A detailed analysis of the amendments
proposed in the Income Tax Act, 1961 in the Union Budget 2015
1.       Reduction
of Corporate Tax Rate from 30% to 25%
Effect:
The amendment is to be spread over the next four financial years. Though it is
a welcome move, it would have been more welcomed by the Corporate world had the
entire reduction in the tax rate be given with immediate effect. In fact, the
reduction will take effect only from next financial year which means that for
the financial year 2015-16, corporates will end up paying higher tax at 34.60%
due to the increase in surcharge.
2.       Increase
of surcharge for domestic companies
Effect:
The proposal to increase the surcharge for domestic companies with total income
exceeding Rs.1 crore but not exceeding Rs.10 crores from the existing 5% to 10%
and for those exceeding Rs.10 crores from the existing 10% to 12% will take away
the benefits of the reduced tax rate and push up the corporate tax rate from
32.445% to 33.063% for the former category of companies and from 33.99%
to.34.61% for the latter.
3.       Increase
in the rate of Minimum Alternate Tax
Effect:
Though there is no specific provision for increase in this tax rate, the
cascading effect of the increase in the surcharge rate would be felt here too
with the effective MAT rate for smaller companies having total income between
Rs.1 Crore and Rs.10 Crore from 20.01% to 20.38% and for the bigger companies
having total income above Rs.10 Crores from 20.96% to 21.34%.
4.       Additional
surcharge for income over Rs.1 Crore
Effect:  The rich would be taxed more, the mantra
behind this proposal. It will make the high net worth assessees pay higher tax
by way of this surcharge increased from the existing 10% to 12%. The maximum
marginal tax would go up from the present 33.99% to 34.61% considering the fact
the cascading effect of the education cess of 3% will now be computed on the additional
surcharge too. Smaller assessees would be spared.
5.       Abolishing
wealth tax
Effect: A
welcome move, because now you don’t have to go through the hassle of filing
another set of returns. However, for all those who felt that their high end
assets would not come under the scrutiny of the tax authorities, it’s no time
to cheer. All these assets will now have to be disclosed and declared in the
income tax returns.
6.       TDS
on interest paid by co-operative banks to members
Effect: It
will be a big set off for senior citizens and other assesses in the lower tax
bracket that hitherto had been getting a nominal membership of the co-operative
banks and being spared the hassle of TDS. It’s an additional burden for the
banks too. Co-operative credit societies, quite surprisingly continue to enjoy
this benefit.
7.       Increase
in exemption limit for transport allowance
Effect:
This is a welcome move for employees since the limit of Rs.800 per month has
been considered too low and not at par with the increased cost of
transportation in the real sense. The increase to Rs.1600 per month would
certainly bring cheer to the working class.
8.       Making
employers responsible for obtaining evidence of deduction
Effect:
The proposed amendment to Section 192 makes it mandatory for employers to
obtain evidence of deductions/exemptions/set-off of any losses that the
employees claim from their taxable salary. Additional burden on the employers,
the rules and the forms and the manner in which the employers are required to
collect this evidence is to be announced shortly.
9.       Increase
in the deduction for payment of medical premia
Effect: A
welcome move again, considering the high cost of medical treatment these days.
The increase in the limit from Rs.15000 to Rs.25000 under Section 80D will be
cheered by the individual tax payers.
10.   Increase
in the deduction for payment of medical premia for senior citizens
Effect: A
big cheer from the senior citizens for increasing this deduction under Section
80D from the present Rs.20000 to Rs.30000. Also commendable is the fact that
for the uninsured very senior citizens, above the age of 80, they can claim
this deduction for the expenses incurred for their medical treatment.
11.   Requirement
of furnishing PAN for all transactions above Rs.1 lakh
Effect:
This move is certainly going to go a long way in curbing the black money menace
and bring in more transparency in all transactions.
12.   No
transactions relating to transfer of immovable property in cash above certain
limit
Effect:
The proposal to restrict acceptance of any loan and/or deposits from any person
as also repay any such loans/deposits above Rs.20000 relating to the transfer
of an immovable property, will also go a long way in curbing generation of black
money in immovable property transactions which today is quite rampant.
