Key Features of Budget Employee specific Copyright JB ARSEN

Transcription

1 Key Features of Budget Employee specific 2015 Copyright JB ARSEN

2 2015 Copyright JB ARSEN A. Rates of Income-tax

3 Rates of Income-Tax Basic Rates The income tax rates remains unchanged for individuals. The rates of income-tax in the case of every individual during the financial year are as follows Total Income Upto INR 2,50,000 INR 2,50,001 to INR 5,00,000 INR 5,00,001 to INR 10,00,000 Above INR 10,00,000 Tax Rates Nil 10 percent 20 percent 30 percent 2015 Copyright JB ARSEN 2

4 Rates of Income-Tax Basic Rates The income-tax rates for every individual, being resident in India who is of the age of 60 years or more but less than 80 years at any time during the financial year Total Income Upto INR 3,00,000 INR 3,00,001 to INR 5,00,000 INR 5,00,001 to INR 10,00,000 Above INR 10,00,000 Tax Rates Nil 10 percent 20 percent 30 percent 2015 Copyright JB ARSEN 3

5 Rates of Income-Tax Basic Rates The income-tax rates for every individual,being resident in India who is of the age of 80 years or more at any time during the financial year Total Income Upto INR 5,00,000 INR 5,00,001 to INR 10,00,000 Above INR 10,00,000 Tax Rates Nil 20 percent 30 percent 2015 Copyright JB ARSEN 4

6 Rates of Income-Tax Surcharge Amount of income-tax shall be increased by a surcharge at the rate of 12 percent of such income-tax in case of individuals having a total income exceeding INR 1 Crore. Education Cess In the Financial year , Education cess on income-tax and Secondary and Higher Education cess on income-tax shall be continued to be levied at the rate of Two percent and One percent respectively Copyright JB ARSEN 5

7 2015 Copyright JB Arsen B. Benefits of Individual Taxpayers

8 Transport Allowance Increase in limit of Transport Allowance Under the current provisions of the Act, Transport Allowance granted to an employee to meet his expenditure for the purpose of commuting between the place of residence & duty is exempt upto INR 800 per month. Amendment The transport allowance exemption is being increased to INR 1,600 per month from INR 800 per month Copyright JB ARSEN 7

9 Chapter VI-A deductions Tax benefits under section 80C for the girl child under the Sukanya Samriddhi Account Scheme A special small savings instrument for the welfare of the girl child had been introduced under the Sukanya Samriddhi Account Rules, 2014 pursuant to the Budget announcement in July The following tax benefits have been envisaged in the Sukanya Samriddhi Account Scheme: i. The investments made in the Scheme in the name of any girl child of the individual or in the name of any girl child for whom such individual is the legal guardian will be eligible for deduction under section 80C; of the Act; ii. The interest accruing on deposits in such account will be exempt from tax; iii. The withdrawal from the said scheme in accordance with the rules of the said scheme will be exempt from tax. This amendment will take effect retrospectively from 01 April 2015 and will apply in relation to the AY and subsequent AYs 2015 Copyright JB ARSEN 8

10 Chapter VI-A deductions Raising the limit of deduction under section 80CCC - Under the existing provisions of section 80CCC(1) of the Act, an assessee, being an individual is allowed a deduction upto Rs 100,000 in the computation of his total income, of an amount paid or deposited by him to effect or keep in force a contract for any annuity plan of Life Insurance Corporation of India or any other insurer for receiving pension from a fund set up under a pension scheme. Amendment (This amendment will take effect from 01 April 2016) In order to promote social security, section 80CCC(1) has been amended so as to raise the limit of deduction under the section from Rs100,000 to Rs 150,000, within the overall limit provided in section 80CCE Copyright JB ARSEN 9

11 Chapter VI-A deductions Additional deduction under section 80CCD Under the current provisions of section 80CCD of the Act, if an individual, employed by the Central Government or an individual employed by any other employer, or any other assessee being an individual has paid or deposited any amount in the financial year in his account under National Pension System, a deduction of the following amount shall be allowed not exceeding: i. In case of any employee - 10 per cent of his salary in the financial year; and ii. In any other case - 10 per cent of his gross total income in the financial year. Similarly, contribution made by the Central Government or any other employer to the National Pension System of the individual under the pension scheme is also allowed as deduction under section 80CCD, to the extent it does not exceed 10 per cent. of the salary of the individual in the previous year. The current amount of deduction under section 80CCD is INR 100,000 Amendment (This amendment will apply in relation to the AY and subsequent AYs) Limit on deduction on account of contribution to a pension fund has been increased from INR 100,000 to INR 150, Copyright JB ARSEN 10

