1.14 Equalisation LevyA new Chapter VIII titled "Equalisation Levy" is inserted in the Finance Bill 2016. The chapter provides for an equalisation levy @ 6% of the amount of consideration exceeding Rs. 1,00,000 for specified services received or receivable by a non-resident not having PE in India from a resident in India who carries out business or profession or from a non-resident having PE in India. Specified service means online advertisement, any provision for digital advertising space or any other facility or service for the purpose of online

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advertisement and includes any other service as may be notified by the Central Government in this behalf. In order to avoid double taxation, it is proposed to provide exemption under section 10(50) of the IT Act for any income arising from providing specified services on which equalisation levy is chargeable. It is further proposed to amend section 40(a) of the IT Act to provide that deduction for expenses incurred by the assessee under this Chapter shall be allowed only if the equalization levy is deducted and deposited to the credit of Central government.This Chapter will take effect from the date appointed in the notification to be issued by the Central Government.

6.1.15 Rationalization of conversion of a company into Limited Liability Partnership (LLP)In addition to the existing condition under section 47(xiiib) of the IT Act, for availing tax neutral conversion from Company to LLP, it is proposed to amend the said section so as to provide that, for availing tax-neutral conversion, in addition to the existing conditions, the value of the total assets in the books of accounts of the company in any of the 3 previous years preceding the previous year in which the conversion takes place, should not exceed Rs. 5,00,00,000

6.1.16 Deferment of POEM and enabling provisions for its implementation The POEM was defined to mean a place where key management and commercial decisions that are necessary for the conduct of the business of an entity as a whole are in substance made.In order to provide clarity in respect of implementation of POEM based rule of residence and also to address concerns of the stakeholders, it is proposed to: ndefer the applicability of POEM based residence test by 1 year and the

determination of residence based on POEM shall be applicable from FY 2016-17.

nprovide a transition mechanism for a company which is incorporated outside India and has not earlier been assessed to tax in India.

nprovide that these transition provisions would also cover any subsequent previous year upto the date of determination of POEM in an assessment proceedings. However, once the transition is complete, then normal provision of the IT Act would apply.provide that in the notification, certain conditions including procedural conditions subject to which these adaptations shall apply can be provided for and in case of failure to comply with the conditions, the benefit of such notification would not be available to the foreign company.

nprovide that every notification issued in exercise of this power by the Central Government shall be laid before each house of the Parliament.

6.1.17 Benefit of initial additional depreciation under section 32(1)(iia) of the IT Act extended to assessee engaged in the business of transmission of powerIt is proposed to amend Section 32(1)(iia) to provide that an assessee engaged

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in the business of transmission of power shall also be allowed additional depreciation @ 20% of actual cost of new machinery or plant acquired and installed in a previous year.

6.1.18 New taxation regime for securitisation trust and its investorsIn order to rationalise the tax regime for securitisation trust and its investors, it is proposed to substitute the existing special regime for securitisation trusts by a new regime. The new regime provides for tax pass through treatment of the income of the securitisation trust by which such income would be directly taxable in the hands of its investors. It further states that the securitisation trust shall be required to deduct the tax at source at the rate of 25% in case of payment to resident investors which are individual or HUF and @ 30% in case of others. In case of payments to non-resident investors, the TDS shall be at the rates in force.It is proposed to provide that the current regime of distribution tax shall cease to apply in case of distribution made by securitisation trusts with effect from 1 June 2016.These amendments will take effect from 1 June 2016.

6.1.19 Phasing out of deduction and exemptions The Government proposed to implement its decision to reduce corporate tax rate from 30% to 25% over the next 4 years along with corresponding phasing out of exemption and deductions. In this regard, the Government with its intention to phasing out the incentives under the IT Act has stipulated sunset dates for the various sections and amendments. For details, please refer Chapter 5 - Tax Incentives.

6.1.20 TCS on sale of vehicles and goods or servicesThe existing provision of section 206C of the IT Act, provides that the seller shall collect tax at source at specified rate from the buyer at the time of sale of specified items such as alcoholic liquor for human consumption, tendu leaves, scrap, mineral being coal or lignite or iron ore, bullion, etc. in cash exceeding Rs. 2,00,000It is proposed to amend section 206C of the IT Act to provide that the seller shall collect the tax @ 1% from the purchaser on sale of motor vehicle of the value exceeding Rs. 10,00,000 and sale in cash of any goods (other than bullion and jewellery), or providing of any services (other than payments on which tax is deducted at source under Chapter XVII-B) exceeding Rs. 2,00,000. This amendment will take effect from 1 June 2016.

6.1.21 Deduction in respect of provision for bad and doubtful debt in the case of NBFC It is proposed to provide deduction from total income (computed before making any deduction under this clause and Chapter-VIA) on account of provision for bad and doubtful debts to the extent of 5% of the total income in the case of NBFCs.

6.2.1 Additional deduction in respect of interest on housing loan6.2 Personal

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Section 80EE of the IT Act is substituted to incentivize first-home buyers availing home loans, by providing additional deduction up to Rs. 50,000 in respect of interest payable on loan taken for residential house property from any financial institution. This incentive is proposed to be extended to a house property of a value less than Rs. 50,00,000 and in respect of which a loan of an amount not exceeding Rs. 35,00,000 has been sanctioned during the period from 1 April 2016 to 31 March 2017. It is also proposed to extend the benefit of deduction till the repayment of loan continues. The deduction under the proposed section is over and above the existing deduction of interest against income from house property under Section 24 of the IT Act.

6.2.2 Rationalization of taxation of Income by way of dividendIt is proposed to insert a new Section 115BBDA of the IT Act, so as to provide that any income by way of dividend from domestic companies in excess of Rs.10,00,000 received by an Individual, HUF or a Firm who is resident in India, shall be chargeable to tax @10% on gross basis.

6.2.3 Rationalisation of tax treatment of Recognised Provident Funds, Pension Funds and National Pension SchemenIt is proposed to amend Section 10 of the IT Act, so as to provide that in

respect of the contributions made on or after 1 April 2016 by an employee participating in a recognized provident fund and superannuation fund, up to 40% of the accumulated balance attributable to such contributions on withdrawal shall be exempt from tax.

nIt is proposed to amend that any payment in commutation of an annuity purchased out of contributions made on or after 1 April 2016 which exceeds 40% of the annuity, shall be chargeable to tax.

nAny payment from National Pension System Trust to an employee on account of closure or his opting out of the pension scheme referred to in Section 80CCD of the IT Act, to the extent it does not exceed 40% of the total amount payable to him at the time of closure or his opting out of the scheme, shall be exempt from tax. However, the whole amount received by the nominee, on death of the assessee shall be exempt from tax.

nUnder Part A of Fourth Schedule to the IT Act, contributions made by employer to the credit of an employee participating in a recognised provident fund, which are in excess of 12% of the salary of the employee, are liable to tax in the hands of the employee. However, there is no monetary limit for the contribution made by the employer though there is a monetary ceiling for employee's contribution. Therefore, in order to bring parity in the monetary limit for contribution by the employer and the employee, it is proposed to amend the said section and said schedule so as to provide the limit of employer's contribution to Rs.1,50,000, without attracting tax.

nWith a view to bring all the pension plans under one umberalla, it is also proposed to amend-

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– the said schedule so as to provide exemption to one-time portability from a recognised provident fund to NPS;

–• Section 10(13) of the IT Act so as to provide that any payment from an approved superannuation fund by way of transfer to the account of the employee under NPS referred to in Section 80CCD and notified by the Central Government shall be exempt from tax.

6.2.4 Increase in limit of rebate allowable under Section 87AIt is proposed to increase the maximum amount of rebate from Rs.2,000 to Rs.5,000.

6.2.5 Rationalization of limit of deduction allowable in respect of rents paid under Section 80GGIn order to provide relief to the individual tax payers, it is proposed to increase the maximum limit of deduction Rs. 2,000 to Rs. 5,000 per month.

6.2.6 Increase in time period for acquisition or construction of self-occupied house property for claiming deduction of interestIt is proposed that the deduction under Section 24(b) of the IT Act, on account of interest paid on capital borrowed for acquisition or construction of a self-occupied house property shall be available if the acquisition or construction is completed within 5 years from the end of the FY in which capital was borrowed.

6.2.7 Taxation of gold bond under Sovereign Gold Bond Scheme, 2015In order to encourage the investment in aforesaid scheme, it is proposed to amend section 47 of the IT Act to provide that any redemption of Sovereign Gold Bond under the Scheme, by an individual shall not be treated as transfer and therefore shall be exempt from tax on capital gains.Further, it is also proposed to amend section 48 of the IT Act, so as to provide indexation benefits to long term capital gains arising on transfer of Sovereign Gold Bond to all assessee.

6.2.8 Tax Treatment of Gold Monetization Scheme, 2015With view to extend the tax benefits to the Gold Monetization Scheme, 2015 as were available to the Gold Deposit Scheme, 1999 it is proposed to extend the same tax benefits to the Gold Monetization Scheme, 2015 introduced by the Government of India. It is proposed to amend Section 2(14) of the IT Act to exclude Deposit Certificates issued under Gold Monetisation Scheme, 2015 from the definition of capital asset and thereby to exempt it from capital gains tax. It is also proposed to amend Section 10(15) of the IT Act to provide that the interest on Deposit Certificates issued under the aforesaid Scheme, shall be exempt from income-tax.This amendment will be effective retrospectively from 1 April 2016.

6.2.9 Tax on capital gain on transfer of residential property not to be charged in certain cases The existing provision of section 54GB of the IT Act provided exemption from capital gain from the transfer of long term capital assets being a residential

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property (a house or plot of land) owned by eligible assessee (i.e. Individual or HUF), provided, the capital gain are invested in subscription of shares of a company which is qualified to be a SME and subject to other conditions specified therein. Further, on receipt of the proceeds the company should invest the same in purchase of new assets being new plant and machinery but does not include, inter alia, computer or computer software.With view to avoid the incidence of the aforesaid conditions on start-ups, it is proposed to amend section 54GB of the IT Act to provide that investment in eligible start-up company could be made upto 31 March 2019 and also as to provide that the expression ‘New Assets” includes computers or computer software in case of technology driven start-ups so certified by the Inter-Ministerial Board of Certification notified by the Central Government.

6.2.10 Rationalization of Section 56(2)(vii)It is proposed to amend the IT Act to provide that any shares received by an individual or HUF as a consequence of demerger or amalgamation of a company shall not attract section 56(2)(vii) of the IT Act.

6.3.1 Exemption from requirement of furnishing PAN under section 206AA to certain non-residentsIt is proposed to amend section 206AA so as to provide that the provisions of this section shall also not apply to a non-resident, not being a company, or to a foreign company, in respect of any other payment, other than interest on bonds, subject to such conditions as may be prescribed.This amendment will take effect from 1June 2016

6.3.2 Applicability of MAT on foreign companies for the period prior to 1 April 2015 It is proposed to amend the IT Act so as to provide that with effect from 1 April 2001, the provisions of section 115JB shall not be applicable to a foreign company if:nthe assessee is a resident of a country or a specified territory with which

India has an agreement referred to in section 90(1) or the Central Government has adopted any agreement under section 90A(1) and the assessee does not have a permanent establishment in India in accordance with the provisions of such Agreement; or

nthe assessee is a resident of a country with which India does not have an agreement of the nature referred to in clause (i) above and the assessee is not required to seek registration under any law for the time being in force relating to companies.

This amendment is proposed to be made effective retrospectively from AY 2001-02.

6.3.3 Taxation of Rupee Denominated BondThe RBI has recently permitted Indian corporates to issue rupee denominated bonds outside India as a measure to enable the Indian corporates to raise funds

6.3 Non Residents

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from outside India.Accordingly, with a view to provide relief to non-resident investor who bears the risk of currency fluctuation, it is proposed to amend section 48 of the IT Act so as to provide that the capital gains, arising in case of appreciation of rupee between the date of issue and the date of redemption against the foreign currency in which the investment is made, shall be exempt from tax on capital gains.

6.3.4 Exemption in respect of certain activity related to diamond trading in Specified Notified ZoneIn order to facilitate the Foreign Mining Companies (FMC) to undertake activity of display of uncut diamond it is proposed to amend section 9 of the IT Act to provide that no income shall be deemed to accrue or arise in India to it through or from the activities which are confined to display of uncut and un-assorted diamonds in a specified zone notified by the Central Government.This amendment will take effect retrospectively from AY 2016-17 and subsequent years.

6.3.5 Clarification on taxability upon transfer of shares of a private limited company by non-residents With a view to clarify the position on whether the shares of a private limited company forms part of unlisted securities or not, it is proposed to amend the provisions of section 112(1)(c) of the IT Act to provide that long-term capital gains arising from the transfer of a capital asset being shares of a company not being a company in which the public are substantially interested, shall be chargeable to tax at the rate of 10%.

6.3.6 Modification in conditions of special taxation regime for off shore fundsSection 9A of the IT Act provides for a special regime in respect of offshore funds. The benefit under section 9A is available subject to the prescribed conditions provided in sub-sections (3), (4) and (5) of this section. In order to rationalize the regime, it is proposed to modify these conditions to provide that the eligible investment fund for purposes of section 9A shall also mean a fund established or incorporated or registered outside India in a country or a specified territory notified by the Central Government in this behalf. It is also proposed to provide that the condition of fund not controlling and managing any business in India or from India shall be restricted only in the context of activities in India.

6.3.7 Rationalization of tax deduction at source provisions relating to payments by Category-I and Category-II AIF’s to its investorsIn order to rationalise the TDS regime in respect of payments made by the investment funds to its investors, it is proposed to amend section 194LBB of the IT Act to provide that the person responsible for making the payment to the investor shall deduct income-tax under section 194LBB of the IT Act @10% where the payee is a resident and at the rates in force where the payee is a non-resident (not being a company) or a foreign company. Further, it is proposed to amend section 197 of the IT Act to include section

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194LBB of the IT Act in the list of sections for which a certificate for deduction of tax at lower rate or no deduction of tax can be obtained. These amendments will take effect from 1 June 2016.

6.4.1 Furnishing of report in respect of international group - BEPS action plan - Country-By-Country Report and Master fileThe OECD Report on Action 13 of BEPS Action plan provides for revised standards for transfer pricing documentation and a template for Country-by-Country (CbC) reporting of income, earnings, taxes paid and certain measure of economic activity. A three-tiered structure has been mandated consisting of:na master file containing standardised information relevant for all MNE

group members;na local file referring specifically to material transactions of the local

taxpayer; andna CbC report containing certain information relating to the global

allocation of the MNE's income and taxes paid together with certain indicators of the location of economic activity within the MNE group.