13.   TDS
on interest on recurring deposits
Effect: The
proposal to rope in interest on recurring deposits too at par with interest on
fixed deposits to be eligible for deduction of tax at source if it exceeds
Rs.10000 in a financial year is a move towards bringing both the forms of
investments in banks at par. This amendment is to be effective from 1st
June 2015.
14.   TDS
on premature deposits from provident fund
Effect: I
find no reason in this move when such withdrawals are anyway not subject to
tax. Premature withdrawals from PF will now be subject to TDS @ 10% (at maximum
marginal rate if employee does not furnish PAN) if the withdrawal amount
exceeds Rs.30000.The only explanation I can see in this proposal is that it
will ensure better tax compliance, though it is again going to burden the
employers with more compliance.
15.   Increase
in cap for deduction on contribution to prescribed annuity/pension plans
Effect:
This proposal of increasing the cap for such contributions from Rs.1 lakh to
R.1.50 lakhs would enable assessees not to look for other avenues of
investments within the overall ceiling of Rs.1.50 lakhs under section 80C.
16.   Additional
deduction for contribution to the New Pension Scheme
Effect: This
proposal of providing another tax saving investment avenue under section 80CCD
for contribution to the NPS upto Rs.50000 will benefit individual assessees by
way of further tax savings.
17.   Deduction
for contribution to the Sukanya Samriddhi Scheme
Effect: An
opportunity to earn tax sops on philanthropic activities, contribution made to
this scheme, relating to the education of the girl child is a welcome move,
proposed to be introduced retrospectively effective from financial year 2014-15
under Section 80C. A great initiative in allowing even the payment received
from such schemes to be totally tax free. Now parents of a girl child can
rejoice that they not only get tax deduction for investments made under this
scheme, but also would not be required to pay any tax of payments received
under this scheme.
18.   Deduction
for donations made to certain funds
Effect: The
proposal to include donations made to Swachh Bharat Kosh and Clean Ganga Fund
under the ambit of section 80G is a welcome move, which again is made effective
retrospective from financial year 2014-15. Donations made to the National Fund
for Control of Drug Abuse also being included from financial year 2015-16. The
great news is that you get 100% deduction for donations to these funds.
19.   Furnishing
of details for payments to non-residents without TDS
Effect: Making
payments to non-residents and claiming foreign tax credit has been made a
little more cumbersome with now the assessees required to furnish various
details of the same. The required details are yet to be prescribed, but the
message is loud and clear that non-compliance will attract stringent penalty.
20.   Increase
in the surcharge on Dividend Distribution Tax
Effect: The proposal to
increase the surcharge on DDT and on the tax on income distributed by mutual
funds from 10% to 12% will make the declaration of dividend dearer to the
companies and thereby reduce the income received by the shareholder or the unit
holder.
21.   Increase
in surcharge on the tax on buy-back of shares
Effect: This
proposal will make corporates think again before venturing to buy back its
shares by increasing their tax liability on the same effectively from 22.66% to
23.07%.
22.   Reduction
of rate of TDS on royalty and fees for technical services to foreign entities
Effect: This
proposal to reduce the rate of TDS from 25% to 10% is a welcome move since many
DTAA already had 10% rate prescribed and hence it was logical to get the rates
under the Income Tax Act also at par with these tax treaties. The effective TDS
rate due to this amendment would reduce from 27.04% to 10.82%.
23.   Threshold
limit for domestic transfer pricing enhanced
Effect:
The proposal to enhance the threshold limit from the existing Rs.5 crores to
Rs.20 crores would result in lesser compliance by smaller domestic companies.
24.   Scope
of levy of interest for default in payment of advance tax extended
Effect: The
proposal to extend the scope of the levy of this interest to even income
declared before the settlement commission will result in increasing the tax
burden in cases where application has already been filed before the settlement
commission for earlier years.
25.   Favourable
tax orders can now be revised by higher authorities
Effect:
The proposal to allow favourable tax orders passed by the assessing officers to
be revised by the CIT (Commissioner of Income Tax) will come in as a shock to
many assessees who can end up finding orders passed in their favour being later
amended.
26.   Concealment
penalty to be imposed even if tax is paid
Effect:
This proposed amendment to impose concealment penalty even to cases where the
disallowance or additions are made under the normal provisions and the
requisite tax thereon has already been paid under MAT or otherwise does not
auger well with the various case laws of the courts and hence will be a big
burden on the assessees.