12 Chapter VI-A Deductions Amendment in section 80D relating to deduction in respect of health insurance premia Existing provisions of Section 80D provides for deduction of: i. Upto INR 15,000 to an individual, in respect of health insurance premium, paid by any mode, other than cash, towards health insurance of the individual himself or his family or any payment made on account of preventive health check up of the assessee or his family; and ii. An additional deduction of INR 15,000 is provided to the assessee to keep in effect insurance on the health of the parent(s) of the assessee (INR 20,000 if the person insured is a senior citizen aged 60 years or above). The section also presently provides for a deduction of INR 20,000 in both the cases if the person insured is a senior citizen of sixty years of age or above. Amendment (This amendment will take effect from 01 April 2016) The quantum of deduction under section 80D to individuals and HUF in respect of premium paid for health insurance has been raised from INR 15,000 to INR 25,000. The limit of deduction for senior citizens has been raised from INR 20,000 to INR 30, Copyright JB ARSEN 11

13 Chapter VI-A Deductions Amendment in section 80D relating to deduction in respect of health insurance premia Very Senior citizens above the age of 80 years, who are not covered by health insurance, to be allowed deduction of INR 30,000 towards medical expenditures Copyright JB ARSEN 12

14 Chapter VI-A Deductions Deduction in respect of medical insurance under section 80DD The existing provisions under section 80DD provides for a deduction to an individual of INR 50,000 if the dependant is suffering from a disability and INR 100,000 if dependant suffers from a severe disability, who has incurred i. Expenditure for the medical treatment (including nursing), training and rehabilitation of a dependant, being a person with disability as defined under the said section; or ii. paid any amount to LIC or any other insurer in respect of a scheme for the maintenance of a disabled dependant. Amendment (These amendments will take effect from 01 April 2016) It is proposed to amend said section so as to raise the limit of deduction in respect of a dependant with disability to INR 75,000 and that of dependant with severe disability to INR 125, Copyright JB ARSEN 13

15 Chapter VI-A Deductions Deduction in respect of medical treatment under section 80DDB The existing provisions under section 80DDB provides for a deduction of INR 40,000 in case of individual himself or his dependant relative or a member of HUF in respect of payment for medical treatment of certain of certain chronic and protracted diseases such as Cancer, full blown AIDS, Thalassaemia, Haemophilia etc. The deduction was INR 60,000 in case of senior citizens. Amendment (These amendments will take effect from 01 April 2016) It is proposed to amend said section so as that no deduction shall be allowed unless assessee obtains a prescription from a specialist doctor of such medical treatment. The deduction in respect of assesee, his dependant or member of HUF, who is a very senior citizen has been raised to INR 80,000. Very senior citizen for this purpose is an individual resident in India of the age of 80 years or more Copyright JB ARSEN 14

16 Chapter VI-A Deductions Deduction in respect of donations to certain funds, charitable institution under section 80G The existing provisions under section 80G provides for a 100 percent deduction for donations made to certain funds and institutions of national importance like Prime Ministers National Relief Fund, National Foundation for Communal Harmony etc. Amendment (These amendments will take effect retrospectively from 01 April 2015) Section 80G has also been amended to provide that donations made by any donor to the Swachh Bharat Kosh and donations made by domestic donors to Clean Ganga Fund will be eligible for a deduction of 100 percent from the total income. Further 100 percent deduction shall be provided for donations made to National Fund for Control of Drug Abuse. (This amendment will take effect from 01 April 2016.) 2015 Copyright JB ARSEN 15

17 Chapter VI-A Deductions Deduction in respect of a person with disability under section 80U The existing provisions under section 80U provides for deduction to an individual resident certified by medical authority to be a person with disability a sum of INR 50,000 if he is suffering from a disability and INR 100,000 if he is suffering from a severe disability. Amendment (These amendments will take effect from 01 April 2016) It is proposed to amend said section so as to raise the deduction in case of person with disability to INR 75,000 and that of person with severe disability to INR 125, Copyright JB ARSEN 16