The CbC report mentions that, these 3 documents (country-by-country report, master file and local file) will require taxpayers to articulate consistent transfer pricing positions and will provide tax administrations with useful information to assess transfer pricing risks. It will facilitate tax administrations to make determinations about where their resources can most effectively be deployed, and, in the event audits are called for, provide information to commence and target audit enquiries.The CbC report requires MNEs to report annually and for each tax jurisdiction in which they do business; the amount of revenue, profit before income tax and income tax paid and accrued. It also requires MNEs to report their total employment, capital, accumulated earnings and tangible assets in each tax jurisdiction. Finally, it requires MNEs to identify each entity within the group doing business in a particular tax jurisdiction and to provide an indication of the business activities of each entity. The CbC report has to be submitted by parent entity of an international group to the prescribed authority in its country of residence. This report is to be based on consolidated financial statement of the group.The master file is intended to provide a high-level overview of the MNE group’s business, including the nature of its global business operations, its overall transfer pricing policies; and its global allocation of income and economic activity in order to assist tax administrations in evaluating the presence of significant transfer pricing risk.It is proposed to insert section 286 in the IT Act to provide a specific reporting regime in respect of CbC reporting and also the master file. The elements relating to CbC reporting requirement and matters proposed to be included are:nthe reporting provision shall apply in respect of an international group

6.4 Transfer Pricing

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having consolidated revenue, based on consolidated financial statements, exceeds the threshold. The current international consensus is for a threshold of €750 million equivalent in local currency. This threshold in Indian currency would be equivalent to Rs.5,395 crores (at current rates).

nthe parent entity of an international group, if it is resident in India shall be required to furnish the report in respect of the group to the prescribed authority on or before the due date of furnishing of return of income for the Assessment Year relevant to the Financial Year (previous year) for which the report is being furnished;

nthe parent entity shall be an entity which is required to prepare consolidated financial statement under the applicable laws or would have been required to prepare such a statement, had equity share of any entity of the group been listed on a recognized stock exchange in India;

nevery constituent entity in India, of an international group having parent entity that is not resident in India, shall provide information regarding the country or territory of residence of the parent of the international group to which it belongs. This information shall be furnished to the prescribed authority on or before the prescribed date;

nthe report shall be furnished in prescribed manner and in the prescribed form and would contain aggregate information in respect of revenue, profit & loss before Income-tax, amount of Income-tax paid and accrued, details of capital, accumulated earnings, number of employees, tangible assets other than cash or cash equivalent in respect of each country or territory along with details of each constituent's residential status, nature and detail of main business activity and any other information as may be prescribed. This shall be based on the template provided in the OECD BEPS report on Action Plan 13;

nan entity in India belonging to an international group shall be required to furnish CbC report to the prescribed authority if the parent entity of the group is resident:– in a country with which India does not have an arrangement for

exchange of the CbC report; or– such country is not exchanging information with India even

though there is an agreement; and– this fact has been intimated to the entity by the prescribed

authority.nIf there are more than one entities of the same group in India, then the

group can nominate (under intimation in writing to the prescribed authority) the entity that shall furnish the report on behalf of the group. This entity would then furnish the report;

nIf an international group, having parent entity which is not resident in India, had designated an alternate entity for filing its report with the tax jurisdiction in which the alternate entity is resident, then the entities of

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such group operating in India would not be obliged to furnish report if the report can be obtained under the agreement of exchange of such reports by Indian tax authorities;

nThe prescribed authority may call for such document and information from the entity furnishing the report for the purpose of verifying the accuracy as it may specify in notice. The entity shall be required to make submission within 30 days of receipt of notice or further period if extended by the prescribed authority, but extension shall not be beyond 30 days.

6.4.2 Rationalisation of time limit for completion of assessment, reassessment and re-computationIt is proposed to substitute section 153 of the IT Act wherein the time limit for completion of the assessment, reassessment and re-computation has been advanced by 3 months and accordingly, the time limit for completion of the TP assessments has also been advanced.The amendment will take effect from 1 June 2016.

6.4.3 Amendment to section 92D to the IT ActSection 92D of the IT Act relating to maintenance and keeping of information and document by persons entering into an international transaction or specified domestic transaction, provides that every person who has entered into an international transaction or specified domestic transaction shall keep and maintain such information and document in respect thereof as may be prescribed. The said section further provides that the Assessing Officer or the Commissioner (Appeals) may in the course of any proceeding require such person to furnish the information and document within the period of 30 days of it being called for or within the extended period.It is proposed to amend Section 92D of the IT Act so as to provide that the person being a constituent entity of an ‘international group’ referred to in section 286 of the IT Act, shall also keep and maintain such information and document in respect of the international group as may be prescribed. It is further proposed to amend the said section so as to provide that without prejudice to the power of the Assessing Officer or the Commissioner (Appeals) to call for the information and document, the person being a constituent entity of an international group, shall furnish the prescribed information and document to the prescribed authority referred to in section 286 of the IT Act in the prescribed manner on or before the date to be prescribed.

6.4.3.1Penalty for failure to furnish report or for furnishing inaccurate report under section 286It is proposed to insert section 271GB of the IT Act and amendment to section 271AA of the IT Act for non-furnishing of the report or furnishing inaccurate report, under which a graded penalty structure would apply as follows:

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6.5 General6.5.1 Rationalization of Provisions relating to filing of appeal with ITAT against the

order of DRP

Sections under IT Act

Penalty

Section 271GB Non-furnishing of Report

(a) Default not more than one month

Rs.5,000 per day

Particulars of Default

(b) Default more than one month Rs.15,000 per day for period exceeding 1 month

(c) Default even after service of order levying penalty under either (a) or (b) above

Rs.50,000 per day continuing default beyond the date of service of penalty order

Section 271GBTimely non-submission of information and documents before prescribed authority

(a) timely non-submission of information before prescribed authority when called for

Rs.5,000 per day

(b) Default even after service of order levying penalty under (a) above

Rs.50,000 per day continuing default beyond the date of service of penalty order

Section 271AAInaccurate Information in Report

(a) the entity knows of the inaccuracy at the time of furnishing the report but does not inform the prescribed authority; or

Rs.5,00,000

(b) the entity discovers the inaccuracy after the report is furnished and fails to inform the prescribed authority and furnish correct report within a period of 15 days of such discovery; or

(c) the entity furnishes inaccurate information or document in response to notice of the prescribed authority.

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Section 253(2A) of the IT Act provides that the Principal Commissioner or Commissioner may, if he objects to any direction issued by the DRP under Section 144C(5) of the IT Act in pursuance of which the AO has passed an order completing the assessment or reassessment, direct the AO to appeal to the ITAT against such order.Further, Section 253(3A) of the IT Act provides that every appeal under sub-section (2A) shall be filed within 60 days of the date on which the order sought to be appealed against is passed by the AO in pursuance of the directions of the DRP under sub-section (5) of section 144C of the IT Act. In line with the decision of the Government to minimize litigation, it is proposed to omit the said sub-sections (2A) and (3A) of section 253 of the IT Act to do away with the filing of appeal by the AO against the order of the DRP. The consequent amendments are proposed to be made to sub-section (3A) and (4) of the said provision.These amendments will take effect from 1 June 2016.

6.5.2 Rationalization of Penalty ProvisionsIt is proposed to replace section 271 of the IT Act with section 270A which provides for levy of penalty in cases of under-reporting and misreporting of income. Sub-section (1) of the proposed new section 270A of the IT Act seeks to provide that the AO, CIT (Appeals) or the Principal Commissioner or Commissioner may levy penalty if a person has under-reported his income as specified in the provisions. The amount of under-reported income is proposed to be calculated in different scenarios are provided in detail in the regulations. It is proposed that the rate of penalty shall be 50% of the tax payable on under-reported income. However in a case where under-reporting of income results from misreporting of income by the assessee, the person shall be liable for penalty @200% of the tax payable on such misreported income as specified in the provisions.It is also proposed that in case of company, firm or local authority, the tax payable on under-reported income shall be calculated as if the under-reported income is the total income. In any other case, the tax payable shall be 30% of the under-reported income.It is also proposed that no addition or disallowance of an amount shall form the basis for imposition of penalty, if such addition or disallowance has formed the basis of imposition of penalty in the case of the person for the same or any other AY. Consequential amendments have been proposed in sections 119, 253, 271A, 271AA, 271AAB, 273A and 279 of the IT Act to provide reference to newly inserted section 270A of the IT Act.

6.5.3 Rationalisation of time limit for assessment, reassessment and re-computationIt is desirable that proceedings under the IT Act are finalised more expeditiously as digitisation of processes within the department has enhanced its efficiency in handling workload. It is proposed to advance the time limit for completion of

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assessment, reassessment etc. by 3 months as compared to the existing time limit.

6.5.4 Penalty under section 271AAB of the IT ActIn order to rationalize the rate of penalty and to reduce discretion, it is proposed to amend clause (c) of sub-section (1) of section 271AAB of the IT Act to provide for levy of penalty on undisclosed income at a flat rate of 60% of such income.

6.5.5 Clarification regarding set off losses against deemed undisclosed incomeSection 115BBE of the IT Act, inter-alia provides that the income relating to section 68 or section 69 or section 69A or section 69B or section 69C or section 69D of the IT Act is taxable @ 30% and further provides that no deduction in respect of any expenditure or allowances in relation to income referred to in the said sections shall be allowable.In order to avoid unnecessary litigation, it is proposed to amend the provisions of section 115BBE(2) of the IT Act to expressly provide that no set off of any loss shall be allowable in respect of income under sections 68 or section 69 or section 69A or section 69B or section 69C or section 69D of the IT Act.

6.5.6 Rationalization of TDS provisionsIn order to rationalise the rates and base for TDS provisions, the existing threshold limit for deduction of tax at source and the rates of deduction of tax at source are proposed to be revised. For details please refer Chapter 11 ‘TDS Rates’.

6.5.7 Tax on accreted income of charitable institution and trust in certain specified cases The existing provision of the IT Act does not provide any clarity on how the assets of charitable institutions and trust, shall be dealt with, in case when it voluntarily wind up its activities and dissolves or may also merge with any other charitable or non-charitable institution or it may convert into a non-charitable organization. It is proposed to amend the provision of the IT Act and introduce new chapter XII-EB in the IT Act, to provide for levy of additional income tax at MMR, in case of conversion into or merger with any non-charitable form or on transfer of assets of a charitable organization on its dissolution to a non-charitable institution. This amendment will take effect from 1 June 2016.

6.5.8 Providing legal framework for automation of various processes and paperless assessmentIt is proposed to amend the relevant provisions of the IT Act so as to provide adequate legal framework for paperless assessment in order to enhance efficiency and reduce the burden of compliance. A series of changes are proposed to achieve this objective.These amendments will take effect from 1 June 2016.

6.5.9 Rationalization of advance tax payment schedule under section 211 of the IT Act and interest under section 234C of the IT ActIt is proposed to rationalise schedule for advance tax payment and prescribe the

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same advance tax schedule for all the assessees i.e. 4 installments except in case of an eligible assessee in respect of eligible business as referred to in section 44AD of the IT Act.It is further proposed that an eligible assessee in respect of eligible business referred to in section 44AD of the IT Act opting for computation of profits or gains of business on presumptive basis, shall be required to pay advance tax of the whole amount in 1 installment on or before 15 March of FY.The consequential amendments are also proposed to be made to section 234C of the IT Act.It is also proposed that interest under section 234C of the IT Act shall not be chargeable in case of an assessee having income under the head "Profits and gains of business or profession" for the first time, subject to fulfillment of conditions specified therein.These amendments will take effect from 1 June 2016.

6.5.10 Increase in rate of STT in case of sale of an option in securities STT is proposed to be increased from 0.017% to 0.05% of the option premium on sale of an option in securities where option is not exercised. This amendment will take effect from 1 June 2016.

6.5.11 Tax exemption on long term capital gain on investment of the gains in units of specified funds It is proposed to insert new section 54EE to provide exemption from tax on long term capital gain if the long term capital gains proceeds are invested by the assessee in units of the specified fund within 6 months from the date of such transfer of long term capital assets. It is further proposed that, the aggregate investment in the units of specified funds shall be allowed up to Rs. 50,00,000 during any financial year in which original asset or assets are transferred or in the subsequent financial year. The exemption shall be subject to condition that the amount remains invested for 3 years failing to which the exemption shall be withdrawn.

6.5.12 Filing of return of IncomeIt is proposed to amend the 6th proviso to section 139(1) of the IT Act to include that if a person during the previous year earns income which is exempt under section 10(38) of the IT Act and income of such person without giving effect to the said clause of section 10 exceeds the maximum amount which is not chargeable to tax, shall also be liable to file return of income for the previous year within the due date.It is also proposed to substitute section 139(4) of the IT Act to provide that any person who has not furnished a return within the time allowed to him under section 139(1) of the IT Act, may furnish the return for any previous year at any time before the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. It is also proposed to substitute section 139(5) of the IT Act so as to provide that if any person, having furnished a ROI under section 139(1) of the IT Act or under

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section 139(4) of the IT Act, or in a return furnished in response to notice issued under section 142(1) of the IT Act, discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of 1 year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. It is also proposed to provide that a ROI which is otherwise valid would not be treated defective merely because self-assessment tax and interest payable in accordance with the provisions of section 140A has not been paid on or before the date of furnishing of the return.

6.5.13 Rationalization of Section 50C in case sale consideration is fixed under agreement executed prior to the date of registration of immovable propertyIt is proposed to amend the provisions of section 50C of the IT Act so as to provide that where the date of the agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of the agreement may be taken for the purposes of computing the full value of consideration.It is further proposed to provide that this provision shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by way of an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account, on or before the date of the agreement for the transfer of such immovable property.

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Chapter 7 Indirect Taxes - Significant Changes

The change in rates effected in the Customs and Central Excise regulations shall be effective from 1 March 2016 and legislative changes shall be effective from the enactment of Finance Bill, 2016 unless otherwise specified. The changes in Service Tax regulations shall be effective from the date of enactment of the Bill, unless otherwise specified.

