CA Bikash Bogi

BULLET POINT SUMMARY of Direct Tax Provisions

INDIVIDUALS / HUF / AOP / BOI

  • No change in income tax rates.
  • Income Tax Exemption limit increased to Rs. 2.5 Lakh from Rs. 2 lakh. For Senior citizens exemption limit increased to Rs. 3 lakh.
  • Deduction u/s 80C increased to Rs. 1.5 lakh from Rs. 1 lakh
  • Deduction for Interest on housing loan for Self Occupied property increased to Rs. 2 Lakh from 1.5 lakh.

CORPORATES:

  • No change in Corporate Tax rate.
  • Investment allowance at 15% for 3 years to manufacturing company which invest more than Rs. 25 crore in plant and machinery.
  • 10 Years Tax Holiday for Power Sector if begins generation, distribution & transmission of Power by 31.03.2017.
  • Investment Linked deduction extended to two new ventures ; Slurry Pipeline for transportation of Iron Ore & Semi Conductor wafer fabrication manufacturing units.
  • Expenditure on Corporate Social Responsibility [CSR] shall not be allowed as deduction while calculating business income.
  • For Non-deduction of TDS, only 30% of the expenditure will be disallowed instead of earlier disallowance of 100% of the expenditure, if TDS rate is between 1% – 10%.
  • For business of plying, hiring or leasing goods carriage [up-to 10 vehicle], the presumptive income shall be Rs. 7500/- per month.
  • Credit of Alternative Minimum Tax will now be available to taxpayers and allowed to carry forward to adjust normal tax liability of succeeding years.

INTERNATIONAL TRANSACTIONS / NRI / FOREIGN TAXATION:

  • Roll Back Provisions for Advance Pricing Agreement Scheme, as per which APA taken for future transactions will also applicable for transactions of preceding four years [subject to conditions].
  • “Range Concept” introduced in Transfer Pricing provisions as per which Arm’s Length Price shall be calculated based on Multi-year data instead of single year data.
  • Transfer Pricing Officer [TPO] can levy penalty u/s 271G.
  • Dividend received from Foreign Company shall be taxed at Concessional rate of 15%. No sunset clause.
  • Income Arising to Foreign Portfolio Investors from Transaction in securities will be treated as capital gains and will tax accordingly.
  • TDS on any Interest payment made for “any bonds” issued in foreign currency shall be deducted @ 5% [earlier it was only on “Infrastructure bonds”]. The eligible date extended to 31.03.2017.

OTHER PROVISIONS:

  • Long Term capital Gain of units of Mutual Funds [other than Equity oriented funds] shall be taxed @20%. Further, units have to hold at least 36 months for treating it as long term.
  • To qualify as Long term capital assets, Unlisted securities is required to be hold for at-least 36 months instead of earlier period of 12 months.
  • Advance Ruling shall be extended to Resident Taxpayers and existing number of benches of Advance Ruling shall be increased.
  • More Stringent Provisions related to furnishing of Annual Information Return.
  • For resolving the disputes, Scope of Settlement Commission will be expanded.
  • Dividend distribution tax shall be paid on gross dividend paid instead on dividend net of taxes.
  • Tax Regime to Infrastructure Investment Trusts and Real Estate Investment Trusts to set up in accordance with regulations of SEBI.
  • Compulsory Imprisonment and fine, if the assesses willfully fails to produce books of accounts and other details as required in section 142(1) or 142(2A)

OTHER MAJOR ANNOUNCEMENTS:

  • A high Level committee constituted by CBDT shall take care of issue of indirect transfer on retrospective amendments on case to case basis.
  • No more Retrospective Amendments in Tax Laws.
  • 60 New Aaykar Seva Kendra to be opened in financial year 2014-15 to promote tax payer friendly services.
  • Government will review the Direct Tax Code [DTC] in its present shape and review it.

( Author is a Partner with SBR & Co. Chartered Accountants Mumbai and can be reached at bikashbogi@sbrca.in)

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Tags : Budget (1957) Budget 2014 (172) CA Bikash Bogi (10)

0 responses to “The Modi Budget 2014 : Direct Tax Highlights”

  1. Hiren says:

    Dear CA Sir,

    You have written as “To qualify as Long term capital assets, Unlisted securities is required to be hold for at-least 36 months instead of earlier period of 12 months”

    So is is for all types of unlisted securities (i.e. shares) or only for MFs ?

  2. Asgar Yusufali says:

    Holding 390 Equity Shares of BOSCH Ltd.–since 1969( 5 Shares became 390 due
    to Face Value Split & issue Of Bonus Shares over the YEARS) I have SOLD 90
    Shares in June 2014 @ 13250/ on NSE & have received Rs 11,84,444/after
    deduction of SEBI TAXES & BROKERAGE. BALANCE 300 SHARES have remained UNSOLD
    PLease advise MY CAPITAL GAINS TAX LIABILITY & the period by which I should PAY.I am 75 YEARS OLD

  3. umamaheshwar.n says:

    very useful post .. thanks a lot ..

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