India Budget July 2014

to be announced on 10 july 2014 by BJP Finance Minister Mr.Arun Jaitley

budget india july 2014- income tax,indirect tax key highlights

posted 10 Jul 2014, 09:48 by Naresh S.Shah & Co ‎(NSC)‎ Chartered Accountants

DIRECT INDIRECT TAX PART OF BUDGET PROPOSALS ANNOUNCED IN JULY 2014
10.7.2014

DIRECT TAXES PROPOSALS
‰
Personal Income-tax exemption limit raised by  Rs. 50,000/- that is, from  Rs. 2 lakh to Rs.
2.5 lakh in the case of individual taxpayers, below the age of 60 years. Exemption limit
raised from  Rs. 2.5 lakh to  Rs. 3 lakh in the case of senior citizens.
‰
No change in the rate of surcharge either for the corporates or the individuals, HUFs,
firms etc.
‰
The education cess to continue at 3 percent.
‰
Investment limit under section 80C of the Income-tax Act raised from  Rs. 1 lakh to  Rs. 1.5
lakh.
‰
Deduction limit on account of interest on loan in respect of self occupied house property
raised from  Rs. .1.5 lakh to  Rs. .2 lakh.
‰
Conducive tax regime to Infrastructure Investment Trusts and Real Estate Investment
Trusts to be set up in accordance with regulations of the SEBI

Investment allowance at the rate of 15 percent to a manufacturing company that invests
more than  Rs. 25 crore in any year in new plant and machinery. The benefit to be
available for three years i.e. for investments upto 31.03.2017.
‰
Investment linked deduction extended to two new sectors, namely, slurry pipelines for
the transportation of iron ore, and semi-conductor wafer fabrication manufacturing
units.
‰
10 year tax holiday extended to the undertakings which begin generation, distribution
and transmission of power by 31.03.2017.
‰
Income arising to foreign portfolio investors from transaction in securities to be treated
as capital gains

Concessional rate of 15 percent on foreign dividends without any sunset date to be
continued.
‰
The eligible date of borrowing in foreign currency extended from 30.06.2015 to
30.06.2017 for a concessional tax rate of 5 percent on interest payments. Tax incentive
extended to all types of bonds instead of only infrastructure bonds.
‰
Introduction of a “Roll Back” provision in the Advanced Pricing Agreement (APA)
scheme so that an APA entered into for future transactions is also applicable to
international transactions undertaken in previous four years in specified circumstances.
‰
Introduction of range concept for determination of arm’s length price in transfer pricing
regulations.
‰
To allow use of multiple year data for comparability analysis under transfer pricing
regulations.
‰
To remove tax arbitrage, rate of tax on long term capital gains increased from 10
percent to 20 percent on transfer of units of Mutual Funds, other than equity oriented
funds.

Income and dividend distribution tax to be levied on gross amount instead of amount
paid net of taxes.

In case of non deduction of tax on payments, 30% of such payments will be disallowed
instead of 100 percent.
‰
Government to review the DTC in its present shape and take a view in the whole
matter.
‰
60 more Ayakar Seva Kendras to be opened during the current financial year to
promote excellence in service delivery.
‰
Net Effect of the direct tax proposals to result in revenue loss of  Rs. .22,200 crore.

INDIRECT TAXES PROPOSALS

‰ To boost domestic manufacture and to address the issue of inverted duties, basic
customs duty (BCD) reduced on certain items.

To encourage new investment and capacity addition in the chemicals and petrochemicals sector, basic customs duty reduced on certain items.
‰
Steps taken to boost domestic production of electronic items and reduce our
dependence on imports. These include imposition of basic customs duty on certain
items falling outside the purview of IT Agreement, exemption from SAD on inputs/
components for PC manufacturing, imposition of education cess on imported electronic
products for parity etc.
‰
Colour picture tubes exempted from basic customs duty to make cathode ray TVs
cheaper and more affordable to weaker sections.