27.   Future
proposal to levy 2% Swachh Bharat Cess on services
Effect:
Though not directly relating to any provisions under the Income Tax Act, I find
it pertinently important to include this here since this proposed future
suggestion may result in pushing up the service tax rate from 14% to 16% thereby
increasing the cost of these services to the common man.
CA. Sanjay Thampy
FCA, Grad. CWA, CS, DBM

 

It's only fair to share...
  •  
  •  
  •  
  •  
  •  
  •  
  •  
Read More →
Replies: 0

FINANCE MINISTER MR. ARUN JAITLEY RISE TO PRESENT THE
BUDGET FOR F.Y.2015-16.
MARKET UP 242 POINTS AT 29462, NIFTY UP 67 POINTS AT 8911
THE INITIAL
GIBBERISH, FOR SOME WHO MAY BE INTERESTED AND FOR THE ECONOMICALLY INCLINED:
J
1.
PEOPLE OF INDIA HAVE VOTED FOR GROWTH AND
TRANSPERANCY
2.
WE HAVE EMBRACED STATES AS EQUAL PARTNERSWE ARE
A ROUND THE CLOCK, ROUND THE YEAR GOVERNMENT
3.
UNDERTAKEN STEPS TO ENERGISE ECONOMY
4.
WORLD IS PREDICTING IT IS INDIA’S CHANCE TO FLY
5.
MUST ENCOURAGE GROWTH OF ENTREPREUNERSHIP
6.
WE NEED TO SEE MASSIVBE INVESTMENTS GOING INTO
INFRASTRUCTURE, R&D
7.
EVERY RUPPE OF PUBLIC EXPENDITURE WILL
CONTRIBUTE TO ECONOMY
8.
THE LATEST CPI INFLATION IS 5.1% AND WHOLESALE
SALE PRICE INFLATION IS NEGATIVE
9.
GOVERNMENT’S OBJECTIVE IS TO KEEP INFLATION
BELOW 6%
10.
INVESTORS ARE SEEING US WITH RENEWED HOPE
11.
CAD (CURRENT ACCOUNT DEFICIT) FOR THIS YEAR IS
EXPECTED TO BE 1.3% OF THE GDP (GROSS DOMESTIC PRODUCT)
12.
GDP EXPECTED TO ACCELERATE TO 7.4%
13.
AIMING FOR DOUBLE DIGIT RATES SEEMS FEASIBLE
SOON
14.
FM LISTS OUT ACHIEVEMENTS THROUGH COAL AUCTIONS J
15.
RUPEE HAS GAINED BY 6.4%
16.
JANADHAN, AADHAR, MOBILE AND GST ARE GAME
CHANGING REFORMS
17.
FOREIGN EXCHANGE RESERVES AT RECORD 340 BILLION
DOLLARS
18.
80000
secondary schools to get upgrade
19.
ALL THE SCHEMES HAVE TO CATER AROUND THE POOR
20.
Will meet
4.1% fiscal deficit target
21.
ELECTRIFICATION OF ALL VILLAGES BY 2020
22.
WILL ENSURE EMPLOYMENT TO OUR YOUTH
23.
AIM TO MAKE INDIA A MANUFACTURING HUB
24.
A ROOF FOR EACH FAMILY IN INDIA BY 2022
25.
KEY CHALLENGE IS AGRICULTURAL INCOME IS FALLING.
FOCUS TO BE ON PER DROP, MORE CROP
26.
GOVT FIRM IN MEETING 3% FISCAL TARGET IN MEDIUM
TERM
27.
MNREGA SCHEME IS TO STAY. WIL BE FINANCED BY
ALLOCATION OF 5000 CRORES
28.
TOTAL TRANSFER OF STATES WILL BE 62% OF THE
CENTRE’S RECEIPTS
29.
DISINVESTMENT NEEDS TO BE SCALED UP
30.
COMMITTED TO THE PROCESS OF RATIONALISATION
31.
RURAL INFRASTRUCTURE DEVELOPMENT FUND TO BE
CREATED WITH CORPUS OF INR 25000 CRORES
32.
FISCAL TARGET OF 3% BY F.Y.18
33.
