Akshay Garg & Sumit Goel

Economic Overview

  • Budget aims to achieve 7-8 per cent economic growth rate in next 3-4 years
  • Fiscal deficit target for this year retained at 4.1%

Key Regulatory Proposals

  • Assurance on no retrospective amendments to tax structures, a big assurance to Non Resident Investors
  • Increased FDI rate to 49% in Insurance and defense sectors
  • Uniform KYC norms for entire financial sector
  • One single DEMAT account for all financial transactions
  • Corporate tax rates remains unchanged

Direct Taxes

  • Period of holding for Equity Mutual fund units has increased from 12 months to 36 months for capital gain purpose and Tax raised from 10% to 20%.
  • Introduced Range concept in Transfer Pricing
  • Tax Holiday for power sector companies extended to 10 years
  • New definition for MSME to enhance the scope of incentives
  • Income from portfolio investment is considered as capital gains
  • 30% disallowance if no taxes are deducted for payments made to residents
  • Investment allowance @ 15% to manufacturing companies on investment in plant or machinery of more than Rs. 25 Crores from 1/04/2013 to 31/03/2017
  • Foreign Dividend Tax to remain at 15%
  • Expenses done for CSR activities as per provisions of the Companies Act, are not allowable as expenses for the purpose of Income Tax Act as amended provisions of section 37
  • Provisions of Search amended to include search for TDS provisions also
  • On maturity of Life Insurance Policies, which are not exempt as per provisions of section 10 (10D), 2% TDS will have to be deducted
  • Amount received as advance on agreement to sale of capital asset and later forfeited will be treated as income from other sources under section 56
  • Order under section 201 for TDS can be passed by the departmental authorities in seven years now, instead earlier provision of only two years

Personal Tax Proposals

  • Personal Income Tax exemption limit increased from Rs. 2 lakhs to Rs. 2.5 lakhs for individuals below 60 years
  • For senior citizens Basic exemption limit increased from Rs. 2.5 lakhs to Rs. 3 lakhs
  • Deduction for interest on housing loan for self occupied property increased from Rs. 1.5 lakhs to Rs. 2 lakhs
  • Public provident Fund contribution limit enhanced from Rs.1 lakhs to Rs.1.5 lakhs
  • Deductions under sec. 80C increased from Rs. 1 lakh to Rs. 1.5 lakhs

Other Proposals

  • From FY 2016-17 New Accounting standards made compulsory, voluntary from FY 2015-16

Indirect Tax – Rates

  • No change in the standard rate of Basic Customs Duty (BCD), Additional Duty of Customs (CVD) and Special Additional Duty of Customs (SAD)
  • No changes in the standard rate of Central Excise Duty
  • No changes in Service tax rate
  • Changes in rates of effective customs duty are attached as Annexure 1
  • Changes in rates of effective excise duty are attached as Annexure 2

Indirect Tax – Proposals

CUSTOMS DUTY

  • Customs duties on mineral oils including petroleum & natural gas extracted or produced in the continental shelf of India or the exclusive economic zone of India shall not be recovered for the period prior to 07.02.2002. However, if paid earlier, no refund would be granted.
  • Bill of Entry can be filed prior to the filing of Import Report on import through land route.
  • In case of import by land (vehicle), if bill of entry is filed before arrival of vehicle then rate of duty will be date of arrival.
  • Application to Settlement Commission can be made in case of import through post and courier.
  • Commissioner (Appeal) to take into consideration that a particular order being cited as a precedent decision on the issue has not been appealed against for reasons of low amount.
  • Safeguard Duty provision created in Customs Tariff Act, 1975 to provide for levy of duty on inputs/ raw materials imported by Export Oriented Units (EOU) and cleared into Domestic Tariff Area (DTA) as such or used in manufacture of final products and cleared into DTA.
  • Baggage Rules
  • ­   free baggage allowance limit raised from Rs. 35,000/- to 45,000/-
  • ­   duty free allowance of cigarettes reduced from 200 to 100
  • ­   duty free allowance of cigars reduced from 50 to 25
  • ­   duty free allowance of tobacco reduced from 250 gms to 125 gms
  •  Duty Free entitlement for importing certain goods used in the manufacture of readymade garment for export is increased from 3% to 5%
  • Plant & equipment imported prior to 2008 for project finance by UN or international organization are now allowed to transfer/sold/re-export subject to certain conditions

CENTRAL EXCISE DUTY

  • Valuation rules amended to overcome SC decision in case of FIAT
  • Mandatory electronic payment of excise duty for all assesses
  • Scope of Settlement Commission enlarged by making provision for allowing applications of settlement for non-filing of returns after recording reasons
  • ‘Resident Private Limited Company’ would be eligible for determination by Advance Ruling
  • The Third Schedule to the Central Excise Act, 1944 has been amended to include other parts of chapter heading 8421 (filtering or purifying machinery)
  • 1% penalty in case of default of payment beyond 30 days. CENVAT benefit would be available.

