Key Summary of Union Budget F.Y. 2015-16 : Direct Tax

Introduction:


Budget for the F.Y. 2015-16 has been announed by Hon’able Finance Minister Arun Jaitley, dated on 28th Feb, 2015. This is a full-fledged budget, presented by BJP Government  after their interim budget last year. Everyone were predicting for a reform in taxation system and moreover relief from Indirect Tax System as GST Bill has already passed in Lok Shaba. But, what I takes into scenario about this budget is mostly concern with the Income Tax matters and moreover about the proposals for deductions and tax free investments.

A brief scenario of the budget is presented below:


                          PARTICULARSNEW RATEOLD RATE
Reduce the rate of Corporate Tax and applicable over the next 4 years    25%    30%
As per Sec 115A Income Tax act 1961, Reduce the rate of income tax on royalty and fees for technical services.     10%    25%
Surcharge on individuals, HUFs, AOPs, BOIs, artificial juridical persons, firms, cooperative societies and local authorities having income exceeding 1 crore.     12%    10% 
  • Donation made to National Fund for Control of Drug Abuse (NFCDA) shall be eligible for 100% deduction under section 80G of the Income-tax Act.
  • It is also proposed to provide a deduction of upto 50,000 over and above the limit of Rs. 1.50 lakh in respect of contributions made to NPS.
  • It is proposed to provide that investment in “Sukanya Samriddhi Scheme” will be eligible for deduction u/s 80C and any payment from the scheme shall not be liable to tax.
  • It is proposed to provide that the donations (other than the CSR contributions made in accordance with [Section 135] of the Companies Act, 2013) made to Swachch Bharat Kosh” (by both resident and nonresident) and “Clean Ganga Fund” (by resident) shall be eligible for 100% deduction under section 80G of the Income-tax Act.
  • The revenue loss on account of such abolition is proposed to be compensated by increase in the existing surcharge by 2% in case of
  • It is proposed to amend the provisions of [Section 255] of the Income-tax Act so as to increase the monetary limit from Rs. 5 lakh to Rs. 15 lakh, for a case to be heard by a Single Member Bench of the ITAT.
  • It is proposed to amend the provisions of [Section 2(15)] of the Income-tax Act so as to include ‘yoga’ as a specific category of activity in the definition of ‘charitable purpose’ and also to provide relief for activities in the nature of business undertaken by genuine charitable organizations subject to the condition that aggregate receipts from such activity is less than 20% of the total receipts.
  • It is proposed to amend the provisions of [Section 92BA] of the Income tax Act so as to increase the threshold limit for applicability of transfer pricing regulations to specified domestic transactions from 5 crore to 20 crore.
  • Additional depreciation @ 20% is allowed on new plant and machinery installed by a manufacturing unit or a unit engaged in generation and distribution of power. However, if the asset is installed after 30th September of the previous year only 10% of the additional depreciation is allowed. It is proposed to allow the remaining 10% of the additional depreciation in the subsequent previous year.
  • It is proposed to amend the provisions of [Section 80JJAA] of the Income-tax Act so as to provide that tax benefit under the said section shall be available to a ‘person’ deriving profits from manufacture of goods in a factory and paying wages to new regular workmen. The eligibility threshold of minimum 100 workmen is proposed  is  to reduced to fifty.
  • It is proposed to amend the provisions of [Section 194LD] of the Income tax Act so as to extend the period of applicability of reduced rate of tax at 5% in respect of income of foreign investors (FIIs and QFIs) from corporate bonds and government securities, from 31.5.2015 to 30.06.2017.
  • It is also proposed to levy a surcharge @12% as against current rate of 10% on additional income-tax payable by companies on distribution of dividends and buyback of shares, or by mutual funds and securitization trusts on distribution of income.
  • In the case of foreign companies the surcharge will continue to be levied @2% if the income exceeds Rs. 1 crore and is upto 10 crore, and @5% if the income exceeds Rs. 10 crore.
  • It is further proposed to levy a surcharge @12% on individuals, HUFs, AOPs, BOIs, artificial juridical persons, firms, cooperative societies and local authorities having income exceeding Rs. 1 crore. Surcharge in the case of domestic companies having income exceeding Rs. 1 crore and upto 10 crore is proposed to be levied @ 7% and surcharge @ 12% is proposed to be levied on domestic companies having income exceeding 10 crore.

And, the most important segment, that this budget had presented is the investment plan to get the deduction under Chapter – VI of Income Tax Act, 1951 are:

    PARTICULARSNEW LIMITOLD LIMIT
Increase the limit of deduction u/s 80CCD of the  Income tax Act on account of contribution by the employee to National PensionScheme (NPS).         1.5 LAC     1 LAC
Increase the limit of deduction u/s 80CCC of the Income tax Act on account of contribution to a pension fund of LIC or IRDA approved insurer.       1.5 LAC     1 LAC
Increase the limit of deduction u/s 80U of the Income tax Act in case of a person with disability       0.75 LAC    0.5 LAC
Increase the limit of deduction u/s 80 U of Income tax Act in case of severe disability.     1.25 LAC   1 LAC
Increase the limit of deduction u/s 80DD of the Income tax Act in respect of maintenance, including medical treatment of a dependant who is a person with disability.     0.75 LAC  0.5 LAC
Increase the limit of deduction u/s 80 DD of Income tax Act   in case of severe disability.   1.25 LAC   1LAC
Increase the limit of deduction in case of very senior citizens u/s 80DDB of the Income-tax Act on expenditure on account of specified diseases from ` 60,000 to ` 80,000.   0.8 LAC   0.6 LAC
Increase the limit of deduction u/s 80D of the Income tax Act  on health insurance premium 0.25 LAC 0.15 LAC
Increase the limit of deduction u/s 80D of the Income tax Act  on health insurance premium in case of senior citizen 0.3  LAC 0.2 LAC

As, there are many other segments of Budget for F.Y. 2015-16.

Happy Reading !!

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Shushant ( ICAI Final )

Shushant is a Chartered Accountant student at Institute of Chartered Accountants of India. He is also a Student of Company Secretary at Institute Of Company Secretaries of India. He is a administrator of this site . In his spare time he hang out with his friends and discuss about the current issues in market. You can find his latest blog posts at www.enrollmyexperience.com and at his facebook profile.

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