18 Contribution to EPF Employees Provident Fund Optional Government to bring enabling legislation to allow employee to opt for EPF or New Pension Scheme. For employee s below a certain threshold of monthly income, contribution to EPF to be optional, without affecting employees contribution Copyright JB ARSEN 17

19 Relaxing the Requirement to Obtain TAN for Certain Deductors Amendment to Section 203A Under the provisions of section 203A of the Act, every person deducting tax (deductor) or collecting tax (collector) is required to obtain Tax Deduction and Collection Account Number (TAN) and quote the same for reporting of tax deduction / collection to the Income-tax Department However, currently any person who is required to deduct tax at source from payment exceeding INR 5,000,000 for acquisition of immovable property (other than agricultural land) from a resident transferor under section 194-IA of the Act, is not required to obtain and quote TAN and he is allowed to report the tax deducted by quoting his Permanent Account Number Amendment (This amendment will take effect from 01 June 2015) To reduce the compliance burden types of deductors under section 194-IA and one time transaction such as single transaction of acquisition of immovable property from non-resident by an individual or HUF on which tax is deductible under section 195 of the Act, it is proposed to amend the provisions of section 203A of the Act so as to provide that the requirement of obtaining and quoting of TAN under section 203A of the Act shall not apply to the notified deductors or collectors 2015 Copyright JB ARSEN 18

20 Taxes Deducted at Source Amendment to provisions of section 192 relating to salaries Under the existing provisions contained in sub-section (1) of the aforesaid section, any person responsible for paying any income chargeable under the head Salaries shall, at the time of payment, deduct income-tax on the amount payable at the average rate of income-tax computed on the basis of the rates in force for the financial year in which the payment is made on the estimated income of the assessee under the head Salaries for that financial year. Amendment: (The amendment will take effect from 01 June 2015) The employer shall be required to obtain from the employee evidence of the prescribed claims (including claim of set off loss) under the Act in the form and manner prescribed. Nature of claims, form and manner of collection of evidence to be prescribed 2015 Copyright JB ARSEN 19

21 Taxes Deducted at Source Amendment to provisions of section 192A relating to salaries New Section 192A (The amendment will take effect from 01 June 2015) A new provision of the Act has been inserted for deduction of tax at the rate of 10 percent on premature taxable withdrawal from Employees Provident Fund Scheme, 1952 ("EPFS"). Such provision casts an obligation on the trustee of the EPFS to deduct tax at source. To reduce the compliance burden of employees having taxable income below the taxable limit, it is proposed to provide a threshold limit of payment of INR 30,000 for such provision to apply. In case of employees paying tax at higher slab rates (20 percent or 30 perecent), the shortfall in the actual tax liability vis-à-vis TDS will be required to be paid by the employee through advance tax / self assessment tax. In case of non-furnishing of PAN by employees to the trustee of the EPFS, tax would be deductible at the maximum marginal rate Copyright JB ARSEN 20

22 Taxes Deducted at Source TDS on time and recurring deposits Amendment: (The amendment will take effect from 01 June2015) Following changes have been proposed in Section 194A of the Act, which relate to deduction of tax on interest (other than interest on securities). i. Co-operative banks to withhold tax on payment of interest (over the specified threshold of INR 10,000) on time deposits to its members ii. A banking company or a co-operative bank to withhold tax on payment of interest (over specified threshold of INR 10,000) on recurring deposits 2015 Copyright JB ARSEN 21

23 Taxes Deducted at Source Amendment to provisions of Section 197A- No deductions The existing provision provides exemption from tax deduction for interest other than interest on securities (section 194A) as well as interest on securities (section193), provided the person to whom the payment is made submits in writing the Form 15G / 15H, in duplicate, stating that his total income including the income under the above sections does not exceed the basic exemption limit. Amendment: (The amendment will take effect from 01 June 2015) This section has been amended to include the incomes mentioned under section 192A (income from EPF scheme paid to employee) as well as income under section 194DA (bonus paid on Insurance claims) Copyright JB ARSEN 22

24 Thank You JB ARSEN Tax Corporate Law 2015 Copyright JB ARSEN