A. MAJOR AMENDMENTS
Rates of Income-tax: 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 inpidual 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 inpiduals, HUFs, firms etc. The education cess to continue at 3 percent.
Raising the limit of deduction under section 80C: It is proposed to raise the limit of deduction allowed under section 80C from the existing Rs. 1 lakh to Rs. 1.5 lakh. In view of the same, consequential amendments are proposed in sections 80CCE and 80CCD of the Act. W.e.f. 1st April, 2015
Deduction from income from house property: It is proposed to amend the second proviso to clause (b) of said section 24, so as to increase the limit of deduction on account of interest in respect of property referred to in sub-section (2) of section 23 to two lakh rupees. W.e.f. 1st April, 2015
Deduction in respect of capital expenditure on specified business: It is proposed to include two new businesses as “specified business” for the purposes of the investment-linked deduction under section 35AD (a) laying and operating a slurry pipeline for the transportation of iron ore and (b) setting up and operating a semiconductor wafer fabrication manufacturing unit, if such unit is notified by the Board in accordance with the prescribed guidelines. W.e.f. 1st April, 2014.
Extension of the sunset date under section 80-IA for the power sector: Extend the terminal date for a further period up to 31st March, 2017 i.e. till the end of the12th Five Year Plan. W.e.f. 1st April, 2015.
Tax deduction at source from non-exempt payments made under life insurance policy: It is proposed to insert a new section in the Act to provide for deduction of tax at the rate of 2 per cent. No deduction if Payment is less than Rs.1,00,000/-. W.e.f. 1st October, 2014
Signing and verification of return of income: It is proposed to amend section 140 of the Act so as to provide that the return shall be verified by the persons specified therein. W.e.f. 1st October, 2014.
Applicability to earlier years of the registration granted to a trust or institution: The benefit of sections 11 and 12 shall be available in respect of any income derived from property held under trust in any assessment proceeding for an earlier assessment year which is pending before the Assessing Officer as on the date of such registration, 1st October, 2014.
Corporate Social Responsibility (CSR): It is proposed to clarify that for the purposes of section 37(1) any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 shall not be deemed to have been incurred for the purpose of business and hence shall not be allowed as deduction under section 37.w.e.f. 1st April, 2015
Disallowance of expenditure for non- deduction of tax at source: It is proposed that in case of non-deduction or non-payment of TDS on payments made to residents as specified in section 40(a)(ia) of the Act, the disallowance shall be restricted to 30% of the amount of expenditure claimed disallowance under section 40(a)(ia) of the Act shall extend to all expenditure on which tax is deductible under Chapter XVII-B of the Act. 1st April, 2015
Tax Deduction at Source: it is proposed to amend section 200 of the Act to allow the deductor to file correction statements. Consequently, it is also proposed to amend provisions of section 200A of the Act for enabling processing of correction statement filed. Time limit provided under section201(3)(ii) of the Act for passing order under section 201(1) of the Act shall be extended by one more year. 1st October, 2014.
Business of Plying, Hiring or Leasing Goods Carriages: it is proposed to provide for a uniform amount of presumptive income of Rs.7,500 for every month (or part of a month) for all types of goods carriage without any distinction between HGV and vehicle other than HGV.W.e.f. 1st April, 2015
Taxability of advance for transfer of a capital asset: It is proposed to insert a new clause (ix) in sub-section (2) of section 56 to provide for the taxability of any sum of money, received as an advance or otherwise in the course of negotiations for transfer of a capital asset. Such sum shall be chargeable to income-tax under the head ‘income from other sources’ if such sum is forfeited and the negotiations do not result in transfer of such capital asset. W.e.f. 1st April, 2015.
Speculative transaction in respect of commodity derivatives: It is proposed to amend clause (e) of the proviso to the said clause (5) so as to provide that eligible transaction in respect of trading in commodity derivatives carried out in a recognised association and chargeable to commodities transaction tax under Chapter VII of the Finance Act, 2013 shall not be considered to be a speculative transaction. W.e.f. 1st April, 2014
Capital gains arising from transfer of an asset by way of compulsory acquisition: It is proposed to provide that the amount of compensation received in pursuance of an interim order of the court, Tribunal or other authority shall be deemed to be income chargeable under the head ‘Capital gains’ in the previous year in which the final order of such court, Tribunal or other authority is made.
