“Kalangathu
Kanda Vinaikkan Thulangkathu
Thookkang
Kadinthu Seyal”
(What
clearly eye discerns as right, with steadfast will
And
mind unslumbering, that should man fulfil)
- Saint Tiruvalluvar
TAX PROPOSALS
Clarity in tax laws, a stable tax regime, a non-adversarial
tax administration, a fair mechanism for dispute resolution and independent
judiciary for greater assurance is underlying theme of tax proposals.
Tax
Administration Reforms Commission to be set up.
In short
term need to reclaim peak of 11.9 per cent of tax GDP ratio achieved in 2007-08.
DIRECT TAXES
Little
room to give away tax revenues or raise tax rates in a constrained economy.
No case to
revise either the slabs or the rates of Personal Income Tax. Even a moderate
increase in the threshold exemption will put hundreds of thousands of Tax
Payers outside Tax Net.
However, relief for Tax Payers in the first bracket of `2 lakhs to ` 5 lakhs. A tax credit of ` 2000 to every person with total income upto `5 lakhs.
Surcharge of 10 percent on persons (other than companies) whose taxable income
exceed ` 1 crore to augment revenues.
Increase surcharge from 5 to 10 percent on domestic companies
whose taxable income exceed ` 10 crore.
In case of foreign companies who pay a higher rate of
corporate tax, surcharge to increase from 2 to 5
percent, if the taxabale income exceeds `
10 crore.
In all other cases such as dividend distribution tax or tax
on distributed income, current surcharge increased from 5 to 10 percent.
Additional
surcharges to be in force for only one year.
Education
cess to continue at 3 percent.
Permissible premium rate increased from 10 percent to 15
percent of the sum assured by relaxing eligibility conditions of life insurance
policies for persons suffering from disability and certain ailments.
Contributions made to schemes of Central and State
Governments similar to Central Government Health Scheme, eligible for section
80D of the Income tax Act.
Donations
made to National Children Fund eligible for 100 percent deduction.
Investment allowance at the rate of 15 percent to
manufacturing companies that invest more than ` 100 crore in plant and machinery during the period 1.4.2013
to 31.3.2015.
‘Eligible date’ for projects in the power sector to avail
benefit under Section 80-IA extended from 31.3.2013 to 31.3.2014.
Concessional rate of tax of 15 percent on dividend received
by an Indian company from its foreign subsidiary proposed to continue for one
more year.
Securitisation Trust to be exempted from Income Tax. Tax to
be levied at specified rates only at the time of distribution of income for
companies, individual or HUF etc. No further tax on income received by
investors from the Trust.
Investor
Protection Fund of depositories exempt from Income-tax in some cases.
Parity in
taxation between IDF-Mutual Fund and IDF-NBFC.
A Category I AIF set up as Venture capital fund allowed
pass through status under Income-tax Act.
TDS at the rate of 1 percent on the value of the transfer
of immovable properties where consideration exceeds `
50 lakhs. Agricultural land to be exempted.
A final withholding tax at the rate of 20 percent on
profits distributed by unlisted companies to shareholders through buyback of
shares.
Proposal to increase the rate of tax on payments by way of
royalty and fees for technical services to non-residents from 10 percent to 25
percent.
Reductions made in rates of Securities Transaction Tax in respect
of certain transaction.
Proposal to introduce Commodity Transaction Tax (CTT) in a
limited way. Agricultural commodities will be exempted.
Modified
provisions of GAAR will come into effect from 1.4.2016.
Rules on Safe Harbour Safe Harbour
Fifth
large tax payer unit to open at Kolkata shortly.
A number of administrative measures such as extension of
refund banker system to refund more than ` 50,000, technology based processing, extension of e-payment
through more banks and expansion in the scope of annual information returns by
Income-tax Department.
Indirect Taxes
No change in the normal rates of 12 percent for excise duty
and service tax.
No change in the peak rate of basic customs duty of 10
perent for non-agricultural products.
Customs
Period of concession available for specified part of
electric and hybrid vehicles extended upto 31 March 2015 .
Duty on specified machinery for manufacture of leather and
leather goods including footwear reduced from 7.5 to 5 percent.
Duty on pre-forms precious and semi-precious stones reduced
from 10 to 2 percent.
Export duty on de-oiled rice bran oil cake withdrawn.