The provisions applicable to Service Tax, Customs and Excise are given as under:

n11 new benches of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) to be created for removable of backlog of cases.

nThe limitation period for issuance of show cause notice for cases not involving fraud, collusion, suppression, etc. is proposed to be increased from 18 months to 30 months in case of service tax and from 1 year to 2 year in case of excise and customs.

nRate of interest for delay in payment of excise and customs duty to be reduced from 18% to 15% p.a. w.e.f. 1 April 2016. Rate of interest for delay in payment of service tax to be rationalized @ 24% p.a. in case amount is collected but not paid and @ 15% p.a. in all other cases as against the present rate of 18% to 30% p.a., as the case may be.

nIndirect Tax Dispute Resolution Scheme, 2016 has been proposed to be introduced w.e.f. 1 June 2016 for service tax, excise and customs assessee who has filed an appeal before Commissioner (Appeals) and is pending for adjudication as on 1 March 2016. The salient features are as follows:

- The declaration to be filed on or before 31 December 2016.

- To pay duty/tax, interest and penalty @ 25% imposed under the impugned order within 15 days of receipt of acknowledgment and intimate within 7 days of such payment.

- Scheme not applicable in certain cases like search and seizure proceedings being initiated; prosecution proceedings being initiated before 1 June 2016; matter pertaining to narcotic drugs or other prohibited goods; matter pertaining to any offence punishable under Indian Penal Code, Prevention of Corruption Act, 1988 etc.; or detention order passed under COFESA.

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7.1 Service Tax

7.1.1 General


7.1.2 Amendment in scope of negative list of services, exempted services and declared services

nServices by way of construction, erection etc. of a civil structure or any other original works pertaining to the “In-situ Rehabilitation of existing slum dwellers using land as a resource through private participation” component of Housing for All (HFA) (Urban) Mission / PMAY only for existing slum dwellers to be exempted.

nServices by way of construction, erection etc., of a civil structure or any other original works pertaining to the “Beneficiary-led individual house construction / enhancement” component of Housing for All (HFA) (Urban) Mission/ PMAY to be exempted.

nServices provided by Indian Institute of Management to their students by way of specified educational programs to be exempted.

These amendments will take effect from 1 March 2016

nLegal services provided by a senior advocate to an advocate or partnership firm of advocates on shall be liable to service tax. Further services provided by person represented on an arbitral tribunal to an arbitral tribunal made liable to service tax.

nServices by way of transportation of passengers by ropeway, cable car or aerial tramway shall now be liable to service tax.

nServices by way of construction, erection, etc., of original works pertaining to low cost houses up to a carpet area of 60 sq. mtr. per house (i.e. 645 sq ft.) in a housing project approved by the competent authority under the “Affordable housing in partnership” component of housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (PMAY) or any housing scheme of a State Government shall be exempted.

nExemption limit of services by a performing artist in folk or classical art forms of music, dance or theatre has been increased from Rs. 1,00,000 to Rs. 1,50,000 per performance.

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nExemption has been provided for the following services-

- Services of assessing bodies empanelled centrally by Directorate General of Training, Ministry of Skill Development and Entrepreneurship.

- Services provided by way of skill/vocational training by Deen Dayal Upadhyay Grameen Kaushalya Yojana training partners.

- Services of general insurance business provided under Niramaya Health Insurance scheme.

- Services provided by Insurance Regulatory and Development Authority (IRDA) of India to insurers.

- Services provided by National Centre for Cold Chain Development under Department of Agriculture, Cooperation and Farmers Welfare, Government of India, by way of cold chain knowledge dissemination.

- Services provided by Biotechnology Industry Research Assistance Council (BIRAC) approved biotechnology incubators to the incubatees.

- Services provided by Employees Provident Fund Organisation (EPFO) to employees.

- Services provided by Securities and Exchange Board of India (SEBI) by way of protecting the interests of investors in securities and to promote the development of, and to regulate, the securities market.

- The services of life insurance business provided by way of annuity under the National Pension System (NPS) regulated by Pension Fund Regulatory and Development Authority (PFRDA) of India.

These amendments will take effect from 1 April 2016

nServices by way of transportation of passengers by stage carriage which was earlier not taxable has been proposed to be liable to service tax. However, non-air conditioned stage carriage has been excluded from the purview of service tax by inserting the same in the Mega Exemption w.e.f. 1 June 2016.


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nServices by way of construction, erection, commissioning, or installation of original works pertaining to monorail and metro shall now be liable to service tax. However, where contracts were entered into before 1 March 2016, on which appropriate stamp duty, was paid, shall remain exempt.

nRestoration of certain exemptions withdrawn last year for projects, contracts in respect of which were entered into before withdrawal of the exemption.

(a) Exemption from service tax on services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of:

- Civil structure;

- Structure used as educational, clinical and art establishment

- Residential complex used by government employees.

was withdrawn w.e.f. 1 April 2015. The same is being restored for the services provided under a contract which had been entered into prior to 1 March 2015 and on which appropriate stamp duty, where applicable, had been paid prior to that date. The exemption is being restored till 31 March 2020.

Refund to be granted for all such service tax which has been collected but which would not have been so collected had the above law been in force at all times.

(b) Exemption from service tax on services by way of construction, erection, commissioning or installation of original works pertaining to an airport, port was withdrawn with effect from 1 April 2015. The same is being restored for the services provided under a contract which had been entered into prior to 1 March 2015 and on which appropriate stamp duty, where applicable, had been paid prior to that date subject to production of certificate from the Ministry of Civil Aviation or Ministry of Shipping, as the case may be, that the contract had been entered into prior to 1 March 2015. The exemption is being restored till 31 March 2020.

nAssignment by the Government of the right to use the radio-frequency spectrum and subsequent transfers thereof is proposed to be declared as a service under section 66E of the Finance Act, 1994.

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7.1.3 Amendment in abatement rates

nAt present, there is abatement of 60% on the gross value of renting of motor-cab services, provided no CENVAT Credit has been taken. It has been clarified that cost of fuel should be included in the consideration charged for providing renting of motor-cab services for availing the abatement.

The above amendment will take effect from 1 April 2016

7.1.4 Amendment in Point of Taxation Rules, 2011

nDoubts regarding the point of taxation in case of a new service becoming taxable existed in the present scenario. Now, it has been clarified that the new levy on services shall be treated as to be services becoming taxable for the first time and thus Rule 5 of Point of Taxation to be applied.

nAs per Rule 5, no tax shall be payable in following 2 scenario:

PaticularsAbatement rate (%)

Existing Proposed Existing

1 Transport of passengers by rail 70 70

2 Transport of goods other than incontainers by rail 70 70

3 Transport of goods in containers by rail 70 60

4 Transport of goods by vessel 70 70

5 Services by way of construction ofresidential complex, building, civil structure, or a part thereof- 70 70

a) High end flats

b) Low end flats

6 Services provided by a tour operatorin relation to packaged tour 75 70

7 Services provided by a tour operatorin relation to services other than packaged tour. 60 70

8 Services provided by goodstransport agency for shiftingof household goods 70 60

9 Services provided by goodstransport agency other thanmentioned in Sl .no 8 70 70

10 Services provided by foreman of achit fund in relation to chit NIL 30

CENVAT Credit

Proposed

Available only of input

services.Not

available

Sr.No.

Available only of input

services.Not

available

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- Invoice has been issued and payment received against such invoice before such service became taxable;

- Payment has been received before the service becomes taxable and invoice has been issued within 14 days of the date when the

stservice is taxed for the 1 time.

nIt is further clarified that new levy or tax shall be payable on all the cases other than specified above.

The above amendment will take effect from 1 March 2016.

7.1.5 Amendment in Reverse Charge Mechanism

nServices provided by mutual fund agent or distributor, to a mutual fund or asset management company shall now be liable as forward charge instead of the existing reverse charge, so as to enable the small sub-agents down the distributor chain to avail small scale exemption having threshold exemption of Rs. 10,00,000 per year.

The above amendment will take effect from 1 April 2016

7.1.6 Other Significant Amendments

nOne Person Company whose aggregate value of services during previous financial year is Rs. 50,00,000 or less or a Hindu Undivided Family shall be required to pay service tax as per the due date as applicable to individual or partnership firms.

nThe optional Service Tax rate in case of single premium annuity policies is being rationalized @ 1.4% of the total premium charged in case where the amount allocated for investment is not intimated to policy holder.

nService tax assessees above a certain threshold will also be required to file an annual return.

The above amendment will take effect from 1 April 2016.

nNotification No. 41/2012-ST, dated the 29 June 2012 was amended by notification No.1/2016-ST dated 3 February 2016 so as to, inter alia, allow refund of Service Tax on services used beyond the factory or any other place or premises of production or manufacture of the said goods for the export of the said goods. The amendment is being made to give retrospective effect from the date of application of the notification i.e. 1 July 2012.

nServices by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, repair, alteration of canal,

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dam or irrigation works to a governmental authority during the period 1 July 2012 to 29 January 2014 shall be exempted. Thus, refund of service tax paid on the said services for the above period shall be allowed.

nThe power of arrest in service tax is proposed to be restricted to situations where the tax payer has collected the tax but not deposited it to exchequer to the tune of Rs. 2,00,00,000 or more against existing limit of Rs. 50,00,000

nThe monetary limit for launching prosecution is proposed to be increased from Rs. 1,00,00,000 to Rs. 2,00,00,000.

7.2.1 General

nPeak rate of Basic Customs Duty (BCD) remains unchanged @10.30% (Tax @ 10%, Education Cess @ 2% and Secondary and Higher Education Cess @ 1%).

7.2.2 Gems and Jewellery

nBCD on import of Imitation Jewellery is increased from 10% to 15%.

nConcessional CVD on Gold Dore bar and Silver Dore bar is increased from 8% to 8.75% and from 7% to 7.75% respectively.

7.2.3 Pharmaceutical and Healthcare

nBCD on import of medical use fission Molybdenum – 99 used in the manufacture of radio pharmaceuticals, is reduced from 7.5% to NIL.

nDisposable sterilized dialyzer and micro barrier of artificial kidney is exempted from BCD, CVD and SAD.

nBCD on Super Absorbent Polymer used in the manufacture of sanitary towels, tampons, napkins, diapers, etc. is reduced from 7.5% to 5%, subject to actual user condition. BCD on pulp of wood used in the manufacture of sanitary towels, tampons, napkins, diapers, etc. is reduced from 5% to 2.5%, subject to actual user condition.

7.2.4 Textiles

nBCD on import of specified fabrics used in the manufacture of textile garments for exports, exempted to the extent of 1% of FOB value of exports in the preceding FY, subject to specified conditions. Exemption entitlement shall be one twelfth of 1% for the month of March 2016.

nBCD on import of specified fibres, filaments/ yarns is reduced from 5% to 2.5%.

7.2 Customs Duty

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7.2.5 Storage and warehousing

nNew class of warehouse to be added for enabling storage of specific goods under physical control of the Department.

nConcessional BCD at 5% is extended to Cold chain including pre-cooling unit, packhouses, sorting and grading lines and ripening chambers. Consequently, the Project Import Regulations have been amended to provide for the transitions.

nBCD on refrigerated containers is reduced from 10% to 5%.

7.2.6 Automobiles

nBCD on golf cars is increased from 10% to 60%.

nExemption from levy of BCD on import of battery pack, battery charger, AC or DC motor, AC or DC motor controllers used in the manufacture of electrically operated vehicles and hybrid vehicles is extended without any time limit.

7.2.7 Others

nDuty free allowance for bonafide gifts is increased from Rs. 10,000 to Rs. 20,000.

nCVD Exemption on certain specified construction related machinery withdrawn.

nPower generation project driven by municipal and urban waste, must be backed by valid agreement between producer of power with urban local body for processing of municipal solid waste. The agreement is needed to have validity of more than 10 years from the date of commissioning of project for availing customs duty concessions as an alternative to the existing condition of “production of valid power purchase agreement between the importer/producer of power and the purchaser, for the sale and purchase of electricity generated using non-conventional materials”.

nSelf – declaration sufficient for availing duty exemptions to import goods at concessional rate to be used in manufacture of excisable goods. The manufacturer filing such declaration to avail the benefit of concessional rate of duty shall be required to furnish a quarterly return as prescribed under the regulations.

nBaggage rules simplified and rationalized to cover multiple slabs of duty free allowance for various categories of passengers.

nCustoms baggage declaration to be filed only by passengers carrying dutiable or prohibited goods. The Customs Duty Free allowances are –

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7.3 Central Excise

7.3.1 General

nThe general effective rate of BED remained unchanged @12.5%.

7.3.2 Precious metals and Jewellery

nExemption from BED has been withdrawn on certain articles of jewelllery (as indicated below) which will result in levy of excise duty as under -

Eligible passenger Origin country Duty free allowancePassengers of Indian origin and foreigners residing in India, excluding infant

Other than Nepal, Bhutan,

Myanmar

50,000

Tourists of foreign origin, excluding infants

15,000

Passengers of Indian origin and foreigners residing in India, excluding infant

Nepal, Bhutan, Myanmar

15,000

Tourists of foreign origin, excluding infants

By land - Nil

Indian passenger who has been residing abroad for over 1 year

Anywhere Gold jewelleryGentleman – 20 gms with a value cap of Rs.50,000

Lady – 40 gms with a value cap of Rs.1,00,000

All passengers Anywhere Alcohol liquor or wine: 2 litres

All passengers Anywhere Cigarettes: 200 numbers or Cigars upto 50 or Tobacco 250 grams

Passenger of 18 years and above Anywhere One Laptop

Tariff entry

Description of excisable goods

Rate chargeable (without

CENVAT Credit)

7113 (I) Articles of jewellery;

Rate chargeable (without

CENVAT Credit)

1% 12.5%

7113 (II) Articles of silver jewellery, other than those studded with diamond, ruby, emerald or sapphire.

