Bombay Chartered Accountants Society Lecture Meeting on Filing of Income Tax Returns Assessment Year Relevant amendments

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1 Bombay Chartered Accountants Society Lecture Meeting on Filing of Income Tax Returns Assessment Year Relevant amendments By Chetan Shah

2 Tax Rates Threshold Limit Particulars (i) Individuals & Hindu Undivided Families (HUF s) (ii) For Women resident in India & below 65 years of age (iii) For Senior Citizens (individual having age of 65 years and above) Income Upto Rs.1,60,000 Rs.1,60,001 -Rs.3,00,000 Rs.3,00,001 - Rs.5,00,000 Above Rs. 5,00,000 Income Upto Rs.1,90,000 Rs.1,90,001 -Rs.3,00,000 Rs.3,00,001 - Rs.5,00,000 Above Rs. 5,00,000 Income Upto Rs.2,40,000 Rs.2,40,001 -Rs.3,00,000 Rs.3,00,001 - Rs.5,00,000 Above Rs. 5,00,000 New Rates Rate of Tax Nil 10% 20% % Rate of Tax Nil 10% 20% % Rate of Tax Nil 10% 20% % (iv) For Firms Income as per Income Tax Act 30% 2

3 (v) For Companies If Net Income exceeds Rs.1 crore 10% If Net Income is less than Rs.1 crore No Surcharge Rate of tax is 30% (v) For Foreign Companies If Net Income exceeds Rs.1 crore 2.5% If Net Income is less than Rs.1 crore No Surcharge Rate of tax is 40% Note: No SURCHARGE is applicable for Individuals, HUFs & Firms. Education cess and Higher education cess remains same as before.

4 Definition of Charitable purpose The definition of charitable purpose is amended to exclude certain business related activities from advancement of any other object of general public utility. However, in the Finance Act, 2010 a retrospective amendment is made to the effect: That if the aggregate value of the receipts from such activities is not more than Rs. 10,00,000/- during the year, such purpose would still be charitable. 4

5 Extension of time limits u/s 10A and 10B Extension of Tax Holiday to Units in Free Trade Zones & Export Oriented Undertakings Extended from Assessment Year to

6 Section 10AA - Formula for calculation of exempted profit of a SEZ Unit Profit of the Unit in SEZ * Export Turnover of Unit in SEZ / Total Turnover of business carried on by the Undertaking (Unit) Carried on by the assessee is replaced by undertaking (unit)

7 Sec 35(2AB) Weighted deduction on In- House Research and Development Facility This provision is now applicable to all businesses engaged in manufacture or production of articles or things, except those specified in the Eleventh Schedule instead of certain specified businesses only.

8 40A(3) Disallowance for Payment > Rs. 35,000 Payments made to transporters otherwise than by account payee cheque or Bank draft if payment or aggregate payments made during a day exceeds Rs. 35,000. This change is effective from

9 Sec 40(b)(v) Remuneration to Partners In case of partnership firms it shall be the aggregate of the following viz: Upto first Rs. 3,00,000/- of Book Profit or in case of a loss.-- higher of Rs. 1,50,000 or 90% of Book Profit will be allowed as amount of deduction. On the balance of the Book Profit, 60% of Book Profit will be allowed as deduction. Note: The above limits are also applicable to Limited Liability Partnership.

10 Deduction u/s. 40(a)(ia) PRESENT POSITION Expenditure allowable if TDS is paid before March 31 in cases where tax is deductible during the months April to February Where tax is deductible during the month of March then due date of filing return AMENDED POSITION Relevant expenditure is allowable if TDS is paid before the due date of filing of return of income irrespective of the month in which the tax has been deducted / deductible.

11 Higher Rate of TDS u/s. 206AA Every deductee to furnish PAN In case of failure tax to be deducted at the applicable rate or the rate of tax in force or 20%, whichever is the highest. Declarations in Form 15G / 15H will be in valid if no PAN of the deductee quoted. Implication in disallowance u/s. 40(a)?

12 Amendment to Section 50C The word assessable inserted w.e.f in section 50C for taxing those transactions which are not registered with Stamp Duty Authority.