Duty of 10 percent on export of unprocessed ilmenite and 5
percent on export on ungraded ilmenite.
Concessions to air craft maintenaince, repair and overhaul
(MRO) industry.
Duty on Set Top Boxes increased from 5 to10 percent.
Duty on raw silk increased from 5 to 15 percent.
Duties on Steam Coal and Bituminous Coal equalised and 2
percent custom duty and 2 percent CVD levied on both kinds coal.
Duty on imported luxury goods such as high end motor
vehicles, motor cycles, yachts and similar vessels increased.
Duty free gold limit increased to `
50,000 in case of male passenger and `1,00,000
in case of a female passenger
subject to conditions.
Excise duty
Relief to readymade garment industry. In case of cotton,
zero excise duty at fibre stage also. In case of spun yarn made of man made
fibre, duty of 12 percent at the fibre stage.
Handmade carpets and textile floor coverings of coir and
jute totally exempted from excise duty.
To provide relief to ship building industry, ships and
vessels exempted from excise duty. No CVD on imported ships and vessels.
Specific excise duty on cigarettes increased by about 18
percent. Similar increase on cigars, cheroots and cigarillos.
Excise duty on SUVs increased from 27 to 30 percent. Not
applicable for SUVs registered as taxies.
Excise duty on marble increased from `30 per square meter to ` 60 per square meter.
Proposals to levy 4 percent excise duty on silver
manufactured from smelting zinc or lead.
Duty on mobile phones priced at more than `2000 raised to 6 percent.
MRP based assessment in respect of branded medicaments of
Ayurveda, Unani, Siddha, Homeopathy and bio-chemic systems of medicine to
reduce valuation disputes.
Service Tax
Maintain stability in tax regime.
Vocational courses offered by institutes affiliated to the
State Council of Vocational Training and testing activities in relation to
agricultural produce also included in the negative list for service tax.
Exemption of Service Tax on copyright on cinematography
limited to films exhibited in cinema halls.
Proposals to levy Service Tax on all air conditioned
restaurant.
For homes and flats with a carpet area of 2,000 sq.ft. or
more or of a value of `1
crore or more, which are high-end constructions, where the component of
services is greater, rate of abatement reduced from from 75 to 70 percent.
Out of nearly 17 lakh registered assesses under Service Tax
only 7 lakhs file returns regularly. Need to motivate them to file returns and
pay tax dues. A onetime scheme called ‘Voluntary Compliance Encouragement
Scheme’ proposed to be introduced. Defaulter may avail of the scheme on
condition that he files truthful declaration of Service Tax dues since 1st October 2007 .
Tax proposals on Direct Taxes side estimated to yield to `13,300 crore and on the Indirect Tax side `4,700 crore.
Good and Services Tax
A sum of ` 9,000 crore towards the
first instalment of the balance of CST compensation provided in the budget.
Work on draft GST Constitutional amendment bill and GST
law expected to be taken forward.
Insurance
A multi-pronged approach to increase the penetration of
insurance, both life and general, in the country.
Number of proposals finalised, in consultation with IRDA
such as empowering insurance companies to open branches in Tier-II cities and
below without prior approval of IRDA, KYC of banks to be sufficient to acquire
insurance policies, banks to be permitted to act as insurance brokers, banking
correspondent allowed to sell micro-insurance products and achieving the goal
of having an office of LIC and an office of at least one public sector general
insurance company in towns with population of 10,000 or more.
Rashtriya Swasthya Bima Yojana to be extended to other
categories such as rickshaw, auto-rickshaw and taxi drivers, sanitation
workers, rag pickers and mine workers.
A comprehensive social security package to be evolved for
unorganised sector by facilitating convergence among different schemes.
Three promises
Promises made to woman, youth and poor.
We stand
in solidarity with our girl children and women. And we pledge to do everything
possible to empower them and to keep them safe and secure. A fund - “Nirbhaya
Fund” - to be setup with Government contribution of ` 1,000 crore.
Youth to
be motivated to voluntarily join skill development programmes. National Skill
Development Corporation to set the curriculum and standards for training in
different skills. ` 1000 crore set apart for
this scheme.
To the
poor of India direct benefit transfer scheme will be rolled out throughout
the country during the term of the UPA Government with the motive “Äapka paisa
aapke haath”.
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