NIL NIL

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nSmall Scale Industries (SSI) threshold exemption for articles of jewellery (excluding articles of silver jewellery, other than those studded with diamonds, ruby, emerald or sapphire) is being increased to Rs. 600,00,000 in a year, with an eligibility limit of Rs. 1200,00,000 in the preceding financial year. For the month of March, 2016, the SSI exemption for such articles of jewellery is being restricted to Rs. 50,00,000.

nOptional centralized registration has been extended to such manufacturers. Requirement of physical verification of premises to be registered in such cases is being done away with.

nFollowing excise duty changes have been effected -

7.3.3 Automobile Sector

nInfrastructure cess is being levied on motor vehicle (depending upon type of motor vehicle under the chapter heading 8703 ranging from 1% to 4%. However, the motor vehicles after clearances is registered for use as taxi, cars for physically handicapped persons and registered as ambulance shall be exempted from infrastructure cess.

nCENVAT credit cannot be utilized against the payment of Infrastructure cess and further no credit of such cess shall be available under the CENVAT Credit Rules

nThe validity period of concessional excise duty of 6% granted to specified parts of electric vehicle and hybrid vehicle is being extended without time limit.

nThe excise duty on engine foe xEV (hybrid electric vehicle) reduced from 12.5% to 6%.

Particulars Present Excise duty

Gold bars manufactured from gold ore or concentrate, gole dore bar and silver dore bar

Earlier Excise duty

9.0 % 9.5 %

Gold bars and gold coins of purity not below 99.5 % produced during the process of copper smelting

9.0 % 9.5 %

Silver manufactured from silver ore or concentrate, silver dore and gold dore bar.

8.0 % 8.5 %

Silver in any form, except silver coins of purity below 99.9 % produced during the process of copper smelting

8.0 % 8.5 %

Silver produced during the process of zinc or lead smelting

8.0 % 8.5 %

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7.3.4 Food Processing Sector

nBasic excise duty on refrigerated containers reduced from 12.5% to 6%.

7.3.5 Textiles

nThe tariff rate for following goods have been amended:

7.3.6 Consumer Goods

nExcise duty on rubber sheets and resin rubber sheets for soles and heals reduced from 12.5% to 6%.

nThe tariff rate for all categories of footwear is being reduced from 75% to 70% of retail sale price.

nExcise duty on water, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavored being increased from 18% to 21%

7.3.7 Amendments in CENVAT Credit Rules, 2004

nAll capital goods having value up to Rs. 10,000 per piece are being included in the definition of inputs.

nWagons falling under sub heading 8606 92 of the Central excise tariff and equipment and appliance used in an office located within a factory are being included in the definition of capital goods and hence, CENVAT credit shall be eligible.

nManufacturer of final products is being allowed to take CENVAT Credit of Chapter 82 of the Central Excise Tariff (tools, implements etc.) in addition to credit on jigs, fixtures, moulds and dies when intended to be used in the premises of job-worker or another manufacturer who manufactures the goods as per specification of manufacturer of final products. The manufacturer can send the said goods directly to other manufacturer or job-worker without bringing the same to his premises.

nThe CENVAT Credit Rules has been amended, so as to improve credit flow, reduce the compliance burden and associated litigations, particularly

Particulars Earlier position Present positionReadymade garments and made up of articles of textiles

30% of retail sale price

60% of retail sale price

Branded readymade garments and made up articles of textiles of

Nil(without CENVAT credit)

or6% / 12.5% (with

CENVAT credit)

2%(without CENVAT credit)

or12.5% (with CENVAT

credit)

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those relating to apportionment of credit between exempted and non-exempted final products / services.

nAmendments are been made in respect of provisions relating to input service distributor, including extension to transfer the input services credit to outsourced manufacturers, under certain circumstances. The amendments in said rules will also enable manufacturers with multiple manufacturing units to maintain a common warehouse for inputs and distribute inputs with credits to the individual manufacturing units.

nRule 9A is being amended to provide for filing an annual return by a manufacturer of final product or provider of output service for each financial year by 30 November of the succeeding year.

nPresently, Rule 14(2) prescribe a procedure on First in First out basis for determining whether a particular credit has been utilized. The said sub-rule has been omitted. Now, whether a particular credit has been utilised or not shall be ascertained by examining whether during the period under consideration, the minimum balance of credit in the account of the assesse was equal to or more than the disputed amount of credit.

nBanking and other financial institution to have an option of reversing CENVAT credit in respect of exempted services on actual basis in addition to an option of reversal of 50% of CENVAT credit.

nExcise duty on capital goods used exclusively for manufacture of exempted goods or provision of exempted service for 2years from the date of commencement of commercial production or providing of services or 2 years from installation of capital goods post commencement shall not be eligible as CENVAT credit. Hitherto, no time limit was prescribed for exclusive usage of capital goods.

These amendments will take effect from 1 April 2016.

nTransportation of goods by a vessel from customs station of clearance in India to place outside India not to be treated as exempted services for the purpose of CENVAT Credit Rules. Thus, shipping lines will be entitled to avail CENVAT credit on inputs and input services used in providing said services.

7.3.8 Amendments to Central Excise Rules, 2002

nCentral excise assesses can revise the filed periodical return by the end of the calendar month in which return is filed. These amendments will take effect from 1 April 2016.

nReduction in number of returns by an assesse above a certain threshold from 27 to 13.

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nIn respect of finalization of provisional assessment, the interest shall be charged from the original date of payment of duty.

7.3.9 Certain Other Amendments

nThe excise duty exemption under the area based exemptions for production of gold and silver from gold dore, silver dore or any other raw material is prospectively withdrawn. Thus, a new industrial unit or an existing industrial unit which undertakes substantial expansion of capacity shall not be eligible for availing excise duty exemption.

nRule 5 of CENVAT Credit Rules read with Notification No.27/2012 CE dated 18 June 2012 has been amended for filing of refund claim. In respect of service provider, the expiry of 1 year shall be from the date of issuance of invoice where payment has been received in advance prior to date of issuiance of invoice or receipt of payment in foreign exchange where service has been completed prior to receipt of such payment, whichever is earlier. In case of manufacturer of goods, section 11B of the Central Excise Act is applicable for filing refund claim.

nSection 3 of The Central Sales Tax Act, 1956 deals with formulation of principles for determining when a sale or purchase of goods takes place in the course of inter-state trade or commerce.

nAn explanation has been added to state that where the gas sold or purchased and transported through a common carrier pipeline or any other common transport or distribution system becomes co-mingled and fungible with other gas in the pipeline or system and such gas is introduced into the pipeline or system in one state and is taken out from the pipeline in another state, such sale or purchase of gas shall be deemed to be a movement of goods from one state to another and Central Sales Tax will be applicable on such transaction.

7.4 Central Sales Tax Act, 1956

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Chapter 8 Other Significant Proposals

8.1 Significant Proposals – Business Incentives

8.1.1 As a measure to support the export sector, the duty drawback scheme has been widened and deepened to include more products and countries.

8.1.2 “Stand Up India Scheme” to facilitate at least two projects per bank branch, one for each category of entrepreneur i.e. SC/ ST and woman. This will benefit at least 2.5 lakh entrepreneurs.

8.1.3 A new model Shops and Establishments Bill to be circulated to the state governments

8.1.4 To provide calibrated marketing freedom in order to incentivise gas production from deep-water, ultra deep-water and high pressure-high temperature areas.

8.1.5 Comprehensive plan, spanning next 15 to 20 years, to augment the investment in nuclear power generation to be drawn up.

8.1.6 It is proposed to amend Companies Act to improve environment for start-ups

8.1.7 Government to contribute 8.33% for all new employees (where basic salary does not exceed Rs. 15,000 p.m.) enrolling in EPFO for the first 3 years of their employment. Budget provision of Rs. 1,000 crores for this scheme.

8.2 Liberalization of FDI Provisions proposed

Sr. No.

Sector-wise Budget Announcements

1. Insurance and Pension Sector

Foreign investment up to 49% will be allowed in the insurance and pension sectors under the automatic route, subject to the extant guidelines on Indian management and control to be verified by the Regulators.

2. FDI in Asset Reconstruction Companies (ARCs)

100% FDI in ARCs will be permitted through automatic route. Foreign Portfolio Investors (FPIs) will be allowed up to 100% of each tranche in securities receipts issued by ARCs subject to sectoral caps.

3. NBFC Sector FDI will be allowed beyond the 18 specified NBFC activities under the automatic route in other activities which are regulated by financial sector regulators

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8.3 Other Measures – Ease of Doing Business for Foreign Investors

8.4 FEMA

8.3.1 With a view to promote Make in India and following the practices in advanced countries, foreign investors will be accorded Residency Status subject to certain conditions. Currently, these investors are granted business visa only up to 5 years at a time.

8.3.2 In order to ensure effective implementation of Bilateral Investment Treaties signed by India with other countries, it is proposed to introduce a Centre State Investment Agreement. This will ensure fulfilment of obligations of the State Governments under these Treaties. States which opt to sign these Agreements will be seen as more attractive destinations by foreign investors.

8.4.1 Section 14A is proposed to be inserted in FEMA to incorporate provisions contained under the Second Schedule appended to the IT Act so as to empower an officer not below the rank of Assistant Director to recover arrears of penalty

Sr. No.

Sector-wise Budget Announcements

4. FDI in marketing of food products produced and manufactured

As a measure to benefit farmers and give impetus to food processing industry and create vast employment opportunities, 100% FDI is proposed to be allowed in marketing of food products produced and manufactured in India through FIPB route.

5. Other Significant Measures(a) Investment limit for

foreign entities in Indian stock exchanges

Investment limit for foreign entities in Indian stock exchanges will be enhanced from 5 to 15% on par with domestic institutions. This will enhance global competitiveness of Indian stock exchanges and accelerate adoption of best-in-class technology and global market practices.

(b) Eligible FDI to include hybrid instruments

The basket of eligible FDI instruments will be expanded to include hybrid instruments subject to certain conditions

(c) Investment by FPIs in Central Public Sector Enterprises

The existing 24% limit for investment by FPIs in Central Public Sector Enterprises other than Banks, listed in stock exchanges, will be increased to 49% to obviate the need for prior approval of Government for increasing the FPI investment.

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under the FEMA by exercising the powers conferred under the IT Act.

8.4.2 Infrastructure Development – Railways

nIt has been proposed to launch “Foreign Rail Technology Cooperation Scheme” in order to achieve higher quality services.

nIt is proposed to open e-ticketing facility to foreign debit / credit cards held by foreign tourists and NRIs by June 2016.

nLIC will set up a dedicated fund to provide credit enhancement to infrastructure projects. The fund will help in raising the credit rating of bonds floated by infrastructure companies and facilitate investment from long term investors.

nRBI will issue guidelines to encourage large borrowers to access a certain portion of their financing needs through market mechanism instead of the banks.

nInvestment basket of FPIs will be expanded to include unlisted debt securities and pass through securities issued by securitisation SPVs.

nFor developing and enabling eco system for the private placement market in corporate bonds, an electronic auction platform will be introduced by SEBI for primary debt offer.

nA complete information repository for corporate bonds, covering both primary and secondary market segments will be developed jointly by RBI and SEBI.

nA framework for an electronic platform for repo market in corporate bonds will be developed by RBI.

8.6.1 RBI Act is being amended to provide statutory basis for a Monetary Policy Framework and a Monetary Policy Committee through the Finance Bill 2016. A committee-based approach will add lot of value and transparency to monetary policy decisions.

8.6.2 To continue with the ongoing reform programme and ensure passage of the Constitutional amendments to enable implementation of the Goods and Service Tax, the passage of Insolvency and Bankruptcy law and other important reform measures.

8.6.3 It is proposed to set-up a Committee to review the implementation of the FRBM

8.5 Deepening of Corporate Bond Market

8.6 Significant Proposals – Proposed New Legislations / Amendments / Announcements

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Act.

8.6.4 Passenger road transport segment to be revamped with reforms (including Amendments to be made in Motor Vehicles Act).

8.6.5 Amendments in the SARFAESI Act 2002 to enable the sponsor of an ARC to hold up to 100% stake in the ARC and permit non-institutional investors to invest in Securitization Receipts.

8.6.6 A comprehensive Code on Resolution of Financial Firms to be introduced.

8.6.7 Comprehensive central legislation to deal with illicit deposit taking schemes to be introduced.

8.6.8 Department of Investment and Public Asset Management to oversee disinvestment in public sector.

8.6.9 Steps to revitalise PPPs:

nPublic Utility (Resolution of Disputes) Bill will be introduced during 2016-17

nGuidelines for renegotiation of PPP Concession Agreements will be issued

nNew credit rating system for infrastructure projects to be introduced

nA new policy for management of Government investment in Public Sector Enterprises, including disinvestment and strategic sale approved.

8.7.1 Undertake important reforms by:

ngiving a statutory backing to AADHAR platform to ensure benefits reach the deserving

nincentivising gas discovery and exploration by providing calibrated marketing freedom

nprovide legal framework for dispute resolution and re-negotiations in PPP projects and public utility contracts

nundertake important banking sector reforms and public listing of general insurance companies

8.7 Other Proposals

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Chapter 9 Impact On Select Industries

9.1 Gems And Jewellery Industry9.1.1 Key Highlights

nThe Gems and Jewellery sector plays a significant role in the Indian economy, contributing around 6% to 7% of the country’s GDP. It is substantially export oriented and labour intensive sector.

nBased on its potential for growth and value addition, the Government of India has declared the Gems and Jewellery sector as a focus area for export promotion. The Government has recently undertaken various measures to promote investments and to upgrade technology & skills to promote ‘Brand India’ in the international market.

nOverall exports from the gem and jewellery industry in India during the first six months of FY 2015-16 stood at $19.22 billion, a decline of 5.59% over the $20.3 billion exported during the same period last year.

nThe exports of cut and polished diamonds during this period fell by 13.81% to $10.42 billion this year from $12.09 billion last year, while the import of rough diamonds fell from $9.4 billion last year to $6.95 billion this year, a decline of 26%.

9.1.2 Positive Proposals / Impact nNew manufacturing companies, incorporated on or after 1 March, 2016

will be given an option to be taxed at 25% plus surcharge and cess provided they do not claim profit linked or investment linked deductions and do not avail of investment allowance and accelerated depreciation.

nSmall enterprises i.e. companies with turnover not exceeding Rs. 5,00,00,000 (in the FY ending 31 March 2015) will be taxed at lower rate of 29% plus applicable surcharge and cess.

nNo income shall be deemed to accrue or arise in India to it through or from the activities which are confined to display of uncut and unassorted diamonds in a notified Special Zone.

nRedemption of Sovereign Gold Bonds under the Sovereign Gold BondScheme, 2015 by an individual will not be treated as transfer and therefore shall be exempt from tax on capital gains.

nAggregate annual limit of Rs. 75,000 proposed to be increased upto Rs. 100,000 for deduction of tax at source under section 194C.

nThreshold limit for deduction of tax at source under section 194H proposed to be increased from Rs. 5,000 to Rs. 10,000. Rate of tax deduction proposed to be reduced from 10% to 5%

nThe turnover limit under presumptive taxation under section 44AD of the IT Act will be increased from Rs. 1,00,00,000 to Rs. 2,00,00,000 which will bring relief to a larger number of assessees in the MSME sector.