To encourage production of LCD and LED TVs below 19 inches in India, basic customs
duty on LCD and LED TV panels of below 19 inches reduced from 10 percent to Nil.

‰ To give an impetus to the stainless steel industry, increase in basic customs duty on
imported flat-rolled products of stainless steel from 5 percent to 7.5 percent.
‰
Concessional basic customs duty of 5 percent extended to machinery and equipment
required for setting up of a project for solar energy production.
‰
Specified inputs for use in the manufacture of EVA sheets and back sheets and flat
copper wire for the manufacture of PV ribbons exempted from basic customs duty.
‰
Reduction in basic customs duty from 10 percent to 5 percent on forged steel rings
used in the manufacture of bearings of wind operated electricity generators. Exemption
from SAD of 4 percent on parts and raw materials required for the manufacture of
wind operated generators.
‰
Concessional basic customs duty of 5 percent on machinery and equipment required
for setting up of compressed biogas plants (Bio-CNG).
‰
Anthracite coal, bituminous coal, coking coal, steam coal and other coal to attract 2.5
per cent basic customs duty and 2 per cent CVD to eliminate all assessment disputes
and transaction costs associated with testing of various parameters of coal.
‰
Basic customs duty on metallurgical coke increased from Nil to 2.5 percent in line with
the duty on coking coal.

Duty on ship breaking scrap and melting scrap of iron or steel rationalized by reducing
the basic customs duty on ships imported for breaking up from 5 percent to 2.5 percent.

To prevent mis-use and avoid assessment disputes, basic customs duty on semi processed, half cut or broken diamonds, cut and polished diamonds and coloured gemstones rationalized at 2.5 percent.
‰
To encourage exports, pre-forms of precious and semi-precious stones exempted
from basic customs duty

Duty free entitlement for import of trimmings, embellishments and other specified items
increased from 3 percent to 5 percent of the value of their export, for readymade
garments.
‰
Export duty on bauxite increased from 10 percent to 20 percent.
‰
For passenger facilitation, free baggage allowance increased from  Rs. .35,000 to  Rs. .45,000.
‰
To incentivize expansion of processing capacity, reduction in excise duty on specified
food processing and packaging machinery from 10 percent to 6 percent.
‰
Reduction in the excise duty from 12 percent to 6 percent on footwear of retail price
exceeding  Rs. 500 per pair but not exceeding  Rs. 1,000 per pair.
‰
Withdraw concessional excise duty (2 percent without Cenvat benefit and 6 percent
with Cenvat benefit) on smart cards and a uniform excise duty at 12 percent.20
‰
To develop renewable energy, various items exempted from excise duty.

Exemption to PSF and PFY manufactured from plastic waste and scrap including PET
bottles from excise duty with effect from 29th June, 2010 to 7th May, 2012.
‰
Prospective levy of a nominal duty of 2 percent without Cenvat benefit and 6 percent
with Cenvat benefit on such PSF and PFY.
‰
Concessional excise duty of 2 percent without Cenvat benefit and 6 percent with
Cenvat benefit on sports gloves.
‰
Specific rates of excise duty increased on cigrettes in the range of 11 per cent to
72 per cent.
‰
Excise duty increased from 12 percent to 16 percent on pan masala, from 50 percent
to 55 percent on unmanufactured tobacco and from 60 percent to 70 percent on
gutkha and chewing tobacco.
‰
Levy of an additional duty of excise at 5 percent on aerated waters containing added
sugar.
‰
To finance Clean Environment initiatives, Clean Energy Cess increased from  Rs. .50 per
tonne to  Rs. .100 per tonne.

