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Arun Jaitley presents Union Budget on 29th February 

AIT News Network

Finance Minister Arun Jaitley has in his Budget Speech has focussed on Make-In-India, Start Up India, Stand Up India and Ease of Doing Business. 

Presumptive taxation scheme extended to professionals with gross receipts up to `50 lakh with the presumption of profit being 50% of the gross receipts.The accelerated depreciation provided under IT Act will be limited to maximum 40% from 1.4.2017. The benefit of deductions for Research would be limited to 150% from 1.4.2017 and 100% from 1.4.2020. 

The benefit of section 10AA to new SEZ units will be available to those units which commence activity before 31.3.2020.The weighted deduction under section 35CCD for skill development will continue up to 1.4.2020. 

The following two changes in corporate income-tax rates:- 

(a) The new manufacturing companies which are incorporated on or after 1.3.2016 are proposed to be given an option to be taxed at 25% + surcharge and cess provided they do not claim profit linked or investment linked deductions and do not avail of investment allowance and accelerated depreciation. 

(b) To lower the corporate income tax rate for the next financial year of relatively small enterprises i.e companies with turnover not exceeding `5 crore (in the financial year ending March 2015), to 29% plus surcharge and cess. 

100% deduction of profits for 3 out of 5 years for startups set up during April 2016 to March 2019. MAT will apply in such cases. Capital gains will not be taxed if invested in regulated/notified Fund of Funds and by individuals in notified startups, in which they hold majority shares. 

a special patent regime with 10% rate of tax on income from worldwide exploitation of patents developed and registered in India. 

complete pass through of income-tax to securitization trusts including trusts of ARCs. The income will be taxed in the hands of the investors instead of the trust. However, the trust will be liable to deduct tax at source. 

The period for getting benefit of long term capital gain regime in case of unlisted companies is proposed to be reduced from three to two years. Non-banking financial companies shall be eligible for deduction to the extent of 5% of its income in respect of provision for bad and doubtful debts. The determination of residency of foreign company on the basis of Place of Effective Management (POEM) is proposed to be deferred by one year. 

Commitment to implement General Anti Avoidance Rules (GAAR) from 1.4.2017. 

exempts service tax on services provided under Deen Dayal Upadhyay Grameen Kaushalya Yojana and services provided by Assessing Bodies empanelled by Ministry of Skill Development & Entrepreneurship. 

exempts service tax on general insurance services provided under ‘Niramaya’ Health Insurance Scheme launched by National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disability. 

refrigerated containers-reduced the basic custom and excise duty on them to 5% and 6% . 

 basic customs duty exemption to Braille paper. 

withdrawal up to 40% of the corpus at the time of retirement tax exempt in the case of National Pension Scheme. In case of superannuation funds and recognized provident funds,including EPF, the same norm of 40% of corpus to be tax free will apply in respect of corpus created out of contributions made after 1.4.2016.  

The annuity fund which goes to the legal heir after the death of pensioner will not be taxable in all three cases. A monetary limit for contribution of employer in recognized Provident and Superannuation Fund of `1.5 lakh per annum for taking tax benefit.  

exemptton from service tax the Annuity services provided by the National Pension System (NPS) and Services provided by EPFO to employees. 

reduces service tax on Single premium Annuity (Insurance) Policies from 3.5% to 1.4% of the premium paid in certain cases. 

100% deduction for profits to an undertaking from a housing project for flats upto 30 sq. metres in four metro cities and 60 sq. metres in other cities, approved during June 2016 to March 2019, and is completed within three years of the approval. Minimum Alternate Tax will, however, apply to these undertakings. 

For the ‘first – home buyers’, deduction for additional interest of `50,000 per annum for loans up to `35 lakh sanctioned during the next financial year, provided the value of the house does not exceed `50 lakh. 

 any distribution made out of income of SPV to the REITs and INVITs having specified shareholding will not be subjected to Dividend Distribution Tax. 

 exempt service tax on construction of affordable houses up to 60 square metres under any scheme of the Central or State Government including PPP Schemes. 

extends excise duty exemption available to Concrete Mix manufactured at site for use in construction work at such site to Ready Mix Concrete. 

 in addition to DDT paid by the companies, tax at the rate of 10% of gross amount of dividend will be payable by the recipients, that is, individuals, HUFs and firms receiving dividend in excess of `10 lakh per annum. 

raises the surcharge from 12% to 15% on persons, other than companies, firms and cooperative societies having income above 1 crore. 

 tax at source at the rate of 1% on purchase of luxury cars exceeding value of Rs.ten lakh and purchase of goods and services in cash exceeding Rs.two lakh.  