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nConcessional 10% rate of tax on income from worldwide exploitation of patents developed and registered in India by a resident.

nPeriod for getting benefit of concessional treatment on long term capital gains in case of unlisted companies is proposed to be reduced from 3 to 2 years.

nDetermination of residency of foreign company on the basis of POEM is proposed to be deferred by 1 year.

nGovernment will contribute 8.33% towards the Employee Pension Scheme all new employees enrolling in EPFO for the first three years of their employment. The scheme will incentivize new employment generation in the sector and will be applicable to those with salary up to Rs. 15,000/- per month.

nDomestic taxpayers can declare undisclosed income or such income represented in the form of any asset by paying tax at 30%, surcharge at 7.5% and penalty at 7.5%, which is a total of 45% of the undisclosed income. Declarants will have immunity from prosecution. Scheme shall be open from 1 June 2016 to Sept 30 2016

nNew Dispute Resolution Scheme to be introduced. No penalty in respect of cases with disputed tax up to Rs. 10 lacs. Cases with disputed tax exceeding Rs. 10 lakh to be subjected to 25% of the minimum of the imposable penalty. Any pending appeal against a penalty order can also be settled by paying 25% of the minimum of the imposable penalty and tax interest on quantum addition. G&J companies facing various indirect tax litigations may avail benefit of this scheme.

nReduced penalty rates to be 50% of tax in case of underreporting of income and 200% of tax where there is misreporting of facts.

nIt is proposed to increase rate of interest on refund from 6% to 9% in case it is related to delay in giving Appellate order by more than 90 days.

nThe Notification No. 41/2012-ST, dated 29 June 2012, was amended bynotification No.1/2016-ST dated 3 February 2016 so as to, inter alia, allow refund of service tax on services used beyond the factory or any other place or premises of production or manufacture of the said goods for the export of the said goods. This amendment is now proposed to be madeeffective from the date of application of the parent notification (i.e. retrospectively from 1 July 2012).

9.1.3 Negative Proposals / ImpactnAdditional tax at the rate of 10% of gross amount of dividend will be

payable by the Individual, Hindu undivided family (HUF) or a firm who is resident in India, receiving dividend in excess of Rs. 10,00,000 per annum.

nSurcharge to be raised from 12% to 15% on persons, other than companies, firms and co-operative societies having income above Rs. 1,00,00,000.

nTax to be collected at the rate of 1% on sale of motor vehicle of the value

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exceeding Rs. 10,00,000 and sale of goods and services in cash exceeding Rs. 2,00,000.

nIn case of superannuation funds and recognized provident funds, including EPF, going forward, only 40% of corpus created out of contributions made on or from 1 April 2016 will be tax free.

nPhasing out deduction under Income tax :– Accelerated depreciation wherever provided in IT Act will be limited

to maximum 40% from 1 April 2017.– Benefit of deductions for research would be limited to 150% from 1

April 2017 and 100% from 1 April 2020.– Benefit of section 10AA to new SEZ units will be available to those

units which commence activity before 31 March 2020.– The weighted average deduction under section 35CCD for skill

development will continue up to 1 April 2020.nEffective service tax rate to increase from 14.5% to 15% (including

Swachh Bharat Cess) in view of the proposal to levy an additional cess @ 0.5% as Krishi Kalyan Cess w.e.f. 1 June 2016 on all or any of the taxable services.

nRate of interest rationalized @ 24% in case amount collected but not paid and @ 15% in all other cases as against the present rate of 18% to 30%, as the case may be.


nExcise duty of 1% without input tax credit or 12.5% with input tax credit on articles of jewellery (excluding silver jewellery, other than studded with diamonds and some other precious stones) with a higher exemption and eligibility limits of Rs. 6,00,00,000 and Rs. 12,00,00,000 respectively.

nIt is clarified that point of taxation in case of new levy on services will be as per Rule 5 of Point of Taxation Rules, 2011 and that the transactions other than those falling under 2 scenarios specified in Rule 5 shall be liable to new levy.

nRefined gold bars manufactured from gold dore bar, silver dore bar, gold ore or concentrate, silver ore or concentrate, copper ore or concentrate. Prospectively, the excise duty exemption under the existing area based exemptions on refined gold is being withdrawn – rate of duty increase from 9% to 9.5%

nFor refined silver manufactured from silver ore or concentrate, silver dore bar, or gold dore bar, the excise duty exemption under the existing area based exemptions is being withdrawn – rate of duty to increase from 8% to 8.5%

nCustoms duty on Imitation jewellery increased from 10% 15%nCVD increased on Gold dore bars from 8% to 8.75%nCVD increased on Silver dore from 7% to 7.75%

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9.2 Entertainment and Media Industry9.2.1 Key highlights

nThe Media and Entertainment (M&E) industry broadly comprises Television, Films, Print, Electronic Media, Radio, Music, Animation, Digital Advertising, Gaming etc., Each of these segments has their own impact on the masses.

nThe Government of India has supported M&E industry’s growth by taking various initiatives such as digitising the cable distribution sector to attract greater institutional funding, increasing FDI limit from 74% to 100% in cable and DTH satellite platforms and granting industry status to the film industry for easy access to institutional finance.

nThe Indian M&E industry is on an impressive growth path. The revenue from advertising is expected to grow at a CAGR of 13% and will exceed Rs.81,600 crore (US$ 12.29 billion) in 2019 from Rs.41,400 crore (US$ 6.24 billion) in 2014. Internet access has surpassed the print segment as the second-largest segment contributing to the overall pie of M&E industry revenues.

9.2.2 Positive proposal/ImpactsnNew manufacturing companies incorporated on or after 1 March 2016 to

be given an option to be taxed at 25% plus surcharge and cess provided they do not claim profit linked or investment linked deductions and do notavail of investment allowance and accelerated depreciation.

nIncrease in the turnover limit under presumptive taxation scheme under section 44AD of the IT Act to Rs.2,00,00,000 to bring big relief to a large number of assessees in Cinema production, content for TV, Event management and other related activities.

n100% deduction of profits for 3 out of 5 years for startups setup during April 2016 to March 2019. MAT will apply in such cases.

nSmall enterprises i.e. companies with turnover not exceeding Rs.5,00,00,000 (in the FY ending 31 March 2015) will be taxed at lower rate of 29% plus applicable surcharge and cess.

nPeriod for getting benefit of long term capital gain regime in case of unlisted companies is proposed to be reduced from 3 to 2 years.

nDetermination of residency of foreign company on the basis of POEM is proposed to be deferred by 1 year so as to bring in better clarity on applicability of the said provisions.

nConcessional rate of tax @ 10% on income from worldwide exploitation of patents developed and registered in India by a resident.

nAggregate annual limit of Rs.75,000 proposed to be increased up to Rs.100,000 for TDS under section 194C of the IT Act.

nThreshold limit for TDS under section 194H of the IT Act proposed to be increased from Rs.5,000 to Rs.10,000. Rate of tax deduction proposed to be reduced from 10% to 5%.

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nDomestic taxpayers can declare undisclosed income or such income represented in the form of any asset by paying tax at 30%, surcharge at 7.5% and penalty at 7.5%, which is a total of 45% of the undisclosed income. Declarants will have immunity from prosecution. Scheme shall be open from 1 June 2016 to 30 September 2016.

nReduced Penalty rates to be 50% of tax in case of under-reporting of income and 200% of tax where there is misreporting of facts.



nModel Shops and Establishments Bill to be circulated to States to uniform law to benefit large media and entertainment organization across the Country.

nChanges in customs and excise duty rates on certain inputs to reduce costs and improve competitiveness of domestic industry in sectors like paper, paperboard & newsprint.

nIncrease in free baggage allowance for international passengers. Filing of baggage only for those carrying dutiable goods.

9.2.3 Negative Proposals / ImpactnSurcharge to be raised from 12% to 15% on persons, other than

companies, firms and co-operative societies having income above Rs.1,00,00,000.

nEqualization levy of 6% of gross amount for payment made to non-residents exceeding Rs.1,00,000 a year in case of B2B transactions

nAdditional tax at the rate of 10% of gross amount of dividend will be payable by the Individual, HUF or a firm who is resident in India, receivingdividend in excess of Rs.10,00,000 p.a.

nEffective service tax rate to increase to 15% (including Swachh Bharat Cess) in view of the proposal to levy additional cess @ 0.5% (Krishi Kalyan Cess) w.e.f. 1 June 2016 on all or any of the taxable services .

nRate of interest rationalized @ 24% in case of amount collected but not paid and @ 15% in all other cases as against the present rate of 18% to 30%, as the case may be.

nIt is clarified that point of taxation in case of new levy on services will be as per Rule 5 of Point of Taxation Rules, 2011 and that transactions other than those falling under 2 scenarios specified in Rule 5 shall be liable to new levy.

9.3.1 Key highlights nIndia has well regarded and world class IT& ITES industry holding on to its

leadership position globally with 55% of market share with a revenue over US $146 billion of exports and having CAGR @ 15% and is expected

9.3 Information Technology / ITES SECTOR

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to touch US $300 billion by 2020.nIndia, the fourth largest base for new businesses in the world and home

to over 3,100 tech start-ups, is set to increase its base to 11,500 tech start-ups by 2020.

nThe sector's contribution to the country's GDP has risen to 9.5% in 2015-16 and proved as a largest private sector employer.

9.3.2 Positive Proposals / ImpactnEligible start-ups can avail 100% deduction of profits and gains for any 3

consecutive years out of 5 years from the year in which the eligible start-up is incorporated.

nSmall enterprises i.e. companies with turnover not exceeding Rs.5,00,00,000 (in the FY ending 31 March 2015) will be taxed at lower rate of 29% plus applicable surcharge and cess.

nConcessional 10% rate of tax on income from worldwide exploitation of patents developed and registered in India by a resident.

nDetermination of residency of foreign company on the basis of POEM is proposed to be deferred by 1 year so as to bring in better clarity on applicability of the said provisions.

nBenefit of section 10AA of the IT Act to new SEZ units will be available to those units which commence activity before 31 March 2020.

nThe weighted deduction under section 35CCD for skill development will continue up to 1 April 2020.

nPeriod for getting benefit of long term capital gain regime in case of unlisted companies is proposed to be reduced from 3 to 2 years.

nAggregate annual limit of Rs.75,000 proposed to be increased up to Rs.100,000 for TDS under section 194C of the IT Act.

nThreshold limit for TDS under section 194H of the IT Act proposed to be increased from Rs.5,000 to Rs.10,000. Rate of tax deduction proposed to be reduced from 10% to 5%.

nDomestic taxpayers can declare undisclosed income or such income represented in the form of any asset by paying tax at 30%, surcharge at 7.5% and penalty at 7.5%, which is a total of 45% of the undisclosed income. Declarants will have immunity from prosecution. Scheme shall be open from 1 June 2016 to 30 September 2016.

nReduced Penalty rates to be 50% of tax in case of under-reporting of income and 200% of tax where there is misreporting of facts.



9.3.3 Negative proposals/Impact nSurcharge to be raised from 12% to 15% on persons, other than

companies, firms and co-operative societies having income above

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Rs.1,00,00,000.nEqualization levy of 6% of amount of consideration exceeding

Rs.1,00,000 for specified services received or receivable by a non-resident not having PE in India from a resident in India who carries business or profession, or a non-resident having PE in India.

nBenefit of deductions for Scientific Research paid to approved scientific research association would be limited to 150% from 1 April 2017 and 100% from 1 April 2020.

nNo deduction shall be available in respect of profits derives from development of SEZ (section 80-IAB of the IT Act) from AY 2018-19.

nAdditional tax at the rate of 10% of gross amount of dividend will be payable by the Individual, HUF or a firm who is resident in India, receiving dividend in excess of Rs.10,00,000 per annum.


nRate of interest rationalized @ 24% in case amount collected but not paid and @ 15% in all other cases as against the present rate of 18% to 30%, as the case may be.

nIt is clarified that point of taxation in case of new levy on services will be as per Rule 5 of Point of Taxation Rules, 2011 and that transactions other than those falling under 2 scenarios specified in Rule 5 shall be liable to new levy.

9.4.1 Key highlightsnInfrastructure sector is responsible for propelling India’s overall

development and enjoys intense focus from Government. The Government of India along with the governments of the respective States have taken several initiatives to encourage the development in the sector. The Smart City Project, where there is a plan to build 100 smart cities, is a prime opportunity for the real estate companies.

nThe Government of India has earmarked Rs 50,000 crore (US$ 7.5 billion) to develop 100 smart cities across the country. The World Bank has approved a US$ 650 million debt funding for a part of the eastern arm of the Dedicated Freight Corridor (DFC) project in India.

9.4.2 Positive proposals / impactsnIn housing sector, an undertaking carrying on housing projects, approved

between June 2016 to March 2019, of constructing flats of 30 sq metres in 4 metro cities and 60 sq metres in other cities is eligible to claim 100% deduction of profits subject to compliance of certain conditions. MAT / AMT will apply in such cases.

nEligible start-ups can avail 100% deduction of profits and gains for any 3

9.4 Real Estate and infrastructure Industry

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consecutive years out of 5 years from the year in which the eligible start-up is incorporated.

nDeduction for additional interest of Rs. 50,000 per annum in case of first time home buyers where the loans up to Rs. 35 lac sanctioned in FY 2016-17 and house cost does not exceed Rs. 50 lacs. This deduction is over and above the limit of Rs.2,00,000 provided under section 24 of the Income tax Act.

nDeduction of Interest on borrowed capital for acquisition or construction of self occupied house property shall be available if the acquisition or construction is completed within 5 years as against 3 years earlier.

nSection 25A, 25AA and 25B merged to section 25A to bring uniformity in treatment of unrealized rent and receipt of arrear rent. Both, receipt ofarrear of rent and unrealized rent received subsequently, shall be taxed in the year in which the same is received or realized and 30% deduction shall be allowed whether taxpayer own the property or not in that financial year.

nSection 50C has been amended to rationalize the situation where the date of agreement fixing the amount of consideration for transfer of immovable property and date of registration are not same then the stamp duty value on the date of the agreement may be taken for the purpose of computing full value of consideration. This shall apply only in the case where amount of consideration referred therein or a part thereof paid otherwise than cash.

nTo facilitate investment in REITs, dividend distributed out of income of SPV to the REITs and InvITs having specified shareholding, will not be subjected to DDT.

nCorporate tax rate for relatively smaller domestic companies with turnover not exceeding Rs. 5 crores (in the financial year ending 31 March 2015) to be 29% plus applicable surcharge plus cess.

nDirect Tax Dispute Resolution Scheme 2016 proposed to be introduced for tax arrears and specified tax where the assessee has the option to settle the case by paying tax and concessional interest and penalty.

nThe limit of turnover for applicability of Presumptive taxation scheme under section 44AD for specified businesses, increased from Rs. 1 crore to Rs. 2 crores.

nWeighted deduction under section 35CDD for skill development will continue up to 1 April 2020.

nAs per Budget announcements, period for getting benefit of long term capital gains in case of shares of unlisted companies proposed to be reduced from 3 years to 2 years.

nAn enterprise starts development, operation and maintenance of any infrastructure facility on or after 1 April 2017 shall be eligible for investment linked deduction under section 35AD.