LPG DIRECT TRANSFER SUBSIDY TO BE EXPIDATED
34.
TIME IS NOT FOR INCREMENTAL CHANGES BUT BIG BANG
35.
TRANSFER FO 8.5 LAKH CRORE CREDIT FOR THE
AGRICULTURAL SECTOR TARGETTED
36.
UNIVERSAL SOCIAL SECURITY SYSTEM FOR ALL INDIANS
37.
FOCUS ON BANKING THE UNBANKED, FUNDING THE
UNFUNDED
38.
NEW BANKRUPTCY CODE TO BE BROUGHT IN
39.
TO UTILISE VAST POSTAL NETWORK FOR BANKING
VENTURES
40.
NATIONAL AGRI MARKET TO INCREASE THE INCOME OF
THE FARMERS
41.
NEW PENSION SCHEME FOR THE POOR, AIMED AT PEOPLE
OVER 60 YEARS OF AGE
42.
TO CREATE SENIOR CITIZENS WELFARE FUND VIA
UNCLAIMED PPFS
43.
INFRASTRUCTURE TO MATCH GROWTH AMBITIONS
44.
70000 CRORES BOOST TO INFRASTRUCTURE
45.
1000
crores boost for self employment schemes
46.
PUBLIC SECTOR PORTS TO BE MADE COMPANIES UNDER
THE COMPANIES ACT
47.
EACH POWER PROJECTS TO BE OF 4000 MWs
48.
POWER PROJECTS TO UNLOCK INVESTMENTS WORTH 1
LAKH CRORES
49.
5000 CRORES FOR NATIONAL INFRASTRUCTRE
50.
TO SET UP PUBLIC DEBT MANAGEMENT AUTHORITY
51.
VISION IN PLACE FOR DIRECT TAX REGIME
52.
TO AMEND SECTION 6 OF FEMA
53.
PROMISES TAX FREE INFRASTRUCTURE BONDS
54.
Indian
gold coin to RECYCLE LOCAL GOLD. NEW GOLD MONETISATION SCHEME
55.
SOVEREIGN GOLD BOND SCHEME ANNOUNCED. THIS SCHEME
WILL CUT OVERSEAS GOLD DEMAND
56.
ALLOW FOREIGN INVESTMENT IN ALTERNATE INVESTMENT
FUNDS
57.
ANOTHER 1000 CRORES FOR NIRBHAYA FUND
58.
To
promote cashless TRANSACTIONS TO CURB BLACK MONEY
59.
PLAN TO INCENTIVISE DEBIT CARD AND CREDIT CARD
TRANSACTIONS
60.
BOOST FOR GLOBAL HERITAGE SITES AT GOA, GUJARAT,
J&K AND MUMBAI
61.
TO BOOST VISA ON ARRIVAL PLANS TO 150 NATIONS
FROMT EH PRESENT 43
62.
FPI AND FDI WON’T BE DIFFERENTIATED
63.
PUBLIC CONTRACT RESOLUTION OF DISPUTES BILL TO
BE BROUGHT IN
64.
NEW REGULATORY REFORMS LAW FOR INFRASTRUCTURE
65.
RENEWABLE ENERGY TARGET TO BE RAISED TO 1.75
LAKH MGW
66.
PROPOSED 75 CRORES OUTLAY FOR ELECTRIC VEHICLES
MANUFACTURING
67.
EDUCATION LOAN SCHEMES FOR HIGHER EDUCATION
68.
A FULL IT BASED STUDENT FINANCIAL BODY TO BE SET
UP
69.
AIIMS AT PUNJAB, J&K, HP, ASSAM AND TN
70.
IIT INKARNATAKA, UPGRADING DHANBAD COLLEGE TO
IIT
71.
APPRENTICE TRANING INSTITUTE FOR WOMEN IN
UTTARAKHAND
72.
IIM IN J&K AND ANDHRA PRADESH
73.
PSU BANKS BOARD BUREAU TO BE SET UP THIS YEAR
ITSELF
74.
FILM CENTRE AND A GAMING INSTITUTE IN ARUNACHAL
75.
FM PROMISES SPECIAL ASSISTANCE TO BIHAR AND WEST
BENGAL
76.
