*Direct Taxes*

  • Exemption limit for the general category of individual taxpayers enhanced from 1,60,000 to Rs.  1,80,000 giving uniform tax relief of Rs.  2,000.
  • Exemption limit enhanced for Senior Citizen to Rs 250000 and qualifying age reduced for senior citizens from 65 to 60 Years. 
  • Higher exemption limit of Rs 500000 for Very Senior Citizens, who are 80 years or above.
  • Current surcharge of 7.5 per cent on domestic companies proposed to be reduced to 5 per cent.
  • Rate of Minimum Alternative Tax proposed to be increased from 18 per cent to 18.5 per cent of book profits.
  • Tax incentives extended to attract foreign funds for financing of infrastructure.
  • Additional deduction of  Rs. 20,000 u/s 80C for investment in long-term infrastructure bonds proposed to be extended for one more year.
  • Lower rate of 15 per cent tax on dividends received by an Indian company from its foreign subsidiary.
  • Benefit of investment linked deduction extended to businesses engaged in the production of fertilisers.
  • Investment linked deduction to businesses developing affordable housing.
  • Weighted deduction on payments made to National Laboratories, Universities and Institutes of Technology to be enhanced to 200 per cent.
  • System of collection of information from foreign tax jurisdictions to be strengthened.
  • A net revenue loss of Rs.  11,500 crore estimated as a result of proposals.

*Indirect Taxes*

  • To stay on course for transition to GST.
  • Central Excise Duty to be maintained at standard rate of 10 per cent.
  • Reduction in number of exemptions in Central Excise rate structure.
  • Nominal Central Excise Duty of 1 per cent imposed on 130 items entering in  the tax net.
  • Lower rate of Central Excise Duty enhanced from 4 per cent to 5 per cent.
  • Optional levy on branded garments or made up proposed to be converted into a mandatory levy at unified rate of 10 per cent.
  • Peak rate of Custom Duty held at its current level.

*Service Tax*

  • Standard rate of Service Tax retained at 10 per cent, while seeking a closer fit between present regime and its GST successor.
  • Hotel accommodation in excess of Rs.  1,000 per day and service provided by air conditioned restaurants that have license to serve liquor added as new services for levying Service Tax.
  • Tax on all services provided by hospitals with 25 or more beds with facility of central air  conditioning.
  • Service Tax on air travel both domestic and international raised.
  • Services provided by life insurance companies in the area of investment and some more legal services proposed to be brought into tax net.
  • All individual and sole proprietor tax payers with a turn over upto  Rs. 60 lakh freed from the formalities of audit under Service Tax.
  • To encourage voluntary compliance the penal provision for Service Tax are being rationalised. Similar changes being carried out in Central Excise and Custom laws.
  • Proposals relating to Service Tax estimated to result in net revenue gain of  Rs. 4,000 crore.
  • Proposals relating to Direct Taxes estimated to result in a revenue loss of Rs. 11,500 crore and those related to Indirect Taxes estimated to result in net revenue gain of Rs.  11,300 crore.

    —————-

    (Author – Amit Bajaj Advocate, Bajaj & Bajaj Advocates, 128, Sangam complex, Milap chowk, Jalandhar City (Punjab), Email: amit@amitbajajadvocate.com, M +919815243335)

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