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nPayment to Railway for use of Railway assets is brought within the ambit of section 43B. In other words, payment to Railway shall be allowed on the payment basis.

nFollowing changes proposed in TDS provisions which has impact on real estate and infrastructure industry:

SectionProposed Limit (Rs.)

194C Payment to contracts

Existing limit (Rs.)Heads

Aggregate annual limit of 75,000

Aggregate annual limit of 1,00,000

194LA Payment of compensation on acquisition of certain immovable property

2,00,000 2,50,000

194H Commission or brokerage 5,000 15,000

SectionProposed Rate

of TDS (%)Existing Rate

of TDS(%)Heads

194H Commission or brokerage 10% 5%194L Payment of compensation on

acquisition of capital assetTo be

omitted wef 1 June 2016

nSteps to re-vitalize PPPs proposed through: – Public Utility (Resolution of Disputes) Bill to be introduced during

2016-17.– Guidelines for renegotiation of PPP Concession Agreements to be

issued– New credit rating system for infrastructure projects to be

introducednServices by way of construction, erection, etc. of original works under

Housing for All (HFA) (Urban) Mission / PMAY, is exempted from service tax.

nServices by way of construction, erection, etc., of original works pertaining to low cost houses up to a carpet area of 60 sq. mtr. per house (i.e. 645 sq ft.) in a housing project approved by the competent authority under the “Affordable housing in partnership” component of housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (PMAY) or any housing scheme of a State Government shall be exempted.

nExemption to construction, maintenance in relation to various projects, contracts etc. which was removed w.e.f. 1 April 2015 been restored and given retrospective exemption.

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nTransportation of goods by a vessel from customs station of clearance in India to place outside India not to be treated as exempted services for the purpose of CENVAT Credit Rules. Thus, shipping lines will be entitled to avail CENVAT credit on inputs and input services used in providing said services.

nAmendment in abatement rates

Sr No

CENVAT CreditAbatement rate (%)Particulars

Transport of passengers by rail

Not available

Available only of

input services

1Existing Proposed Existing Proposed

70 70

Transport of goods other than in containers by rail

2 70 70

Transport of goods in containers by rail

3 70 70

Transport of goods by vessel

4 70 70

Services by way of construction of residential complex, building, civil structure, or a part thereof-a) High end flatsb) Low end flats

Available only of

input services

Available only of

input services

5

70 70

nNo service tax on construction of affordable houses up to 60 sq metres under any scheme of the Central or State Government including PPP schemes.

nPresently excise duty exemption is available to Concrete Mix manufactured at site for use in construction work at site is now also extended to Ready Mix Concrete.

nTo promote use of refrigerated containers, basic custom and excise duty on them reduced to 5% and 6% from 10% and 12.5% respectively.

nServices provided by way of construction or maintenance etc. of canal, dam or other irrigation work provided to Government authorities during the period from 1 July 2012 to 29 January 2014 are being exempted from service tax with consequential refund.

9.4.3 Negative proposals / ImpactnNo deduction shall be available under section 80IAB where development

of SEZ begins on or after 1 April 2017.nNo deduction shall be available to enterprises under section 80IA of

Income tax Act, which starts development, operation and maintenance

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of any infrastructure facility on or after 1 April 2017.nAccelerated depreciation provided under Income tax Act will be limited to

maximum 40% from 1 April 2017 for all assets (whether old or new).nWeighted deduction under section 35(1)(ii), 35(2AA) and 35 (2AB) of the

Income tax Act reduced to 150% from FY 2017-18 to FY 2019-20 and from FY 2020-21 onwards the deduction shall be restricted to 100%.

nDeduction under section 35(1) (iia) and (iii) shall be reduced from 125% to 100% with effect from 1 April 2017.

nDeduction under section 35AD of the income tax Act is reduced to 100% from 150% in case of cold chain facility, warehousing facility, affordable housing projects, building and operating hospitals with effect from 1 April 2017.

nIn addition to existing conditions for availing tax neutral conversion from Company to LLP, value of total assets as per books in any preceding 3 years not to exceed Rs. 5 crores.

nDividend received by Individual, HUF and Firms in excess of Rs.10 lacs per annum are now required to pay additional tax 10% on gross amount of dividend received.


nInfrastructure cess of 1% proposed to be levied on small petrol, LPG, CNG cars, 2.5% proposed on diesel cars of certain capacity and 4% proposed on other higher engine capacity vehicles and SUVs.

nServices by way of construction, erection, commissioning or installationof original works pertaining to monorail and metro shall now be liable to service tax. However, where contracts were entered into before 1 March 2016, on which appropriate stamp duty, was paid, shall remain exempt.

nExemptions to the services of transport of passenger, by ropeway, cable car or aerial tramways is being withdrawn with effect from 1 April 2016.

nServices by way of transportation of passengers by stage carriage which was earlier not taxable has been proposed to be liable to service tax. However, non-air conditioned stage carriage has been excluded from the purview of service tax by inserting the same in the Mega Exemption w.e.f. 1 June 2016.

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Chapter 10 DTAA Rates(As updated up to the Finance Bill, 2016)

Sr.No.

Country Dividend[Note 1]

Interest Royalty FTS Remarks

Tax rate Tax rate Tax rateTax rate

One of the major aspects considered by businesses, while operating on an international scale, is the complexity of taxation systems existing in various jurisdictions. India being a major player in the world market has entered into comprehensive DTAAs with almost 92 countries in order to mitigate the taxation complexities and to facilitate international business transactions. In this chapter, we have compiled the tax rates in respect of Dividend, Interest, Royalty and Fees for Technical Services, based on the DTAAs entered into by India with various countries.

Rate as per the IT Act Nil [Note 1] 20% 10% 10% Rate as per IT Act (to be further[Note 6 [Note 3 [Note 3 increased by applicable surchargeand 7] and 7] and 7] and education cess) or DTAA rate,

whichever is more beneficial shallapply.

1. Albania 10% 10% [Note 4] 10% 10%

2. Armenia 10% 10% [Note 4] 10% 10%

3. Australia 15% 15% Note 5 Coveredunder

Article for Royalty

4. Austria 10% 10% [Note 4] 10% 10%

5. Bangladesh 10% / 15% 10% [Note 4] 10% No 10% tax on dividends if at leastseparate 10% of the capital is owned byprovision company; in any other case 15%.

6. Belarus 10% / 15% 10% [Note 4] 15% 15% 10% tax on dividends if at least25% of the shares are owned bycompany; in any other case 15%.

7. Belgium 15% 15% / 10% 10% 10% 1. Interest taxable at 10% ifrecipient is bank; in any othercase 15%.

2. MFN clause with respect toRoyalty and FTS.

8. Botswana 7.50% / 10% 10% [Note 4] 10% 10% 7.50% tax on dividends if at least25% of the capital is owned bycompany; in any other case 10%.

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Sr.No.




9. Brazil 15% 15% [Note 4] 15% (25% Covered 15% tax on dividends if paid to a for under company; in any other case as per

trademark) Article for domestic tax laws.Royalty

10. Bulgaria 15% 15% [Note 4] 15% / 20% 20% 15% tax on royalties if relating tocopyrights of literary, artistic orscientific works, other thancinematograph films or films ortapes used for radio or televisionbroadcasting; in any other case20%.

11. Bhutan 10% 10% [Note 4] 10% 10%

12. Canada 15% / 25% 15% [Note 4] Note 5 Note 5 15% tax on dividends if at least 10%of the voting power is owned bycompany; in any other case 25%.

13. China 10% 10% [Note 4] 10% 10%

14. Croatia 5%/15% 10 % [Note 4] 10% 10% 5% tax on dividends if at least 10%of the capital is owned by company(other than partnership); in anyother case 15%.

15. Cyprus 10% / 15% 10% [Note 4] 15% 15% / 10% 1. 10% tax on dividends if at least10% of the shares are owned bycompany; in any other case 15%.

2. Technical Fees are taxable @10%under Article 13 and Fees forincluded Services is chargeable @15% under Article 12.

16. Czech Republic 10% 10% [Note 4] 10% 10%

17. Colombia 5% 10% [Note 4] 10% 10%

18. Denmark 15% / 25% 15% / 10% 20% 20% 1. 15% tax on dividends if at least[Note 4] 25% of the shares are owned by

company; in any other case25%.

2. Interest taxable at 10% ifrecipient is bank; in any othercase 15%.

19. Estonia 10% 10%[Note 4] 10% 10%

20. Ethiopia 7.50% 10% [Note 4] 10% 10%

21. Finland 10% 10% [Note 4] 10% 10% MFN clause with respect toDividend, Interest, Royalty and FTS.

Chapter 10 DTAA RATES


22. France 10% 10% [Note 4] 10% 10% MFN clause with respect toDividend, Interest, Royalty and FTS.

23. Fiji 5% 10% [Note 4] 10% 10%

24. Georgia 10% 10% [Note 4] 10% 10%

25. Germany 10% 10% [Note 4] 10% 10%

26. Greece Taxable as per domestic laws in No source country separate

provision

27. Hungary 10% 10% [Note 4] 10% 10% MFN clause with respect toDividend, Interest, Royalty and FTS.

28. Indonesia 10% / 15% 10% [Note 4] 15% No 1. 10% tax on dividends if at leastseparate 25% of the shares are owned byprovision company; in any other case 15%.

2. The tax rates on dividendincome, royalties and FTS (In theearlier DTAA, no separateprovision for FTS) have beenreduced to 10%, but the same isyet to be notified.

29. Iceland 10% 10% [Note 4] 10% 10%

30. Ireland 10% 10% [Note 4] 10% 10%

31. Israel 10% 10% [Note 4] 10% 10% MFN clause with respect toDividend, Interest, Royalty and FTS.

32. Italy 15% / 25% 15% [Note 4] 20% 20% 15% tax on dividends if at least 10%of the shares are owned bycompany; in any other case 25%.

33. Japan 10% 10% [Note 4] 10% 10%

34. Jordan 10% 10% [Note 4] 20% 20%

35. Kazakhstan 10% 10% [Note 4] 10% 10% MFN clause with respect toDividend, Interest, Royalty and FTS.

36. Kenya 15% 15% [Note 4] 20% No 17.50% tax in case of Managementseparate and Professional fees.provision

37. Korea 15% / 20% 15% / 10% 15% 15% 1. 15% tax on dividends if at least20% of the capital is owned bycompany; in any other case 20%.

2. Interest taxable at 10% ifrecipient is bank; in any othercase 15%.

Sr.No.






38. Kuwait 10% 10% [Note 4] 10% 10%

39. Kyrgyz Republic 10% 10% [Note 4] 15% 15%

40. Latvia 10% 10% [Note 4] 10% 10%

41. Libya Taxable as per domestic laws in No source country separate

provision

42. Lithuania 5%/15% 10% 10% 10% 5% tax on dividends if at least 10%of the shares are beneficiallyowned by company (other than apartnership); in any other case15%.

43. Luxembourg 10% 10% [Note 4] 10% 10%

44. Macedonia 10% 10% [Note 4] 10% 10%

45. Malaysia 5% 10% [Note 4] 10% 10%

46. Malta 10% 10% [Note 4] 10% 10%

47. Mauritius 5% / 15% Taxable as 15% No 5% tax on dividends if at least 10%per domestic separate of the capital is owned bylaws [Note 4] provision company; in any other case 15%.

48. Mongolia 15% 15% [Note 4] 15% 15%

49. Montenegro 5% / 15% 10% [Note 4] 10% 10% 5% tax on dividends if at least 25%of the capital is owned by company(other than a partnership); in anyother case 15%.

50. Morocco 10% 10% [Note 4] 10% 10%

51. Mozambique 7.50% 10% [Note 4] 10% No separate provision

52. Myanmar 5% 10% [Note 4] 10% No separate provision

53. Namibia 10% 10% [Note 4] 10% 10%

54. Nepal 5%/10% 10% [Note 4] 15% No 1. 5% tax on dividends if at leastseparate 10% of the shares are owned byprovision company; in any other case 10%.

2. MFN clause with respect toRoyalty, shall be applicable ifNepal enters into treaty withany other country for a lowerrate on royalties.

Sr.No.






55. Netherlands 10% 10% [Note 4] 10% 10% MFN clause with respect toDividend, Interest, Royalty and FTS.

56. New Zealand 15% 10% [Note 4] 10% 10%

57. Norway 10 % 10 % [Note 4] 10% 10%

58. Oman 10% / 10% [Note 4] 15% 15% 10% tax on dividends if at least12.50% 10% of the shares are owned by

company; in any other case12.50%.

59. Philippines 15% / 20% 15% / 10% 15% No 1. 15% tax on dividends if at leastseparate 10% of the shares are owned byprovision company; in any other case

20%.

2. Interest taxable @ 10% ifrecipient is Financial Institution(including an insurancecompany) and where theinterest is payable by a companyresident of Philippines to aresident of India in respect ofpublic issues of bonds,debentures or similarobligations. In any other case15%.

3. Royalty taxable @ 15% if it is payable in pursuance of any collaboration agreement approved by the Government of India. No rates prescribed in any other case.

60. Poland 10% 10% [Note 4] 15% 15%

61. Portuguese 10% / 15% 10% [Note 4] 10% 10% 10% tax on dividends if at leastRepublic 25% of the capital stock is owned

by company for an uninterruptedperiod of 2 years prior to thepayment of dividend; in any othercase 15%.