SERVICE TAX

  • Exemptions
  • ­   Exemption to sale of space or time for advertisements other than print media withdrawn.
  • ­   Radio taxis or radio cabs (whether AC or Non AC) will be taxable and abatement @ 60% allowed.
  • ­   Exemption extended to air-conditioned contract carriages withdrawn and abatement of 60% allowed.
  • ­   Exemption extended to services provided by clinical research organizations on human participants withdrawn.
  • ­   Scope of exemption for services provided to Government or local authority or governmental authority curtailed.
  • ­   Only specified services received by educational institutions exempted from tax.
  • ­   Exemption from service tax is only available to hotel, inn, guest house, club or campsite and will not include any commercial places.
  • ­ Life micro-insurance schemes for the poor, approved by IRDA, where sum assured does not exceed Rupees Fifty Thousand exempted from service tax.
  • ­   Transport of organic manure by vessel, rail or road (by GTA) exempted.
  • ­   Loading, unloading, packing, storage or warehousing, transport by vessel, rail or road (GTA), of cotton, ginned or baled, exempted.
  • ­   Services provided by common bio-medical waste treatment facility operators to clinical establishments exempted.
  • ­   Services received by RBI from outside India in relation to management of foreign exchange reserves.
  • ­   Services provided by Indian tour operators to foreign tourists in relation to a tour wholly conducted outside India exempted.
  • ­   Retrospective exemption from service tax has been granted to service provided by Employees’ State Insurance Corporation (ESIC) during the period prior to 01.07.2012.
  • Reverse charge services – point of taxation will be the payment date or first day after three months from the date of invoice, whichever is earlier (changes to take place on invoices issued after 01.10.2014).

However, where invoice was issued prior to 01.10.2014, but payment has not been made, in that case, point of taxation shall be:

  • ­   If payment is made within six months of the date of invoice, the date of payment.
  • ­   If payment is not made within six months, be determined as per the provisions of rule 7.
  • Partial reverse charge –renting of motor vehicle – service recipient and service provider to pay 50% each (changes wef 01.10.2014)
  • Special Economic Zone (SEZ) – simplification of the procedures prescribed
  • Works contract services – Service portion in repair, maintenance or reconditioning or restoration or servicing activities increased from 60% to 70%.
  • Abatement –Abatement in respect of transport of goods by vessel to be increased from 50% to 60%.
  • Changes in Interest rate on late payment of Service tax
Extent of delay Simple interest rate per annum
For the period up to six months 18%
For the period from six months and upto one year 24%
For the period after one year 30%
  •  Changes in Place of Provision of Service Rules
  • ­  Provision for prescribing conditions for determination of place of provision of repair services carried out on temporarily imported goods is being omitted.
  • ­  The definition of intermediary is being amended to include the intermediary of goods in its scope.
  • ­ Hiring of vessels or aircrafts, irrespective of whether short term or long term, will be covered by the general rule, which is place of location of the service receiver.

CENVAT CREDIT

  • Credit can now be taken within six months from the date of the invoice or challans or other documents specified (changes wef 01.09.2014)
  • CENVAT credit available when Service tax paid under full reverse charge without waiting for the payment of invoice value to the service provider
  • CENVAT credit reversed on account of non-receipt of export proceeds within the specified period, to be allowed as re-credit, if export proceeds are received within one year from the specified period on the basis of documentary evidence of receipt of payment.
  • Rent-a-cab operator and tour operator – Service tax paid by sub-contractor in the same line of business would be allowed as eligible credit to the main service provider to avoid double taxation, subject to certain conditions (changes wef 01.10.2014).
  • GTA service – Service receiver may avail abatement, without having to obtain non-availment of CENVAT Credit certificate from service provider.

