Tax Rates
1.
No change in
the basic exemption limit and the tax rates of individuals
2. Corporate
tax rates proposed to be reduced from 30% to 25% over the next four years,
starting from next financial year.
3. The existing
rate of tax on Income by way of Royalty and Fees for technical services in case
of nonresidents @25% proposed to be reduced to 10%.
4. Additional
surcharge @ 2% being levied on income exceeding Rs. 1 crore. This surcharge
would be levied in place of Wealth-tax which is proposed to be abolished.
Deductions from Gross Total Income
1. Exempt-Exempt-Exempt (EEE) tax
benefit proposed for assessee having a girl child and investing under the
Sukanya Samriddhi Account Scheme. The investments made in the Scheme will be
eligible for deduction under section 80C of the Act, the interest accruing on
deposits in such account will be exempt from income tax and the withdrawal from
the said scheme in accordance with the rules of the said scheme will be exempt
from tax.
2. As a welfare measure towards very
senior citizens, a deduction under section 80D is proposed for any payment made
on account of medical expenditure in respect of a very senior citizen, subject
to a limit Rs. 30,000. ØIn view of continuous rise in the
cost of medical expenditure, section 80D is proposed to be amended to raise the
limit of deduction from Rs. 15,000 to Rs. 25,000. Further, the limit of
deduction for senior citizens is also proposed to be increased from Rs. 20,000
to Rs. 30,000.
3. The limit for deduction under
section 80DDB is proposed to be increased to Rs. 80,000 in respect of amount
paid for medical treatment of very senior citizen.
4. Section 80DD and section 80U is
proposed to be amended to increase the limit from Rs. 50,000 to Rs. 75,000 and
from Rs. 1 lakh to Rs. 1.25 lakh, as the case may be.
5. In order to promote social security,
deduction section 80CCC(1) which provides for deduction of amount paid or
deposited to effect or keep in force a contract for any annuity plan of LIC or
any other insurer for receiving pension from a fund set up under a pension
scheme is proposed to be amended to raise the limit of deduction from Rs. 1
lakh to Rs. 1.5 lakh, within the overall limit provided in section 80CCE.
6. Section 80G is proposed to be
amended to provide for 100% deduction in respect of donations made to the
National Fund for Control of Drug Abuse.
7. With a view to encourage and enhance
people’s participation in the national effort to improve sanitation facilities
and rejuvenation of river Ganga, section 80G is proposed to be amended so as to
provide 100% deduction for donations made by any donor to the Swachh Bharat
Kosh and to Clean Ganga Fund.
Measures to curb black money
1. In order to
curb generation of black money by way of dealings in cash in immovable property
transactions, section 269SS is proposed to be amended so as to provide that no
person shall accept from any person, any loan or deposit or any sum of money,
whether as advance or otherwise, in relation to transfer of an immovable
property otherwise than by an account payee cheque or account payee bank draft
or by electronic clearing system through a bank account, if the amount of such
loan or deposit or such specified sum is twenty thousand rupees or more.
2. Similarly,
section 269T also is proposed to be amended so as to provide that no person
shall repay any loan or deposit made with it or any specified advance received
by it in relation to transfer of an immovable property whether or not the
transfer takes place, otherwise than by an account payee cheque or account
payee bank draft or by electronic clearing system through a bank account, if
the amount or aggregate amount of loans or deposits or specified advances is
twenty thousand rupees or more.
General Anti Avoidance Rule (GAAR)
The implementation of General Anti
Avoidance Rule (GAAR) is proposed to be deferred by two years. Accordingly, it
would be applicable for the financial year 2017-18 (A.Y. 2018-19) and
subsequent years. Further, it is also proposed that the investments made upto
31.03.2017 shall not be subject to GAAR.Ø
Additional Investment Allowance and
provisions in respect of additional depreciation
1. A new section 32AD is proposed to be inserted
to provide for an additional investment allowance of an amount equal to 15% of
the cost of new asset acquired and installed by an assessee, if— Ø
(a) he sets up an undertaking or enterprise for
manufacture or production of any article or thing on or after 1st April, 2015
in any notified backward areas in the State of Andhra Pradesh and the State of
Telangana; and
(b) the new assets are acquired and installed for the
purposes of the said undertaking or enterprise during the period beginning from
the 1st April, 2015 to 31st March, 2020. This deduction shall be available over
and above the existing deduction available under section 32AC of the Act.
2. Further, in
order to incentivise acquisition and installation of plant and machinery for
setting up of manufacturing units in the notified backward area in the State of
Andhra Pradesh or the State of Telangana, it is proposed to allow higher
additional depreciation at the rate of 35% (instead of 20%) in respect of the
actual cost of new machinery or plant (other than a ship and aircraft) acquired
and installed by a manufacturing undertaking or enterprise which is set up in
the notified backward area of the State of Andhra Pradesh or the State of
Telangana on or after the 1st day of April, 2015.
3. To remove
the discrimination in the matter of allowing additional depreciation under
section 32(1)(iia) on plant or machinery used for less than 180 days and used
for 180 days or more, it is proposed to provide that the balance 50% of the
additional depreciation on new plant or machinery acquired and used for less than
180 days which has not been allowed in the year of acquisition and installation
of such plant or machinery, shall be allowed in the immediately succeeding
previous year.
Definition of charitable purpose
1. The
definition for charitable purpose provided under section 2(15) is proposed to
be amended to include the activity of Yoga as a special category of activity to
be considered as charitable purpose on the lines of education.
2. The
definition is proposed to be further amended to provide that the advancement of
any other object of general public utility shall not be a charitable purpose,
if it involves the carrying on of any activity in the nature of trade, commerce
or business, or any activity of rendering any service in relation to any trade,
commerce or business, for a cess or fee or any other consideration,
irrespective of the nature of use or application, or retention, of the income
from such activity, unless,-
(i) such activity is undertaken in the course of
actual carrying out of such advancement of any other object of general public
utility; and
(ii) the aggregate receipts from such activity or
activities, during the previous year, do not exceed 20% of the total receipts,
of the trust or institution undertaking such activity or activities, for the
previous year .
Cost of acquisition in the hands of
resulting company
· There is no
express provision under the Income-tax Act, with regard to value to be
considered as cost of acquisition of a capital asset in the hands of resulting
company on transfer of capital assets acquired on demerger. Accordingly,
section 49 is proposed to be amended to provide that the cost of acquisition of
an asset acquired by resulting company shall be the cost for which the demerged
company acquired the capital asset as increased by the cost of improvement
incurred by the demerged company.
Direct Taxes Code
· Since the
jurisprudence under the Income-tax Act is well evolved and a large number of
provisions of the proposed DTC have already been included in the Income-tax
Act, 1961 and the remaining are proposed to be included through the Finance
Bill, 2015, the Government has expressed its resolve of not going ahead with
the DTC.