Cost Inflation Index: The release of CPI for UNME has been discontinued. Accordingly, it is proposed to amend the said clause (v) of the Explanation to section 48 to provide that “Cost Inflation Index” in relation to a previous year means such index as may be notified by the Central Government having regard to seventy-five percent of average rise in the Consumer Price Index (Urban) for the immediately preceding previous year to such previous year. W.e.f. 1st April, 2016
Capital gains exemption in case of investment in a residential house property: It is proposed to amend the aforesaid sub-section (1) of section 54 so as to provide that the rollover relief under the said section is available if the investment is made in one residential house situated in India. It is further proposed to amend the aforesaid sub-section (1) of section 54F so as to provide that the exemption is available if the investment is made in one residential house situated in India. W.e.f. 1st April, 2015
Capital gains exemption on investment in Specified Bonds: It is proposed to insert a proviso in sub-section (1) so as to provide that the investment made by an assessee in the long-term specified asset, out of capital gains arising from transfer of one or more original asset, during the financial year in which the original asset or assets are transferred and in the subsequent financial year does not exceed fifty lakh rupees. wef 1st April, 2015
Losses in Speculation Business: It is proposed to amend the aforesaidExplanation so as to provide that the provision of the Explanation shall also not be applicable to a company the principal business of which is the business of trading in shares. wef 1st April, 2015
Power of survey: It is proposed to provide that an income-tax authority under section 133A shall not retain in his custody any such books of account or other documents for a period exceeding fifteen days (exclusive of holidays) without obtaining the approval.
Further, it is also proposed to amend section 133A to provide that an income-tax authority may for the purpose of verifying that tax has been deducted or collected at source in accordance with the provisions of Chapter XVII-B or Chapter XVII-BB, as the case may be, enter any office, or a place where business or profession is carried on, within the limits of the area assigned to him, or any such place in respect of which he is authorised for the purposes of this section by such income-tax authority who is assigned the area within which such place is situated where books of account or documents are kept. The income-tax authority may for this purpose enter an office, or a place where business or profession is carried on after sunrise and before sunset. While acting under sub-section (2A) he shall not impound and retain in his custody any books of account or documents inspected by him or make an inventory of any cash, stock or other valuables. wef 1st October, 2014.
Inquiry by prescribed income-tax authority: With a view to enable prescribed income-tax authority to verify the information in its possession relating to any person, it is proposed to insert a new section 133C in the Act so as to provide that for the purposes of verification of information in its possession relating to any person, prescribed income-tax authority, may, issue a notice to such person requiring him, on or before a date to be therein specified, to furnish information or documents, verified in the manner specified therein which may be useful for, or relevant to, any enquiry or proceeding under this Act. wef 1st October, 2014.
Estimate of value of assets by Valuation Officer: it is proposed to substitute the said section 142A so as to provide that the Assessing Officer may, for the purposes of assessment or reassessment, require the assistance of a Valuation Officer to estimate the value, including fair market value, of any asset, property or investment and submit the report to him. wef 1st October, 2014.
Mode of acceptance or repayment of loans and deposits: It is proposed to amend the provisions of the said sections 269SS and 269T so as to provide that any acceptance or repayment of any loan or deposit by use of electronic clearing system through a bank account shall not be prohibited under the said sections if the other conditions regarding the quantum etc. are satisfied. wef 1st April, 2015
Failure to produce accounts and documents: It is proposed to amend the provisions of the said section so as to provide that if a person willfully fails to produce accounts and documents as required in any notice issued under sub-section (1) of section 142 or willfully fails to comply with a direction issued to him under sub-section (2A) of section 142, he shall be punishable with rigorous imprisonment for a term which may extend to one year and with fine. wef 1st October, 2014.
Obligation to furnish statement of Information: It is proposed to amend the said section so as to also provide for furnishing of statement by a prescribed reporting financial institution in respect of a specified financial transaction or reportable account to the prescribed income-tax authority.wef 1st April, 2015.
Assessment of income of a person other than the person who has been searched: It is proposed to amend section 153C of the Act to provide that notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to any person, other than the person referred to in section 153A, then books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person. wef 1st October, 2014.
Extension of tax benefits under section 80CCD to private sector employees: it is proposed to amend the provisions of section 80CCD to provide that the condition of the date of joining the service on or after 1.1.2004 is not applicable to them for the purposes of deduction under the said section. Wef 1st April, 2015.
Dividend and Income Distribution Tax: It is proposed to amend section 115-O in order to provide that for the purposes of determining the tax on distributed profits payable in accordance with the section 115-O, any amount by way of dividends referred to in sub-section (1) of the said section, as reduced by the amount referred to in sub-section (1A) [referred to as net distributed profits], shall be increased to such amount as would, after reduction of the tax on such increased amount at the rate specified in sub-section (1), be equal to the net distributed profits. Similar calculation for section 115R. W.e.f. 1st October, 2014.