62. Qatar 5% / 10%. 10% [Note 4] 10% 10% 5% tax on dividends if at least 10%of the shares are owned bycompany; in any other case 10%.

63. Romania 10% 10% [Note 4] 10% 10%

64. Russian 10% 10% [Note 4] 10% 10%Federation

Sr.No.






Sr.No.




65. Saudi Arabia 5% 10% [Note 4] 10% No separate provision

66. Serbia 5% / 15% 10% [Note 4] 10% 10% 5% tax on dividends if at least 25%of the capital is owned by company(other than a partnership); in anyother case 15%.

67. Singapore 10% / 15% 10% / 15% 10% 10% 1. 10% tax on dividends if at least 25% of the shares are owned by company; in any other case 15%.

2. Interest taxable at 10% if recipient is bank or similar financial institution including an insurance company; in any other case 15%.

68. Slovenia 5% / 15% 10% [Note 4] 10% 10% 5% tax on dividends if at least 10%of the capital is owned bycompany; in any other case 15%.

69. South Africa 10% 10% [Note 4] 10% 10%

70. Spain 15% 15% [Note 4] 10% / 20% 10% 1. 10% tax on royalties if paid for the use or right to use any industrial, commercial or scientific equipment; in any other case 20%.

2. MFN clause with respect to Royalty and FTS.

71. Sri Lanka 7.5% 10% [Note 4] 10% 10%

72. Sudan 10% 10% [Note 4] 10% 10%

73. Sweden 10% 10% [Note 4] 10% 10% MFN clause with respect toDividend, Interest, Royalty and FTS.

74. Swiss 10% 10% [Note 4] 10% 10% MFN clause with respect toConfederation Dividend, Interest, Royalty and FTS.

75. Syria 5% / 10% 10% [Note 4] 10% No 5% tax on dividends if at least 10%separate of the shares are owned byprovision company (other than a

partnership); in any other case10%.

76. Tajikistan 5% / 10%. 10% [Note 4] 10% No 5% tax on dividends if at least 25%separate of the capital is owned by companyprovision (other than a partnership); in any

other case 10%.



77. Tanzania 5%/10% 10% [Note 4] 10% No 5% tax on dividends if at least 25%separate of the shares are beneficiallyprovision owned by company; in any other

case 10%.

78. Thailand 15% / 20% 25% / 10% 15% No 1. 15% tax on dividends if at least[Note 4] separate 10% of the voting shares are

provision owned by payee company andthe payer is an industrialcompany, 20% if payer companyis an industrial company or thepayee company owns at least25% of the voting shares; and inany other case as per thedomestic laws of the payercompany.

2. Interest taxable at 10% if recipient is any financial institution including an insurance company; in any other case 25%.

3. A revised DTAA has been signed with Thailand, which is effective from 1 April 2016. As per the Revised DTAA, the rate of withholding tax is 10% in respect of Dividend, Interest and Royalty. There is no specific provision with respect to FTS.

79. Trinidad and 10% 10% [Note 4] 10% 10%Tobago

80. Turkey 15% 10%/15% 15% 15% Interest is taxable at 10% ifrecipient is bank, insurancecompany or similar financialinstitution; in any other case 15%.

81. Turkmenistan 10% 10% [Note 4] 10% 10%

82. Uganda 10% 10% [Note 4] 10% 10%

83. Ukraine 10% / 15% 10% [Note 4] 10% 10% 10% tax on dividends if at least25% of the capital is owned bycompany (other than apartnership); in any other case 15%.

[Note 4]

Sr.No.






84. United Arab 10% 5% / 12.5% 10% No

in any other case 12.50%.

85. United Arab As perdomestic

86. United Kingdom 15% / 10% 15% / 10% Note 5 Note 5 1. Interest taxable at 10% ifrecipient is bank; in any othercase 15%.

2. Dividend taxable at 15% where dividend is paid out of income derived directly or indirectly from immovable property. In other case-10%.

87. United Mexican 10% 10% 10% 10%

88. United States 15% / 25% 10% / 15%[Note 4] 10% of the voting stock is

owned by company; in any othercase 25%.

2. Interest taxable at 10% if recipient is bonafide bank or financial institution including an insurance company; in any other case 15%.

89. Uruguay 5% 10%[Note 4] 10% 10%

90. Uzbekistan 10% 10% 10% 10%

91. Vietnam 10% 10% [Note 4] 10% 10%

92. Zambia 5% / 15% 10% [Note 4] 10% 10% 1. 5% tax on dividends if at least 25% of the shares are owned by company during a period of 6 months immediately preceding the date of payment of dividend; in any other case 15%.

Interest taxable at 5% if recipient isEmirates [Note 4] separate bank or similar financial institution;

provision

As per Taxable in NoRepublic (Egypt) domestic source separate

law law country provisionas per

domestictax rate

[Note 4]

States [Note 4]

Note 5 Note 5 1. 15% tax on dividends if at leastof America

[Note 4]

Sr.No.






Notes:

1. As per section 115-O of the IT Act, subject to certain exceptions, any amount declared, distributed or paid by a domestic company by way of dividend shall be chargeable to DDT effectively @ 20.3576%. In such cases, dividend distributed (which is subject to DDT) is not subject to any withholding tax and is tax exempt in the hands of the recipient shareholders. The rates mentioned in the above table are applicable to dividend other than the dividend declared, distributed or paid by Indian companies on which DDT is applicable. [Such as deemed dividend under Section 2(22)(e) of the IT Act.]

2. Unless otherwise provided in the DTAA, both the countries have right to tax.

3. With effect from FY 2015-16, the rate of tax under the IT Act on Royalty and/or FTS receivable by a non-resident has been reduced to 10% (plus applicable Surcharge and Education Cess) by the Finance Act, 2015. As per section 90(2) of the IT Act, tax rate as per the provisions of DTAA or the IT Act, whichever is beneficial to the assessee, shall apply. For availing the benefit of DTAA, furnishing of TRC and self declaration in Form 10F by the payee shall be mandatory.

4. Interest derived and beneficially owned by the Government, a political sub-division or a local authority or certain institutions like the RBI or Central Bank of other State or any other institution as may be agreed upon is exempt from taxation in the country of source.

5. Tax rate is 10% in case of Royalties for equipment rental and fees for services ancillary or subsidiary thereto. For other cases, the tax rate is 15%. However, for first 5 years of the agreement, the rate is 20% in case of payer other than Government or specified institution and 15% for the subsequent years.

6. Lower withholding tax of 5% is applicable in case of interest on borrowing in foreign currency, interest on long term bond including long term infrastructure bond, interest from infrastructure debt fund, interest on rupee denominated bond and government securities.

7. In case, the payee is not able to furnish his PAN to the payer, tax shall be deducted at the higher of the following rates (i) rate specified in the relevant provisions of the IT Act (ii) at the rate or rates in force (iii) at the rate of 20%. It is proposed to amend section 206AA of the IT Act so as to provide that tax shall not be deducted at a higher rate in case of non-residents not having PAN, subject to prescribed conditions which are yet to be prescribed.




Chapter 11 TDS Rates(As updated up to the Finance Bill, 2016)

In this chapter, we have compiled the relevant provisions of TDS relating to residents and non-residents, incorporating herein the nature of payment, threshold limits for tax deduction and the applicable rates of TDS for different classes of recipients.

Sr. No.

Nature of Payment Existing Threshold for

Deduction

Rate at which Tax is

to be Deducted

[Note1]

2

Section Proposed Threshold for

Deduction w.e.f. 1 June 2016

Proposed Rate at

which tax is to be

Deducted[Note 1]

Accumulated balance due to an employeeparticipating in RPF [Note-2 and 6]

Rs. 30,000 in aggregate

192A 10% 10%Rs. 50,000 in aggregate

1 Salary As per slab rates prescribed for senior citizens (includes very senior citizen) and other individuals

192

3 Interest on Securities including listed debentures [Note-3 and 6]

Rs. 5,000 for interest on debentures by public company to

individuals and HUF

193 10% 10%Rs. 5,000 for interest on debentures by public company to

individuals and HUF4 Interest other than

interest on securities [Note-4, 6 and 7]

Rs. 5,000 / Rs. 10,000 p.a.

194A 10% 10%Rs. 5,000 / Rs. 10,000 p.a.

5 Winning from lottery or crossword puzzle or card game or other game

Rs. 10,000194B 30% 30%Rs. 10,000

6 Winnings from horse race

Rs. 5,000194BB 30% 30%Rs. 10,000

7 Payments to contractors [Note-7 and 8]

Rs. 30,000 for single transaction or

Rs. 75,000 annual limit

194C 2% (1% for individual and HUF)

2% (1% for individual and HUF)

Rs. 30,000 for single transaction or

Rs. 1,00,000 annual limit

8 Insurance commission Rs. 20,000194D 10% 5%Rs. 15,0009 Payment in respect of

life insurance policy [Note-5 and 6]

Less than Rs. 1,00,000194DA 2% 1%Less than Rs. 1,00,000

10 Payment to non-resident sportsmen / entertainer / sports association

No threshold194E 20% 20%No threshold

11 Payment in respect of deposits under National Savings Scheme,1987 [Note 6]

Less than Rs. 2,500194EE 20% 10%Less than Rs. 2,500

Commission, etc. on sale of Lottery Tickets

Rs. 1,000194G 10% 5%Rs. 15,00012

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Chapter 11 TDS Rates


Sr. No.

Nature of Payment Existing Threshold for

Deduction

Rate at which Tax is

to be Deducted

[Note1]

Section Proposed Threshold for

Deduction w.e.f. 1 June 2016

Proposed Rate at

which tax is to be

Deducted[Note1]

Notes:1. In case the payee is not able to furnish his / her PAN to the payer, tax shall be deducted at higher

of the following rates (i) rate specified in the relevant provision of the IT Act, (ii) at the ratesin force or (iii) at the rate of 20%. It is proposed to amend section 206AA of the IT Act so as to provide that tax shall not be deducted at a higher rate in case of non-residents not having PAN,

13 Commission or brokerage [Note-7]

Rs. 5,000 p.a.194H 10% 5%Rs. 15,000 p.a.

14a Rent of Land / Building / Furniture or fitting [Note-6 and 7]

Rs. 1,80,000 p.a.194I 10% 10%Rs. 1,80,000 p.a.

14b Rent of Plant, Machinery or Equipment [Note-6 and 7]

Rs. 1,80,000 p.a.194I 2% 2%Rs. 1,80,000 p.a.

15 Payment/credit of consideration to a resident transferor of any immovable property (other than agricultural land)

Less than Rs. 50,00,000

194IA 1% 1%Less than Rs. 50,00,000

16 Fees for professional and technical services / royalty / remuneration to Director other than salary [Note-7 and 9]

Rs. 30,000 p.a.194J 10% 10%Rs. 30,000 p.a.

18 Income by way of Interest from Infrastructure Debt Fund

No threshold194LB 5% 5%No threshold

19 Income by way of Interest from IndianCompany [Note-10]

No threshold194LC 5% 5%No threshold

20 Income by way of Interest on certain Bonds and Government Securities held by FII and QFI [Note-11]

No threshold194LD 5% 5%No threshold

21 Payment to non-resident of sum chargeable to tax in India

As per the rate in force or rate specified in the relevant DTAAs, whichever is beneficial [Note-12]

195

17 Payment of compensation for acquisition of certain immovable property

Rs. 2,00,000 p.a.194LA 10% 10%Rs. 2,50,000 p.a.

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Chapter 11 TDS Rates


subject to conditions which are yet to be prescribed. 2. In case PAN is not furnished by the person entitled to receive the accumulated balance in RPF, the

tax is to be deducted at the maximum marginal rate of 35.535% 3. Interest on securities issued by Company and listed on any recognized stock exchange would not

be subject to deduction of tax if such securities are held in dematerialized form.4. Under Section 194A, the threshold limit is Rs.10,000 where the payer is a banking company or a

co-operative society engaged in banking business, or in case of deposits with post office under a scheme notified by Central Government and Rs. 5,000 in any other case.

5. Tax is to be deducted on sums payable other than the amount not includible in the total income under section 10(10D).

6. Tax is not to be deducted, if the payee furnishes to the payer a declaration in Form No.15G or 15H, as the case may be.

7. An individual or HUF is not liable to deduct tax. However, an individual or HUF, who is liable to tax audit under section 44AB during the financial year immediately preceding the financial year in which sum is credited or paid, shall be liable to deduct tax under sections 194A, 194C, 194H, 194I and 194J, as the case may be.

8. No tax is required to be deducted at source on credit or payment of transport charges, if the transporter owns ten or less than ten goods carriages at any time during the previous year and furnishes a declaration to that effect along with his valid PAN.

9. Tax is required to be deducted on remuneration paid to a director which is not in the nature of salary.

10. In respect of amount borrowed in foreign currency from a source outside India:nunder a loan agreement executed after 1 July 2012 but before 1 July 2017; or nby way of issue of any long term bond issued after 1 October 2014 but before 1 July 2017;

or nby way of issue of long term infrastructure bond after 1 July 2012 but before 1 July 2017.

11. Interest payable on or after 1 June 2013 but before 1 July 2017 in respect of investment made by FII or QFI in: nRupee denominated bond of an Indian CompanynGovernment Security

12. For the purpose of claiming DTAA benefit, the non-resident payee should furnish a valid TRC from foreign tax authority and a self-declaration in Form 10F.

13. It has been clarified by CBDT that a payer shall not be required to deduct TDS on service tax component wherever in terms of the agreement between the payer and payee, the service tax component comprised in the amount payable to a resident payee is indicated separately.

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Chapter 12 Direct Taxes And Service Tax Compliance Calendar(As updated up to the Finance Bill, 2016)

I. Due dates for filing of Return of Income (‘ROI’), obtaining Tax Audit Report and Transfer Pricing (Note 1)Person covered under tax audit (other than those to 30 Septemberwhom transfer pricing is applicable)Person covered under transfer pricing 30 NovemberOther persons 30 September 31 July 31 July

II. Advance Tax Payments for Income Tax (Note 2 and 3)st1 Installment - on or before 15 June 15%

nd2 Installment - on or before 15 September 45%rd 3 Installment - on or before 15 December 75%th4 Installment - on or before 15 March 100%

III. Tax Deducted at Source (‘TDS’) (Note 4)Tax must be deducted at the time of payment, in case of salaryIn case of payments other than salary, at the time of making payment or credit, whichever is earlierTax deducted must be deposited in the bank by 7th day of following month except tax deducted for payment or credit made in March must be deposited by 30th April

IV. Tax Collected at Source (‘TCS’)Tax must be collected at the time of receipt or debit, whichever is earlierTax collected must be deposited within one week from the last day of the month in which the collection is made.

