Direct taxes proposals in budget 2014

DIRECT TAXES PROPOSALS in Budget 2014

• Personal Income-tax exemption limit raised by ` 50,000/- that is, from 2 lakh to `2.5 lakh in the case of individual taxpayers, below the age of 60 years. Exemption limit raised from ` 2.5 lakh to ` 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 1 lakh to 1.5 lakh.
• Deduction limit on account of interest on loan in respect of self occupied house property
• raised from `.1.5 lakh to `.2 lakh.
• Conducive tax regime to Infrastructure Investment Trusts and Real Estate Investment
• Trusts to be set up in accordance with regulations of the Securities and Exchange Board of India.
• Investment allowance at the rate of 15 percent to a manufacturing company that invests more than ` 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.
• 18 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 22,200 crore