GENERAL PROVISIONS (As applicable to Customs, Central Excise and Service Tax)

  • Pre-Deposits in Appeal (First Stage) – Mandatory fixed pre-deposit of 7.5% of the duty demanded or penalty imposed or both for filing appeal before the Commissioner (Appeals) & Tribunal – It would also mean that, no stay application would be filed henceforth.
  • Pre-Deposits in Appeal (Second Stage) – Mandatory fixed pre-deposit of 10% of the duty demanded or penalty imposed or both for filing appeal before the Tribunal – It would also mean that, no stay application would be filed henceforth.
  • Ceiling for mandatory pre-deposit fixed at Rs. 10 Crores
  • Discretionary power of Tribunal to refuse the admission of appeal is increased from Rs. 50,000 to Rs. 200,000

Annexure 1 – Changes in the effective rates of Customs Duties

Products Duty Type Existing Effective Rate Proposed Rate
Fatty Acids used in manufacturing of soaps and oelochemicals as actual user BCD 7.5% Nil
Crude Palm Sterian BCD 7.5% Nil
RBD Palm Sterian BCD 7.5% Nil
Other Palm Sterian BCD 7.5% Nil
Specified Industrial grade crude oils BCD 7.5% Nil
Denatured ethyl Alcohol BCD 7.5% 5%
De-oiled soya extract, BCD 7.5% Exempt
Oil cake/ Oil Cake meal BCD 7.5% Exempt
Sunflower Oil cake/ Oil Cake meal BCD 7.5% Exempt
Canola Oil cake/ Oil Cake meal BCD 7.5% Exempt
Mustard or rice Oil cake/ Oil Cake meal BCD 7.5% Exempt
Cigarettes of length exceeding 75 mm 12% or Rs. 1738 per thousand, whichever is higher
Steel grade dolomite and steel grade limestone BCD 5% 2.5%
Bauxite Export Duty 10% 20%
Non-agglomerated coal BCD 2.5%
Non-agglomerated coal CVD 2%
Coaking Coal BCD Nil 2.5%
Coaking Coal CVD 6% 2%
Steam coal and bituminous coal BCD 2% 2.5%
Anthracite coal and other coal BCD 5% 2.5%
Metallurgical coke BCD Nil 2.5%
Crude naphthalene BCD 10% 5%
Reformate and other goods under sub-heading 2707 50 00 BCD 10% 2.5%
Coal tar pitch BCD 10% 5%
Re-gasified LNG for supply to Pakistan BCD & CVD Exempt
Liquefied Propane and Butane mixture, Liquefied Propane, Liquefied Butane and Liquefied Petroleum Gas (LPG) imported by IOCL, HPCL, BPCL for supply to NDEC All Customs duty Exempt
Propane BCD 5% 2.5%
Ethane and other goods under sub heading 2901 10 00, ethylene, propylene and butadiene BCD 5% 2.5%
Ortho-xylene BCD 5% 2.5%
Methyl alcohol BCD 7.5% 5%
Raw materials for manufacture of spandex yarn viz. Diphenyl methane 4,4di-isocyanate (MDI) and Polytetramethylene ether glycol (PT MEG) BCD 5% Nil
Raw materials used in the manufacture of solar backsheet and EVA sheet used in manufacture of solar PV cells or modules as per actual user condition BCD Exempt
Security fibre, security threads and M-feature imported by Bank Note Paper Mill India Private Limited All Customs duty Exempt
Raw materials required for manufacture of security threads and security fiber BCD and CVD Nil
Polystyrene (other than moulding powder) BCD 1.15% 7.5%
Wire rolls required by handicraft exporters (inclusion in list of specified goods) Custom Duty Exempt
Non-fusible embroidery motifs or prints imported by manufacturer of garments for export (inclusion in list of specified goods) Custom Duty Exempt
Specified goods imported for use in the manufacture of textile garments for export BCD & CVD Exempt
Pre-forms of precious and semi-precious stones BCD Exempt
Half-cut or broken diamonds BCD Nil 2.5%
Cut & polished diamonds including lab-grown diamonds and colored gemstones BCD 2% 2.5%
Stainless steel flat products (CTH 7219 and 7220) BCD 5% 7.5%
Forged steel rings used in the manufacture of bearings of wind operated electricity generators BCD 10% 5%
Flat copper wire used in the manufacture of PV ribbons (tinned copper interconnect) for solar PV cells or modules BCD Exempt
Machinery, equipments, etc. required for initial setting up of compressed biogas plant (Bio-CNG). BCD 5%
Machinery, equipments, etc. required for initial setting up of solar energy production projects BCD & CVD 5%
Parts and raw materials used in the manufacture of wind operated electricity generators SAD Exempt
Electrolysers and their parts/spares required by caustic   soda or caustic   potash units and   membranes BCD 5% 2.5%
Other parts (other than membranes and parts thereof) BCD 7.5% 2.5%
LCD and LED TV panels (below 19 inches) BCD 10% Nil
Color picture tubes used in manufacturing of Cathod Ray TVs BCD 10% Nil
Specified parts of LCD and LED panels for TVs BCD Exempt
E-Book readers BCD 7.5% Nil
Battery waste and battery scrap BCD 10% 5%
Specified telecommunication products not covered under the ITA (Information Technology Agreement) BCD Nil 10%
Inputs/Components of Personal Computers SAD Exempt
Certain Electronic goods Cess & SHEC Leviable on CVD Exemption Withdrawn
Specified Inputs(PVC sheet & Ribbon) used in manufacturing of smart cards SAD Exempt
Ships imported for breaking up BCD 5% 2.5%
Portable X-ray machine / system CVD Exemption Withdrawn
Specified HIV/AIDS drugs and diagnostic kits imported under National AIDS Control Programme (NACP) funded by the Global Fund to Fight AIDS, TB and Malaria (GFATM) Custom Duty Exempt
Goods imported by National Technical Research Organization (NTRO) BCD Exempt