68960 CRORES FOR EDUCATION AND MID DAY MEALS
77.
10351 CRORES FOR WOMEN AND CHILD DEVELOPMENT
78.
22407 CRORES FOR HOUSING DEVELOPMENT
79.
4173 CRORES FOR WATER RESOURCES
80.
246727 CRORES FOR DEFENCE
81.
1200 CRORES FOR FAST TRACK CORRIDOR BETWEEN
AHMEDABAD AND MUMBAI
82.
331500 CRORES BOOST FOR THE HEALTH SECTOR.
ALLOCATION MORE THAN THAT FOR DEFENCE
83.
NON PLAN EXPENTIUTE EXPECTED AT 13.12 LAKH
CRORES
84.
PLANNED EXPENDITURE EXPECTED AT 4.56 LAKH CRORES
85.
GROSS TAX RECEIPTS ESTIMATED AT 14.50 LAKH
CRORES
86.
FISCAL DEFICIT SEEN AT 3.9% REVENUE DEFICIT AT
2.8%
87.
AMINING AT NON ADVERSARIAL TAX ADMINISTRATION
88.
2016 HAS BEEN SET AS DEADLINE FOR GST. TO
IMPLEMENT IT FROM NEXT YEAR
89.
NON TAX REVENUE RECEIPTS AT 2.2 LAKH CRORES
90.
NEW STRINGENT LAW FOR BLACK MONEY SLASHED
ABROAD. 10 YEARS PUNISHEMENT FOR BLACK MONEY HOLDERS
91.
FEMA TO BE AMENDED TO ACCOMMODATE BALCK MONEY
92.
TO CURB BENAMI TRANSACTIONS IN PROPERTY DEALS
93.
IMPLEMENTATION OF GAAR (GENERAL ANTI AVOIDANCE
RULES) DEFERED BY TWO YEARS. TO BE PROSPECTIVELY APPLIED FROM APRIL 2014
94.
RICH AND WEALTHY MUST PAY MORE TAXES
PROPOSED
AMENDMENTS IN THE DIRECT TAXES: THIS IS WHAT ALL WERE WAITING FOR
J
1.
CORPORATE TAX RATE CUT TO 25% FROM 30% OVER FOUR
YEARS. MAJOR RELIEF FOR CORPORATE SECTOR
2.
CORPORATE TAX CUT TO START FROM NEXT YEAR
3.
CUT IN TAX TO BE ACCOMPANIED BY CUT IN
EXEMPTIONS
4.
WORKING ON PHASED ELIMINATIONS OF EXEMPTIONS
FROM NEXT FINANCIAL YEAR
5.
PROSECUTION PROCEEDINGS MADE MORE STRINGENT.
CONCEALMENT OF INCOME, ASSETS TO GET 10 YEAR IMPRISONMENT
6.
PENALTY FOR CONCEALMENT AT 300% OF THE
INCOME/ASSET VALUE
7.
TAX PASS THROUGHS TO BE ALLOWED IN CATEGORIES 1
& 2
8.
RENTAL INCOME FROM REITs TO HAVE PASS THROUGH
STATUS
9.
QUOTING PAN MANDATORY FOR ALL PURCHASES ABOVE
RS.1 LAKH
10.
TO CUT INCOME TAX ON REOYALTY SERVICE ON
TECHNICAL FEES TO 10%
11.
TO ABOLISH WEALTH TAX COMPLETELY
12.
ADDITIONAL 2% SURCHARGE ON INCOME OVER RS.1
CRORE
13.
GOVT TO GET ADDITIONAL 9000 CRORES VIA THIS
SURCHARGE
14.
TO RATIONALISE MAT RPOVISIONS FOR FIIs
15.
100% TAX DEDUCTION ON CONTRIBUTIONB TO CLEAN
GANGA
16.
HEALTH INSURANCE EXEMPTION UPPED FOR SENIOR
CITIZENS TO RS.30000
17.
HEALTH INSURANCE LIMIT INCREASED TO RS.25000
FROM RS.15000
18.
ADDITONAL DEDUCTION OF RS.50000 FOR INVESTMENT
IN NATIONAL PENSION SCHEME
19.
ADDITIONAL DEDUCTION OF RS.50000 FOR SOCIAL
SAFETY NET PAYMENTS
20.
