BUDGET 2014 – TAX PROPOSALS (Applicable for the Financial year 2014-15)
RATES OF TAXES
For Individuals (Below 60 years of age) & HUF
Income Rate of Tax
Upto Rs. 2,50,000 Nil
Rs. 2,50,001 to Rs. 5,00,000 10%
Rs. 5,00,001 to Rs. 10,00,000 20%
Above Rs. 10,00,000 30%
For Resident Individuals (above 60 years of age and less than 80 years of age)
Income Rate of Tax
Upto Rs. 3,00,000 Nil
Rs. 3,00,001 to Rs. 5,00,000 10%
Rs. 5,00,001 to Rs. 10,00,000 20%
Above Rs. 10,00,000 30%
For Resident Individuals (above 80 years of age)
Income Rate of Tax
Upto Rs. 5,00,000 Nil
Rs. 5,00,001 to Rs. 10,00,000 20%
Above Rs. 10,00,000 30%
Surcharge :- If the Income exceeds Rs. 1 Crore, surcharge @ 10% shall be applicable
Educational Cess @ 2% and Secondary Higher Education Cess @ 1% shall continue to be levied.
For Firms
The rate of tax on firms shall continue to be @ 30%.
If the Income exceeds Rs. 1 Crore, a surcharge @ 10% shall be applicable
For Companies
The rate of tax on domestic Companies shall continue to be @ 30%.
If the Income exceeds Rs. 1 Crore but does not exceed Rs. 10 Crores, a surcharge @ 5% shall be applicable.
If the Income exceeds Rs. 10 Crores, a surcharge @ 10% shall be applicable.
OTHER IMPORTANT INCOME-TAX PROPOSALS
ü Method of calculation of Dividend Distribution tax has been changed. As per the amended provisions, the Dividend amount shall be grossed up and the Dividend Tax shall be payable on the Gross Amount. The provision is illustrated below :-
Dividend Amount Distributed :- Rs. 85
Increase the same by Rs. 15 [i.e, (85*.15) / (1-0.15) ]
Increased amount Rs. 100
Dividend Distribution Tax Payable @ 15% of Rs. 100 = Rs. 15
This will be applicable from 1st October 2014
ü Under the existing provisions, short term capital asset means a Capital asset held by an assessee for not more than 36 months immediately preceding the date of its transfer. However in case of a share held a company or other security listed in a recognized stock exchange in India or a Unit of Unit trust of India or a unit of a Mutual fund, the period of holding for qualifying as Short Term capital asset is not more than 12 months.
This clause has been proposed to be amended so as to provide that an unlisted security and unit of a mutual fund (other than equity oriented mutual fund) shall be a short term capital asset if it is held for not more than 36 months.
This will be applicable from 1st April 2015 (A.Y.2015-16)
ü Under the existing provisions, tax payable on long-term capital gains arising on transfer of a capital asset, being listed securities or unit or zero coupon bonds , without indexation benefits , shall be @ 10%. This provision has been now amended to allow the concessional rate of tax @ 10% only to listed securities (other than unit) and zero coupon bonds.
ü Under the existing provisions, In order to encourage the companies engaged in the business of manufacture or production of an article or thing to invest in acquisition and installation of new plant and machinery, where an assessee being a company, invests a sum of Rs. 100 crore in new plant & machinery (during the period 1st April 2013 to 31st March 2015), then the assessee shall be allowed a deduction @ 15% of cost of new assets (Section 32AC).
In order to encourage growth of manufacturing sector, it has been proposed to extend this benefit to companies till 31st of Marcy 2017. Further the threshold limit has been revised to Rs. 25 Crores.
ü The Deduction limit under Section 80 C has been enhanced from Rs. 1 Lakhs to Rs. 1.5 Lakhs, in order to encourage the house hold savings.
ü The deduction in respect of Interest on Housing Loan on Self occupied property has been increased from Rs. 1.50 Lakhs to Rs. 2 Lakhs.
ü In case an assessee receives any sum of money, as an advance or otherwise in the course of negotiations for transfer of a capital asset, if such sum is forfeited and negotiations do not result in transfer of such capital asset, It has been proposed to tax such sum of money as “Income from other sources”.
ü Where a Charitable Trust / Institution has been granted registration for purposes of availing exemption under section 11, then such trust/institution cannot claim exemption under any provision of section 10. Similarly, entities which have been approved or notified for claiming benefit of exemption under section 10(23C) would not be entitled to claim any benefit under other provisions of Section 10.
Further a new provision has been included to provide that for the purpose of arriving at the Income under Section 11 and Section 10 (23C), deduction or allowance by way of depreciation or otherwise , in respect of any asset, shall not be allowed.
ü Under the existing provisions of the Income-tax act, where an assessee fails to deduct tax at source (TDS) on specified payments during the previous year, the entire amount of expenditure/Payment shall be disallowed. In order to reduce the hardship, it has been proposed that in case of non-deduction or non-payment of TDS on payments made to residents, the disallowance shall be restricted to 30% of the amount of expenditure claimed.
ü A significant change in Presumtive taxation of assessees engaged in the business of plying, hiring or leasing goods carriages and not owning more than 10 goods carriages has been introduced. It has been proposed to provide a uniform amount of presumptive income of Rs. 7500/- every month for all types of goods carriages, with out any distinction between Heavy Goods Vehicles and Vehicles other than Heavy Goods vehicles.
ü A new proposal has been introduced to provide that eligible transaction in respect of trading in commodity derivatives carried out in a recognized association and chargeable to commodities transaction tax , shall not be considered as Speculative Transactions.
ü Under the existing provisions, as per Section 54 EC of the Income-tax Act, 1961 , where an assessee invests the capital gains in long-term specified asset, the proportionate capital gains shall be exempt from tax. There was also a restriction on the amount that can be invested during the financial year. (Rs. 50,00,000). There were instances where the asset was sold after September in a year, the assessee purchased Rs. 50 Lakhs before the end of the financial year (March) and subsequently, another 50 Lakhs was purchased in the next financial year and there by the assessee was able to claim a deduction or Rs. 1 crore from the capital gains.
In order to avoid the same, it has been proposed to amend the provisions of Section 54 EC , that the Investment in 54EC assets during the financial year and subsequent financial year shall not exceed Rs. 50 Lakhs.