Annexure 2 – Changes in the effective rates of Central Excise Duties

Products Duty Type Existing Effective Rate Proposed Rate
Waters including aerated waters, containing added sugar Add. Duty 12% 17%
Cigars, cheroots, cigarollos and cigarattes, of tobacco or of tobaco substitutes

 

Description BED Rs. per 1000 Rs. per 1000
(length in mm)   sticks sticks
Non filter not exceeding 65 669 1150
Non-filter     exceeding   65   but     not exceeding 70 2027 2250
Filter not exceeding 65 669 1150
Filter     exceeding 65 but not exceeding 70 1409 1650
Filter     exceeding 70 but not exceeding 75 2027 2250
Filter     exceeding 75 but not exceeding 85 2725 Tariff Item omitted
Other 3290 3290
Pan Masala BED 12% 16%
Unmanufactured Tobacco BED 50% 55%
Jarda Scented Tobacco, Guthka and Chewing tobacco BED 60% 70%
Branded Petrol BED Rs. 7.5 per litre Rs. 2.35 per litre
Goods for use in manufacture of EVA sheets or backsheet for manufacture of solar photovoltaic cells or modules namely EVA resin, EVA masterbatch, PEL film, PVF, PVD adhesive resin and hardner

 

BED 12% Nil
Matches, in or in relation to the manufacture of which, any or all processes of pasting of labels on match boxes, venners or cardboards, and packaging are carried out with aid of power BED 12% 6%
DDT manufactured by Hindustan Insecticides Limited for supply to the NVBDCP BED 12% Nil
Plastic material reprocessed in India out by the scrap or the goods falling within Chapters 39,54,56,59,64,84,85,86,87,90,91,92,93,94,95 and 96 by Export Oriented Unit . BED 12% Nil
EVA sheets or backsheet for use in the manufacture of solar photovoltaic cells or modules BED 12% Nil
Gloves specially designed for use in sports ( no CENVAT credit of input or input services allowed) BED 12% 2%
Gloves specially designed for use in sports ( CENVAT credit allowed) BED 12% 6%
Polyster staple fibre and polyster fillamanet yarn manufactured from plastic scrap or plastic waste including waste BED 12% 2%
Footwear of retail price exceeding Rs 500 per pair but not exceeding 1000 BED 12% 6%
Solar tempered glass for use in the manufacture of solar photovoltaic cells or modules, solar power generating equipments or systems and flat plate solar collectors BED 12% Nil
Forged steel rings for manufacture of special bearings for use in wind operated electricity generators BED 12% Nil
Flat   copper wire used   in the manufacture of PV ribbons (tinned copper interconnect) for use in the manufacture of solar cells or modules BED 12% Nil
Winding wires of copper BED 10% 12%
The following goods used in the processing and packaging of agricultural, apiary, horticulture, diary, aquatic and marine produce and meat , namely:

(i) machiney for cleaning or drying bottles or other containers;
(ii) machinery for filling, closing, sealing or labelling bottles, cans, boxes , bags or other containers;
(iii) other packing or wrapping machinery;
(iv) parts of machinery at (i) to (iii)

BED 10% 6%
Presses, crushers and similar machinery used in the manufacture of wine, cider, fruit juices or similar beverages