Service tax.
‰
To broaden the tax base in Service Tax, sale of space or time for advertisements in
broadcast media, extended to cover such sales on other segments like online and
mobile advertising. Sale of space for advertisements in print media however would
remain excluded from service tax. Service provided by radio-taxis brought under service
tax.
‰
Services by air-conditioned contract carriages and technical testing of newly developed
drugs on human participants brought under service tax.
‰
Provision of services rules to be amended and tax incidence to be reduced on transport
of goods through coastal vessels to promote Indian Shipping industry.
‰
Services provided by Indian tour operators to foreign tourists in relation to a tour
wholly conducted outside India to be taken out of the tax net and Cenvat credit for
services of rent-a-cab and tour operators to be allowed to promote tourism.
‰
Service tax exempted on loading, unloading, storage, warehousing and transportation
of cotton, whether ginned or baled.
‰
Services provided by the Employees’ State Insurance Corporation for the period prior
to 1st July 2012 exempted, from service tax.
‰
Exemption available for specified micro insurance schemes expanded to cover all life
micro-insurance schemes where the sum assured does not exceed  Rs. .50, 000 per life
insured.

For safe disposal of medical & clinical waste, sevices provided by common bio-medical waste treatment facilities exempted.

Tax proposals on indirect tax side are estimated ot yield .7525 crores.

24X7 customs clearance facility extended to 13 more airports in respect of all export
goods and to 14 more sea ports in respect of specified import and export goods to
facilitate cargo clearance

‘Indian Customs Single Window Project’ to facilitate trade, to be implemented.

The scheme of Advance Ruling in indirect taxes to be expanded to cover resident
private limited companies. The scope of Settlement Commission to be enlarged to
facilitate quick dispute resolution.
‰
Customs and Central Excise Acts to be amended to expedite the process of disposal
of appeals.

india budget july 2014

posted 10 Jul 2014, 00:49 by Naresh S.Shah & Co ‎(NSC)‎ Chartered Accountants

TAXATION

* Aims to approve goods and services tax by end of this year

* Will not change rules on retrospective tax. All pending cases of retrospective tax for indirect transfers to be examined by a high-level committee before action is taken

* Proposes changes in transfer pricing mechanism

* Extends 5 percent withholding tax on corporate bonds until June 30 2017

* Will provide the necessary tax changes to introduce real estate investment trusts and infrastructure investment trusts



FM proposes cut in basic customs duty on some petrochemical units

To expand horizon of service tax

Basic custom duty on LCD, LEDs below 19 inches reduced to nil from 10%

Excise duty on cigarettes doubled to 22%

To cut excise duty on packaging machinery to 6%

To cut excise duty on food processing to 6% from 10%

Interest cap on Self-occupied houses raised to Rs 2 lakh from Rs 1 lakh

Income tax exemption limit for senior citizens raised to Rs 3 lakh frm Rs 2.5 lakh 

Announces increased excise duty on tobacco products, and aerated water products with added sugar

Announces reduction in excise duty for specified food package industry from 10% to 6%.


New tax slabs:

Upto 2.5 lakh - NIL;

Above 2.5-5 lakh - 10%;

Rs 5-10 lakh - 20%;

Above Rs 10 lakh - 30% ;

SrCitizen: Above 60(Upto 3lakh)/Above 80(Upto Rs 5 lakh)-NIL


Basic customs duty on colour picture tubes scrapped

To hike tax rates to 20% for transfer of MF units

Impact: Duty reduced in petrochemcial products, likely to impact Reliance's margins from this business

Impact: Fatty acid and glycerine duty reduced -- to benefit soap manufacturers


Propose to introduce range concept in transfer pricing

Impact: Capital goods sector can benefit from investment allowance of 15% for 3 yrs to manufacturing company which invest more than Rs 25 crore in plant and machinery 

Tax announcements by FM
  • No change in direct tax rates
  • To increase personal I-T limit to Rs 2.5 lk
  • Raises tax exemption limit to Rs 3lk vs Rs 2.5lk for senior citizens
  • No change in tax laws for Hindu Undivided Families
  • Education cess to continue at 3%
  • To raise Housing interest deduction limit to Rs 2 lk
  • Raises 80C investment cap to Rs 1.5 lk
  • To raise investment allowance for investments above Rs 25 cr in units

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