13 Taxation of Gift received in Kind i.e. without consideration as Income From Other Sources Section 56(vi)(vii) In case of Gifts received by individual / HUF in kind without consideration (immovable or movable property) value of which exceeds Rs. 50,000/- from non relative or on instances other than the occasion of marriage or under a will. Gifts received for a consideration which is less than the aggregate fair market value of the movable property exceeding Rs. 50,000/- Taxation Effect Stamp Duty value in case of immovable property & fair market value in case of movable property shall be taxed as income of the recipient. Aggregate fair market value of movable property in excess of the consideration

14 Amendments in Section 80A Providing for restrictions about more than one deductions and the extent of allowance thereof. W.e.f A.Y Non-allowance of deduction in case of failure to make claim in the return of income. W.e.f. A.Y Providing for arms length price in respect of goods and services exchanged between two units of an assessee, of which one is eligible for Chapter VI-A deductions.

15 Expenditure incurred in respect of individual and dependent who is suffering from Severe Disability. Deduction available in respect of Sec 80 DD and 80U ie: Expenditure incurred in respect of maintenance, including medical treatment of a dependent and for the individual himself with SEVERE DISABILITY has been amended from Rs.75,000/- to Rs.1,00,000/-.

16 Deduction under Sec 80CCD Contribution to Notified Pension Schemes Deduction available to all assessee. This will be effective from 1 st April, The limit of 10% of salary on contribution to the scheme continues only for salaried employees and is inconsistent for other individuals.

17 Deduction under Sec 80E (Interest on Educational Loan). Deduction in respect of INTEREST ON LOAN taken for pursuing ANY COURSE OF STUDY, pursued after passing SSC or it s equivalent from any Govt. recognized school, board or university instead of pursuing full time studies for any graduate / post graduate course in SPECIFIED fields of study in the previous year.

18 Deduction under Sec 80GGB AND 80GGC Contributions received by an electoral trust would be treated as its income, but voluntary contributions received would be exempt from tax if electoral trust distributes 95% of donation received by it during the year to registered political party along with surplus, brought forward from the earlier years. Donations to such electoral trusts would qualify for 100% deduction u/s 80GGB and 80GGC for all assessees.

19 Minimum Alternate Tax (Sec 115JB) Enhancement in MINIMUM ALTERNATE TAX (MAT) for COMPANIES from 10% to 15% Carry Forward of MAT Credit is amended from 7 years to 10 years.

20 Limited Liability Partnership (LLP) Limited Liability Partnership Act; 2008 has come into effect in It is proposed to incorporate the taxation of LLP similar to the general partnership firm, i.e. taxable in the hands of the firm and exempt in the hands of the partners. LLP Act provides for nomination of Designated Partners who will be signing the income tax returns of LLP. However, if there is no Designated Partners then any partner can sign the return.

21 Increase in Threshold Limit for Advance Tax Presently, an assessee is liable to pay advance tax in case his tax liability (net of TDS/TCS) during the year exceeds Rs. 5,000. This limit has been enhanced to Rs. 10,000.

22 Relief in Dividend distribution tax Relief provided if dividend distributed to New Pension Scheme Trust u/s 115O There is no provision for passing on such saving in DDT by the company to NPS Trust. 22

23 Fringe Benefit Tax FBT (Fringe Benefit Tax) has been ABOLISHED w.e.f The taxation of fringe benefits as perquisites in the hands of employees shall continue to be charged. 1 st installment of FBT paid in F.Y will be treated as advance tax and can be adjusted accordingly. 23

24 Increase in Threshold limit for Wealth Tax The limit of Rs. 15,00,000/- has been enhanced to Rs. 30,00,000/-.

25 THANK YOU!! 25

Key Features of Budget 2015-2016 Employee specific. 2015 Copyright JB ARSEN

Key Features of Budget 2015-2016 Employee specific 2015 Copyright JB ARSEN 2015 Copyright JB ARSEN A. Rates of Income-tax Rates of Income-Tax Basic Rates The income tax rates remains unchanged for individuals.