 

BED 6%
(i) machinery for the preparation of meat or poultry;
(ii) machinery for preparation of fruits, nuts or vegetables;
(iii)parts of machinery at (i) or (ii)
BED 10% 6%
Sewing machines with attachable electric motors BED 2% 12%
LED driver and MCPCB for use in the manufacture of LED lights and fixtures or LED lamps BED 12%/10% 6%
Parts consumed within the factory of production for the manufacture of non-conventional energy devices, and when such use in elsewhere than in the factory of production BED Exempt
Smart Cards BED 2%/6% 12%
RO membrane element used in household type filters BED 12%/10% 6%
Reverse osmosis (RO) membrane element for water filtration or purification equipment (other than household type filter) BED Exempt
Specified HIV/AIDS drugs and diagnostic kits supplied under National AIDS Control Programme (NACP) funded by the Global Fund to Fight AIDS, TB and Malaria (GFATM) BED Exempt
Goods supplied to National Technical Research Organisation (NTRO). BED Exempt
Intermediate   goods manufactured and   consumed captively for   further manufacture of matches BED Exempt
Goods cleared by an EOU into the DTA EC and SHEC (Customs Component) Exempt
Excise duty on Polyester Staple Fiber (PSF) and Polyester Filament Yarn (PFY) ( including intermediate products manufactured in the production of PSF and PFY) manufactured from plastic waste or scrap now being exempted retrospectively w.e.f 29.06.2010 BED Exempt
Un-branded articles of precious metals are being exempted from excise duty retrospectively for the period 01.03.2011 to 16.03.2012 BED Exempt
Full exemption from excise duty is being granted in respect of machinery, equipments, etc. required for initial setting up of solar energy production projects BED Exempt
Full exemption from excise duty is being provided on machinery, equipments, etc. required for   initial setting up   of compressed biogas   plant (Bio-CNG). BED Exempt
Excise duty is being exempted on parts of tractors removed from one or more factories of a tractor manufacturer to another factory of the same manufacturer for manufacture of tractors BED Exempt

 


 

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Category : Income Tax (28066)
Type : Articles (17832)
Tags : Budget (1957) Budget 2014 (172)

0 responses to “Union Budget 2014-15 – A New Beginning – Snapshot”

  1. s sudarshana says:

    Your conention is correct please.

  2. s sudarshana says:

    These amendments will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent assessment years in other words the same will apply in relation to Financial Year 2014-15 and subsequent Financial Years. – See more at: https://taxguru.in/income-tax/budget-2014-home-loan-interest-exemption-limit-sop-increased-rs-2-lakh.html#sthash.OUUz8EAT.dpuf

  3. s sudarshana says:

    If that is the case, how come in on of the thread, it was written only in case of housing loan interest rebate from 1.5 to 2.00 lakhs is with effect from 1.4.2015 FY (2016-17 AY)? May I request you to check it and comment only i am correct.

  4. s sudarshana says:

    In one of the posts in this TASGURU, I found the mention of effective date of rebate on rising of housing loan interest rebate from 1.5 to 2.0 lakhs is from 1.4.2015 FY (2016-17 AY). The author may incorporate the correct positon of the effective date in this post.

    • CA Sandeep Kanoi says:

      Effective date is correct as date is the date of Assessment Year Starting, which means provision applicable from FY 2014-15.

  5. ashok dalmia says:

    Sir,(akshay garg and sumeet goyal) i think Under Direct taxes you have wrongly written…

    Period of holding for Equity Mutual fund units has increased from 12 months to 36 months for capital gain purpose and Tax raised from 10% to 20%. –

    correct status is…

    Increase in the rate of tax on long term capital gains from 10% to 20% on transfer of units of Mutual Funds other than equity oriented funds.
    It is proposed to provide that unlisted security and units of Mutual Funds (other than equity oriented funds) be treated as short term capital assets if it is held for not more than 36 months as against existing holding period of 12 months.

  6. Rishi Goyal says:

    Such a glance budget…..

  7. prof.p.k.unni says:

    The central exise limit continues at 1.5crores in the present budget in spite of huge increase in price of raw materials and production cost.kindly grant us the msme units an increase upto three crores per annum.

  8. prof.p.k.unni says:

    The central excise limit continues 1.5croreinthepresent budget iinspiite ofhhuge increase in price of raw materials andincreasein produuction cost. Kkindly grant usthhe msme unitsanninccreaseuptothree crores per annum

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