 Rate of Securities Transaction tax in case of ‘Options’ increased from .017% to .05%. 

tax on income accruing to foreign e-commerce companies from India, it is proposed that a person making payment to a nonresident, who does not have a permanent establishment, exceeding in aggregate `

1 lakh in a year, as consideration for online advertisement, will 

withhold tax at 6% of gross amount paid, as Equalization levy. The levy will

 

only apply to B2B transactions.

 

imposes a Cess, called the Krishi Kalyan Cess, @ 0.5% on all taxable services. The Cess will come into force with effect from 1st June 2016. Input Tax credit of this cess will be available for payment of this cess.

 

an infrastructure cess, of 1% on small petrol, LPG, CNG cars, 2.5% on diesel cars of certain capacity and 4% on other higher engine capacity vehicles and SUVs.

 

an excise duty of ‘1% without input tax credit or 12.5% with input tax credit’ on articles of jewellery [excluding silver jewellery, other than studded with diamonds and some other precious stones], with a higher exemption and eligibility limits of ` 6 crores and ` 12 crores respectively.

 

excise duty on branded readymade garments and made up articles of textiles with a retail sale price of `1,000 and above @ ‘2% without input tax credit or 12.5% with input tax credit’.

 

‘Clean Energy Cess’ levied on coal, lignite and peat hiked from `200 per tonne to `400 per tonne.

 

 tobacco and tobacco products, increases the excise duties on various tobacco products other than beedi by about 10 to 15%.

 

assignment of right to use the spectrum is a service leviable to service tax and not sale of intangible goods.

 

a limited period Compliance Window for domestic taxpayers to declare undisclosed income or income represented in the form of any asset and clear up their past tax transgressions by paying tax at 30%, and surcharge at 7.5% and penalty at 7.5%, which is a total of 45% of the

 

undisclosed income. There will be no scrutiny or enquiry regarding income declared in these declarations under the Income Tax Act or the Wealth Tax Act and the declarants will have immunity from prosecution. Immunity from Benami Transaction (Prohibition) Act, 1988 is also proposed subject to certain conditions. The window under this Income Disclosure

 

Scheme is open from 1st June to 30th September, 2016 with an option to pay amount

 

due within two months of declaration.

 

Dispute Resolution Scheme-A taxpayer who has an appeal pending as of today before the

 

Commissioner (Appeals) can settle his case by paying the disputed tax and interest up to the date of assessment. No penalty in respect of Income-tax cases with disputed tax up to ` 10 lakh will be levied. Cases with disputed tax exceeding ` 10 lakh will be subjected to only 25% of the minimum of the imposable penalty for both direct and indirect taxes. Any pending appeal against a penalty order can also be settled by paying 25% of the minimum of the imposable penalty.

 

The Income-tax Department is also issuing instruction making it

 

mandatory for the assessing officer to grant stay of demand once the assesse

 

pays 15% of the disputed demand, while the appeal is pending before

 

Commissioner of Income-tax (Appeals).

 

amends the CENVAT Credit Rules, 2004, so as to improve credit flow, reduce the compliance burden and associated litigation, particularly those relating to apportionment of credit between exempted and non exempted final products/services. The amendments in these rules will also enable manufacturers with multiple manufacturing units to maintain a

 

common warehouse for inputs and distribute inputs with credits to the individual manufacturing units.

 

abolishes 13 cesses, levied by various Ministries in which revenue collection is less than `50 crore in a year.

 

Non-residents without PAN are currently subjected to a higher rate of TDS. It is proposed to amend the relevant provision to provide that on furnishing of alternative documents, the higher rate will not apply.

 

 The facility for revision of return, hitherto available to a service tax assessee only, is being extended to Central Excise assessees also.

 

additional options to banking companies and financial institutions, including non-banking financial companies, for reversal of input tax credits with respect to non-taxable services provided by them by way of extending deposits, loans and advances.

deferred payment of customs duties for importers and exporters with proven track record

 

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