Discussion on Union Budget 2014

Transcription

1 Discussion on Union Budget 2014 Jointly Organised by Delhi Chapter of CTC and Northern Region Chapter of IFA - India Branch July 19 th 2014 By : Rahul Garg Union Budget 2014 Slide 1

2 FM on Union Budget 2014 that investors were losing faith in India strong opinion against our taxation regime one had to set the economy on a course where at least the direction got identified. The taxation policy followed in India and the functioning of the tax administration had created a scare among investors I've provided a complete cushion against powers of Parliament to tax retrospectively.i've created a consultation mechanism between industry and CBDT, the outcome of which will result in statutory guidelines. As we learn from future experiences, I'm willing to travel a little more distance, but this is the direction. There are many issues on which we've not taken a view, GAAR is one of them. It's not that we can change the stand in one day. We've to have a look at it. - The Times of India, July 15, 2014 Union Budget 2014 Slide 2

3 Tax Rates No change in Income tax rates for : - Domestic Companies, LLP and Firms : 30%* - Foreign Companies : 40%* No change in MAT and AMT rates %* No change in tax rate on dividend from foreign companies 15%* Change in effective rate of DDT - 15%* - Method of computation has changed *additionally surcharge and education cess shall be applicable Union Budget 2014 Slide 3

4 Dividend Distribution Tax Method of computation Particulars Current Company Proposed Dividend distribution DDT rate DDT calculation 100 x 15 = x 15/(100-15) = DDT after surcharge and cess Total Outflow Effective DDT Rate 16.99% 19.98% * DDT calculated on grossed up amount Whether the DDT is to be grossed up with surcharge and cess? Union Budget 2014 Slide 4

5 Business income Corporate Social Responsibility (CSR) expenses - CSR expenses not allowable as deduction; not disallowed for MAT purposes - Expenditure otherwise allowable (say section 35(1), 35AC, 35CCA, 35CCD) not impacted Disallowance of domestic payments for non-compliance of TDS - Disallowance restricted to 30% of expense - Salary expense are now covered - 30% amount subsequently allowed upon TDS compliance - Transitional provision missing what about earlier years disallowances Non-resident payments allowed if TDS compliance done by return filing due date Union Budget 2014 Slide 5

6 Investment Allowance Eligible taxpayers Companies in manufacturing sector Investment Threshold Quantum Plant and machinery acquired and installed Investment > INR 250 mn in a previous year 15% over and above normal depreciation Sunset by 31 March 2017 Yearly investment threshold; no aggregation over 3 years 5 year lock-in (except in merger/demerger) Earlier Investment allowance (100 cr.) scheme for investments continues Union Budget 2014 Slide 6

7 Other Incentives Profit based Tax holiday for Power sector extended till March 31, 2017 Investment-linked deduction - Benefit extended to Slurry pipeline for transportation of iron ore Semi-conductor wafer fabrication manufacturing unit - Mandatory use of assets only for specified business for 8 years On contravention, benefit claimed in excess of eligible depreciation taxable Share trading company s losses from Speculation business would not be considered losses from speculation business for the purpose of set off or carry forward and set off. Union Budget 2014 Slide 7

8 Capital Gains Holding period increased to 36 months for: - Unlisted shares / securities - Units of Non-equity oriented mutual fund Tax rates on transfer of units of mutual fund held for more than 36 months - 20% from 10%. - Transactions on recognized Stock Exchanges are still exempt. Advance forfeited - Other Income (and not to be reduced from cost) Enhanced compensation on compulsory acquisition - to be taxed upon receipt of final order Union Budget 2014 Slide 8

9 Capital Gains Long term capital gain will be exempt - if investment made in one residential house in India Transfer of Government Securities listed and traded outside India from NR to NR exempt from tax Investment in securities by FII according to SEBI regulations, is Capital asset Union Budget 2014 Slide 9

10 TDS provisions 5% TDS on any foreign currency long-term bonds / loan issued till 30 June % TDS on receipts from taxable life insurance products w.e.f. from 1 October 2014 (if >= INR 1 lakh) TDS assessment time limit for payment to resident - Seven years from end of relevant FY (w.e.f. 1 October 2014) - No clarity on time limit for non-residents Provisions for filing and processing of TDS correction statements. Power of survey extended for TDS verification - No power to impound or retain custody of documents in case of survey for TDS Union Budget 2014 Slide 10

11 Miscellaneous Where any notice of demand has been served and appeal is filed, such demand shall be valid until the disposal of appeal by the last appellate authority. Reference to Valuation Officer - to estimate value of investment, bullion, jewelry or any property - without any specific reason and without rejection of books of accounts valuation report within 6 months extension of time limit for assessment Income tax authorities empowered to conduct survey for verification of TDS/TCS. Electronic clearing system through a bank recognized for payments of loans or deposits. Union Budget 2014 Slide 11

12 Thank You! 2014 PricewaterhouseCoopers Private Limited. All rights reserved. In this document, PwC refers to PricewaterhouseCoopers Private Limited (a limited liability company in India having Corporate Identity Number or CIN : U74140WB1983PTC036093), which is a member firm of PricewaterhouseCoopers International Limited (PwCIL), each member firm of which is a separate legal entity. Union Budget 2014 Slide 12