Credit of Alternate Minimum Tax: It is proposed to amend this section so as to provide that the credit for tax paid under section 115JC shall be allowed in accordance with the provisions of section 115JD, notwithstanding the conditions mentioned in sub-section (1) or (2) of section 115JEE. wef 1st April, 2015.
Alternate Minimum Tax: It is proposed to amend the section so as to provide that total income shall be increased by the deduction claimed under section 35AD for purpose of computation of adjusted total income.
Long-term Capital Gains on debt oriented Mutual Fund and its qualification as Short-term capital asset: Shall be a short-term capital asset if it is held for not more than thirty-six months. W.e.f. 1st April 2015.
Tax on long-term capital gains on units: It is proposed to amend the provisions of section 112 so as to allow the concessional rate of tax of ten per cent on long term capital gain to listed securities (other than unit) and zero coupon bonds. W.e.f. 1st April, 2015.
Anonymous donations under section 115BBC: Income-tax payable shall be the aggregate of the amount of income-tax calculated at the rate of thirty per cent on the aggregate of anonymous donations received in excess of five per cent of the total donations received by the assessee or one lakh rupees, whichever is higher. This amendment will take effect from 1st April, 2015
Income Computation and Disclosure Standards: it is proposed to provide that the Central Government may notify in the Official Gazette from time to time income computation and disclosure standards to be followed by any class of or in respect of any class of income. It is further proposed to provide that the Assessing Officer may make an assessment in the manner provided in section 144 of the Act, if the income has not been computed in accordance with the standards notified under section 145(2) of the Act. This amendment will take effect from 1st April, 2015
Investment Allowance to a Manufacturing Company: It is proposed that for investment of sum of more than Rs.100 crore in new assets (plant and machinery) during the period beginning from 1st April, 2013 and ending on 31st March, 2015, then the assessee shall be allowed a deduction of 15% of cost of new assets for assessment years 2014-15 and 2015-16.
Interest payable by the assessee under section 220: It is proposed to insert a new sub-section in section 220 so as to provide that where any notice of demand has been served upon an assessee and any appeal or other proceeding, as the case may be, is filed or initiated in respect of the amount specified in the said notice of demand, then such demand shall be deemed to be valid till the disposal of appeal by the last appellate authority or disposal of proceedings, as the case may be and such notice of demand shall have effect as provided in section 3 of the Taxation Laws (Continuation and Validation of Recovery Proceedings) Act, 1964. wef 1st day of October, 2014.
B.OTHER DIRECT TAX AMENDMENTS
• Taxation Regime for Real Estate Investment Trust (REIT) and Infrastructure Investment Trust (Invit)
• Concessional rate of tax on overseas borrowing: It is proposed to amend section194LC to extend the benefit of this concessional rate of withholding tax to borrowings by way of issue of any long-term bond. W.e.f. 1st October, 2014.
• Reduction in tax rate on certain dividends received from foreign companies: At the lower rate of 15%. W.e.f. 1st April, 2015.
• Roll back provision in Advance Pricing Agreement Scheme: This amendment will take effect from 1st October, 2014.
• Characterization of Income in case of Foreign Institutional Investors: Security held by foreign institutional investor would be treated as capital asset. W.e.f. 1st April, 2015.
• Rationalisation of taxation regime in the case of charitable trusts and institutions: These amendments will take effect from 1st April, 2015
• Clarification in respect of section 10(23C) of the Act: Cancellation of registration of the trust or institution in certain cases : subsequently it is noticed thatits activities are being carried out in such a manner other than for the purpose for which registration was granted. This amendment will take effect from 1st October, 2014.
• Rationalisation of the Definition of International Transaction
• Levy of Penalty under section 271G by Transfer Pricing Officers
• Extension of income-tax exemption to Special Undertaking of Unit Trust of India (SUUTI)
• Transfer of Government Security by one non-resident to another non-resident
• Income-tax Authorities: It is proposed to amend the aforesaid section 116 of the Act so as to include the newly created income-tax authorities. W.r.e.f. 1st June, 2013.
• Mutual Funds, Securitisation Trusts and Venture Capital Companies or Venture Capital Funds to file return of income: wef1st April, 2015.
• Provisional attachment under section 281B: It is proposed to amend the proviso to sub-section (2) so as to provide that the Chief Commissioner, Commissioner, Director General or Director may extend the period of provisional attachment so that the total period of extension does not exceed two years or upto sixty days after the date of assessment or reassessment, whichever is later. wef 1st October, 2014.
CA Jitendra Lohia