V. Due dates for filing of TDS / TCS ReturnsFor quarter ended June 15 JulyFor quarter ended September 15 OctoberFor quarter ended December 15 JanuaryFor quarter ended March 15 May

Nature of Compliances Company PartnershipFirm / LLP

Individualand HUF

Person

Applicable

Applicable

DIRECT TAX COMPLIANCE CALENDAR

In this chapter, we have provided an overview of the various direct tax and service tax compliances from the perspective of a Company, Partnership Firm (including LLP), Individual and HUF.

Applicable, only if person is

covered under tax audit in the

preceding previous year

Applicable, only if person is

covered under tax audit in the

preceding previous year

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Chapter 12 Direct Taxes And Service Tax Compliance Calendar


VI. Due dates for issue of Form 16 (for Salaries) / Form 16A (for other than Salaries)/ Form 16B (for Sale of Property) and Form 27D (for TCS)Issue of Form 16 annually 31 MayIssue of Form 16A / 27D for quarter ended June 30 JulyIssue of Form 16A / 27D for quarter ended September 30 OctoberIssue of Form 16A / 27D for quarter ended December 30 JanuaryIssue of Form 16A / 27D for quarter ended March 30 MayIssue of Form 16B 15 days from the due date of depositing tax

VII. Due date for payment of DDT Applicable to all companies declaring/paying or distributing dividend

VIII. Due date of submission of Statement under section 285 of the IT Act (Note 5)Non-resident having liaison office in India to file Within 60 daysstatement in Form 49C from the end of financial year

IX. Due date for filing Annual Information Return under section 285BA of the IT ActSpecified persons to furnish Annual Information 31 AugustReturn in Form 61A in respect of specified financial transactions

X. Due dates for filing of appeals before the Income-tax appellate authorities Objections before the Dispute Resolution Panel Within 30 days

from the receipt of the draft assessment orderAppeal to the Commissioner of Income-tax (Appeals) Within 30 days

from the date of service of notice of demand or the relevant order

sought to be appealed againstAppeal to the Income-tax Appellate Tribunal (Note 6) Within 60 days

from the date on which order sought to be appealed against is communicated

Nature of Compliances Company PartnershipFirm / LLP

Individualand HUF

Person

Not Applicable

NOTES:1. In case of working partner of a partnership firm, whose accounts are required to be audited under section 44AB of the

IT Act, the date of filing of ROI is 30 September.2. Advance tax payment for income-tax is applicable to every person where the amount of income-tax payable is

Rs.10,000 or more.3. It is proposed that an eligible assessee in respect of eligible business referred to in section 44AD opting for

computation of profits or gains of business on presumptive basis, shall be required to pay advance tax of the whole amount in 1 installment on or before the 15th March of the financial year.

4. A NIL declaration is basically a declaration for non-filing of TDS Statements for those deductors who are not liable to deduct any tax during the relevant quarter or have not deducted tax during any quarter and subsequently did not file a TDS Statement under section 200(3) of the IT Act’ 1961 for any quarter.

5. Every person, being a non-resident having liaison office in India shall, in respect of its activities in a financial year, file a statement in Form No. 49C within 60 days from the end of the financial year i.e. 30 May to the Assessing Officer.

6. Memorandum of cross objection is to be filed within 30 days from the receipt of notice intimating that the appeal has been preferred before the Tribunal, against any part of the order under appeal, if required.

Within 14 days from the date of declaration

or payment or distribution of

dividend, whichever is

earlier

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Chapter 12 Direct Taxes And Service Tax Compliance Calendar


Due date for payment of Service Tax (Note 1)For One Person Company whose aggregate value of services during previous financial year is Rs. 50,00,000 By 6th of the following month for every quarteror less, Individual, partnership firm, LLP or HUFFor Others (Companies, Trusts, AOP, Societies, etc.) By 6th of the following month for every monthInterest on late payment of Service Tax (Note 2)Collection of any amount as service tax but failing to pay the amount so collected on or before the date on which 24% p.a.such payment becomes dueIn situations other than covered above 15% p.a. Filing of Service Tax returnsApril to September (Note 3) 25 OctoberOctober to March (Note 4) 25 AprilLate fees for delay in filing of returns (Note 5) For delay up to 15 days Rs. 500For delay beyond 15 days up to 30 days Rs. 1,000For delay beyond 30 days (Note 6) Rs. 1,000 + Rs. 100 per dayDue date for filing of appeal

Particulars Due dates/quantum of interest and late filing fees

SERVICE TAX COMPLIANCE CALENDAR

Appeal to be filed before Customs, Excise and Service Tax Appellate Tribunal (CESTAT) against order of Commissioner of Central Excise or Commissioner of Central Excise (Appeals).

Within 3 months from date of receipt of the order. CESTAT has powers to condone the delay in filing of appeal if it is satisfied that there was sufficient cause for not presenting the appeal within the stipulated period.

Appeal to be filed before Commissioner of Central Excise (Appeals) against order of adjudication authority subordinate to Commissioner of Central Excise.

Within 2 months from date of receipt of the order. The Commissioner of Central Excise (Appeals) has the power to condone delay in filing of appeal for a further period of 1 month provided sufficient cause is shown for non-filing the appeal within stipulated period of 2 months.

NOTES:1. The due date for payment of service tax for the month or quarter ended on 31 March is 31 March itself.2. For service provider having turnover below Rs. 60,00,000 in the preceding financial year or period

covered under notice, the specified rate shall be reduced by 3%.3. The due date for filing of Service Tax returns for the period April to September for Input Service

Distributor is 30 October.4. The due date for filing of service tax returns for the period October to March for Input Service Distributor

is 30 April.5. In case service tax is NIL, the authority may waive the late filing fees on being satisfied that there is

sufficient reason for not filing the return.6. Maximum late filing fees shall not exceed Rs. 20,0007. The following categories of person must mandatorily obtain service tax registration and comply with

the provisions:nEvery person liable to pay service tax;nAn Input Service Distributor;nEvery provider of taxable service whose aggregate value of taxable service in financial year exceeds

Rs. 9,00,000.

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ABBREVIATIONS


AE Associated EnterpriseAMT Alternate Minimum TaxAO Assessing OfficerAOP Association of PersonsARC Asset Reconstruction CompanyAY Assessment YearB2B Business to BusinessBCD Basic Customs DutyBED Basic Excise DutyBEPS Base Erosion and Profit shiftingBIRAC Biotechnology Industry Research Assistance

CouncilBOI Body of IndividualsBoP Balance of PaymentBSE Bombay Stock ExchangeCAGR Compounded Average Growth Rate CbC Country by CountryCBDT Central Board of Direct TaxesCBEC Central Board of Excise and CustomCESTAT Customs Excise & Service Tax Appellate

TribunalCENVAT Central Value Added TaxCCR Cenvat Credit RulesCIT Commissioner of Income TaxCNG Compressed Natural GasCOFEPOSA Conservation of Foreign Exchange and

Prevention of Smuggling Activities ActCRISIL Credit Rating Information Services of India

LimitedCTT Commodity Transaction TaxCVD Additional Duty of Customs levied under

section 3(1) of the Customs Tariff Act, 1975DDT Dividend Distribution TaxDIPP Department of Industrial Policy and Promotion

DFC Dedicated Freight CorridorDRP Dispute Resolution PanelDSIR Department of Scientific & Industrial ResearchDTA Domestic Tariff AreaDTAA Double Taxation Avoidance AgreementDTH Direct To HomeDVR Digital Video RecorderEET Exempt, Exempt and TaxELSS Equity Linked Savings SchemeEPFO Employees Provident Fund OrganisationEPFS Employees Provident Fund SchemeEOU Export Oriented UnitEU European UnionFDI Foreign Direct InvestmentFEMA Foreign Exchange Management Act, 1999FII Foreign Institutional InvestorsFIPB Foreign Investment Promotion BoardFMC Foreign Mining CompaniesFOB Free On BoardFPI Foreign Portfolio InvestorFRBM Fiscal Responsibility and Budget Management

Act, 2003FTS Fees for Technical ServicesFY Financial YearGAAR General Anti Avoidance RulesGDP Gross Domestic ProductGJEPC Gems and Jewellery Export Promotion CouncilGST Goods and Services TaxHNI High Net-worth IndividualHUF Hindu Undivided FamilyICDS Income Computation and Disclosure StandardIFSC Indian Financial System CodeInvIT Infrastructure Investment TrustINR Indian RupeeIRDA Insurance Regulatory and Development

Authority

IREDA Indian Renewable Energy Development Agency Limited

IT Information TechnologyITeS Information Technology enabled ServicesIT Act Income-tax Act, 1961ITAT Income Tax Appellate TribunalIT Rules Income-Tax Rules, 1962LED Light-Emitting DiodeLIC Life Insurance Corporation of IndiaLLP Limited Liability PartnershipLPG Liquified Petroleum GasM&E Media and EntertainmentMFN Most Favoured NationMMR Maximum Marginal RateMAT Minimum Alternate TaxMNE Multi-National EnterprisesMSME Ministry of Small and Medium EnterpriseNABARD National Bank for Agriculture and Rural

DevelopmentNBFC Non-Banking Financial CompanyNHAI National Highway Authority of IndiaNPS National Pension SchemeNRI Non-resident IndianNSC National Savings CertificateOECD Organization for Economic Co-operation and

Development PAN Permanent Account NumberPCBs Printed Circuit BoardsPE Permanent EstablishmentPFC Power Financer Corporation LimitedPFRDA Pension Fund Regulatory and Development

AuthorityPMAY Pradhan Mantri Awas YojanaPMLA Prevention of Money-Laundering Act, 2002POEM Place of Effective ManagementPPP Public Private PartnershipQFI Qualified Foreign InvestorR&D Research and DevelopmentRBI Reserve Bank of IndiaRBI Act The Reserve Bank of India Act, 1934RCM Reverse Charge MechanismREC / RECL Rural Electrification Corporation LimitedREIT Real Estate Investment TrustROI Return of IncomeRPF Recognized Provident FundSAD Special Additional Duty of Customs levied

under sub-section (5) of section 3 of the Customs Tariff Act, 1975

SARFAESI The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002

SC / ST Scheduled Caste / Scheduled TribeSE Securities ExchangeSEBI Securities and Exchange Board of IndiaSEZ Special Economic ZoneSME Small And Medium EnterprisesSPV Special Purpose VehicleSSI Small Scale IndustriesSTT Security Transaction TaxTAN Tax Deduction and Collection Account NumberTCS Tax Collected at SourceTDS Tax Deducted at SourceTP Transfer PricingTRC Tax Residency CertificateULIP Unit Linked Insurance PolicyUS$ United States DollarVAT Value Added TaxVFX Visual Effectsw.e.f. with effect fromWT Act Wealth Tax Act, 1957

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Mumbai13th Floor, Bakhtawar229, Nariman PointMumbai - 400 021. 301-309, A Wing3rd Floor, Technopolis Knowledge ParkMahakali Caves Road, Andheri (E) Mumbai – 400 093.

201, Shree PadminiTeli Galli JunctionAndheri (E), Mumbai - 400 069. New Delhi - NCR2nd Floor, Tower-BB-37, Sector-1Noida - 201 301. ChennaiAbhinav CentreNo. 4, Co-operative ColonyOff. Chamiers RoadAlwarpet, Chennai - 600 018. 1A, Chamiers Apartments62/121, Chamiers RoadR. A. Puram, Chennai - 600 028.

KolkataA-6, 12th FloorChatterjee International Centre33A, Jawaharlal Nehru RoadKolkata - 700 071.

Bengaluru Sujaya, No. 1007, 2nd Cross13th Main, HAL II StageBengaluru - 560 038. SuratDTA-2, G-02 to G-05 PlotGujarat Hira BourseIchhapore-2Surat – 394 510.

T-720, Belgium TowerOpp. Linear Bus StopRing Road, Surat - 395 002.

B/604-605, Tirupati PlazaAthwa Gate, NanpuraSurat - 395 001. Hyderabad217, Maruthi Corporate Point Swapnalok Complex92, Sarojini Devi Road Secunderabad - 500 003.

AhmedabadB-504, Narnarayan Complex NavrangpuraAhmedabad - 380 009.

Pune102, First FloorShree ResidencyBaner Balewadi RoadNear Laxmi Mata MandirBalewadi, Pune – 411 045. GandhidhamDivyasarika, Plot No. 41Ward 10-A, GurukulGandhidham - 370 201. Indore106, Manas Bhavan Extension 1st Floor, R.N.T. MargIndore - 452 001. Jaipur346, 3rd FloorGanpati Plaza, M.I. RoadJaipur – 302 001.

New Delhi-NCR

Bengaluru

Indore

Pune

GandhidhamAhmedabad

Surat

Mumbai

Hyderabad

Chennai

Kolkata

Jaipur

RSM in India

For further information please contact:RSM Astute Consulting Pvt. Ltd.13th Floor, Bakhtawar, 229, Nariman Point, Mumbai - 400 021. T: (91-22) 6108 5555 / 6121 4444 F: (91-22) 6108 5556 / 2287 5771 E: [email protected]: www.rsmindia.in

Offices: Mumbai, New Delhi-NCR, Chennai, Kolkata, Bengaluru (Bangalore), Surat, Hyderabad, Ahmedabad, Pune, Gandhidham, Indore and Jaipur.

facebook.com/RSMinlndia

twitter.com/RSM_India

linkedin.com/company/rsm-india

RSM Astute Consulting Pvt. Ltd. (including its affiliates) is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network.

Each member of the RSM network is an independent accounting and consulting firm each of which practises in its own right. The RSM network is not itself a separate legal entity of any description in any jurisdiction.

The RSM network is administered by RSM International Limited, a company registered in England and Wales (company number 4040598) whose registered office is at 11 Old Jewry, London EC2R 8DU.

The brand and trademark RSM and other intellectual property rights used by members of the network are owned by RSM International Association, an association governed by article 60 et seq of the Civil Code of Switzerland whose seat is in Zug.

© RSM International Association, 2016