TRANSPORT ALLOWANCE DOUBLED TO RS.1600 PER MONTH
21.
INDIVIDUAL TAX PAYER GETS BENEFIT UPTO RS.4,44,200
PER YEAR
22.
YOGA TO COME UNDER CHARITABLE ORGANISATIONS
PROPOSED
AMENDMENTS IN THE INDIREDCT TAXES: READ IT AT YOUR PERIL, IF IT IS OF ANY
INTEREST
J
1.
CUT IN CUSTOMS DUTY ON 22 ITEMS
2.
REVISION OF EXCISE DUTY ON SOME ITEMS
3.
EXSCISE DUTY ON LEATHER SHOES UPPER TO BE CUT TO
6%
4.
CHANGES IN EXCISE DUTY ON TOBACCO PRODUCTS, AS
EXPECTED
5.
SERVICE TAX RATE INCRESASED TO 14% FROM12%

 

6.
NEGATIVE LIST UNDER SERVICE TAX TO BE PRUNED
It's only fair to share...
  •  
  •  
  •  
  •  
  •  
  •  
  •  
Read More →
Replies: 0

Apnon ne Apne Dum pe Jeena Sikhayaa
A honest and true account of how
my family members have guided and encouraged me to grow into a better, more self-reliant
person., a blog from the true and honest me.
As the father and the husband of
the household and thereby being the senior most member of the family, it was
quite natural that I was assumed and presumed to be the only candidate eligible
to done the role of the mentor, the trouble shooter, the caretaker for all
other family members. I took of my responsibility in full zeal too, taking care
and embracing my close knit family consisting of my beautiful wife and three
wonderful daughters, my princesses under the cover of the umbrella that my
spread out wings covered, not only with respect to the love and affection that
they needed from me but also the financial support and risk cover to take care
of their needs in case of any unforeseen eventuality of I not being there to
watch over them.
They say, children learn from
their parents, and that may be true to a certain extent, but my practical
experience has made me a firm believer of the maxim that we are constant
learners, we learn from what we see, we learn from our and others’ experiences,
we learn from our mistakes and we learn from our deeds. And in this process of
learning, our teachers, our mentors can be anyone. In my case, it happened to
be my own daughters.
Born and brought up in a very
conservative household, from the southern hemisphere of our country, where risk
taking was considered taboo and securing a job with the Government was the way
to eternal bliss, it was initially a bit difficult for me to shed my inhibitions
and leave the comforts of my secure job and take a plunge into the world of entrepreneurship,
which I did a few years back.
A father with the ultimate
responsibility of seeing three daughters getting married off, how could I even
think of such a stupid idea? These recorded messages by my so called
well-wishers kept playing back in my mind and into my ears. A totally confused
me was at the mercy of breakdown, when my eldest daughter, my angel came as the
mentor to me. It was she who stirred and woke the confidence in me. She
insisted that her Dad was not destined to work under someone for the rest of
his life. She realised the flame in my eyes, my quest to become an entrepreneur
and cajoled me into taking the dive.
Today, as I look back on the
crossroads of my life and career, I have no regrets for having taken the
diversion, the less tread path, when I felt like doing it. My daughter has
been the one who believed in what her Dad was capable of and ensured against
all odds that I achieved it. Years after that fateful decision, today, even she
is following my footsteps on the same profession and ready to take over my
enterprise from where and when I shall be willing to hand over the baton into
her worthy hands.
For me, it was my eldest daughter
with the able support of my ever understanding wife and the loving care of my
other two daughters too, who let me live my life the way I dreamed, so that I
can hold my head high and exclaim, Apnon ne Mujhe Apne Dum par Jeena Sikhaaya.
I could do all this without fear was because I knew always that in any
eventuality, my family will be looked after by HDFC Standard Life Insurance
Company Limited, where I have invested prudently in their various life
insurance policies will ensure that my family will also live their life Apne
Dum Pe.

 

For more details of the amazing insurance
plans specially designed by HDFC Standard Life Insurance Company Limited to
make us live our life our way, apne dum pe, please visit http://www.hdfclife.com/.

It's only fair to share...
  •  
  •  
  •  
  •  
  •  
  •  
  •  
Read More →
Replies: 2