Union Budget A Synopsis. Sangramjit Sarangi, CFO

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1 Union Budget A Synopsis Sangramjit Sarangi, CFO

2 DIRECT TAX PROPOSALS

3 Direct Tax Proposals No change in basic corporate income tax rate in respect of Life Insurance companies The rate of surcharge has been increased from 10% to 12% Effective income tax rate increased from 14.16% to 14.42% Effective DDT* rate increased from 20% to 20.36% Deduction for contribution under Pension/Annuity policies u/s 80CCC increased from Rs.1 lac to Rs.1.5 lacs However, cumulative deduction allowed u/s 80C and 80CCC remains at Rs.1.5 lacs Will boost sale of Pension/Annuity policies by Life Insurance Companies (Amendments are effective from April 01, 2015) * DDT Dividend Distribution Tax

4 Direct Tax Proposals Form 15G/H allowed u/s 197A against TDS on insurance payouts u/s Section 194DA Benefit to resident policyholders with lower income/senior citizens as TDS shall not be applicable New section 192A introduced stating that shall be applied in case of premature taxable withdrawal from a RPF*of Rs. 30,000 or more In case where no valid PAN is furnished TDS shall be applicable at Maximum Marginal Rate (i.e. at 30%) Changes to be made in the PF withdrawal process (Amendments are effective from June 01, 2015) * RPF Recognised Provident Fund

5 Direct Tax Proposals Deduction towards health insurance premium and preventive health check-up has been enhanced by Rs. 10,000 as under: - Rs.25,000 for individuals, spouse and dependent children - Rs.30,000# for senior citizens, including payment for parents # includes medical expenditure for senior citizens (80 yrs & above), if no payment has been made towards any existing health policy for such individuals Deduction available to a person/dependant with disability has been enhanced from Rs. 50,000 to Rs. 75,000 In case of a person/dependant with severe disability, the limit has been increased from Rs. 1 lac to Rs lacs (Amendments are effective from April 01, 2015)

6 Direct Tax Proposals Domestic Transfer pricing threshold increased from Rs 5 crores to Rs. 20 crores (for aggregate value of transactions) No impact to SBI Life as aggregate value of such transactions are above Rs. 20 crores Additional deduction upto Rs. 50,000 will be available on the employee s contribution under the New Pension Fund (NPS). This is in addition is to the deduction available upto 10% of salary within an overall limit of Rs. 1.5 lacs For salaried individual, exemption on account of transport allowance increased from Rs. 800 to Rs (Amendments are effective from April 01, 2015)

7 Direct Tax Proposals It is proposed u/s 195 that any person responsible for making payment to a non-resident (NRI) is required to provide information about such payment to the Revenue authorities, even if such payment is not chargeable to tax in India To determine TDS on salary, it is proposed u/s 192 that the employer shall obtain from the employees evidence/documentary proof in such form and manner as may be prescribed by the CBDT while allowing certain deductions/exemptions/set-off of certain losses For example, house rent allowance, interest payment for claiming loss from self-occupied house property, etc. (Amendments are effective from June 01, 2015)

8 INDIRECT TAX PROPOSALS

9 Indirect Tax Proposals Service Tax rate increased from 12.36% to 14% # Service tax rates for Composite products increased from: - 3% for first year premium to 3.5% # - 1.5% for renewal premium to 1.75% # Additional Swachh Barat introduced on any or all notified taxable services# Effective from the date to be notified by the Central Govt after the enactment of Finance Bill, 2015 #Effective rate of service tax will be 16% / 5.5% / 3.75%, as applicable, if Swachh Bharat Cess is applied on Life Insurance services Premium and ULIP charges will increase in the hands of PH s

10 Indirect Tax Proposals Full Reverse charge mechanism introduced in respect of services provided by a Mutual Fund agent or distributor, to a mutual fund or asset management company This will create a level playing field between MF and Life Insurance agents Manpower supply services and security services brought under full reverse charge mechanism as against the partial reverse charge mechanism Service Tax payment process will change for these services (Amendments are effective from April 01, 2015) Life Insurance services provided by way of Varishth Pension Bima Yogna is being added under the negative list

11 Indirect Tax Proposals CENVAT credit of service tax paid under a partial reverse charge can be taken on payment of service tax even where the value is not paid (Effective from April 01, 2015) CENVAT credit availment limit increased for 6 months to 1 year The manner of determining utilisation of CENVAT credit has been introduced: - First from opening balance - Then from admissible credit used during the month - Lastly from inadmissible credit used during the month (Effective from March 01, 2015)

12 OTHER KEY PROPOSALS

13 Other Key Proposals Goods & Service Tax (GST) to be introduced from April 01, 2016 Boost for the economy as a whole. However, the GST rate will be significantly higher than the current service tax PM Suraksha Bima to provide accidental death cover of Rs.2 lacs for a premium of Rs.12 per year PM Jeevan Jyoti Bima to provide both natural and accidental death cover of Rs. 2 lacs at a premium of Rs.330 per year Atal Pension Yojana to be launched to provide a defined pension wherein the government will contribute 50% of the premium Contribution to Clean Ganga and Swachh Bharat Fund (other than CSR contributions by companies) and National Fund for Control of Drug Abuse eligible for 100% deduction under section 80G

14 Other Key Proposals Tax pass through status allowed for all classes of category I and II Alternate Investment Fund (AIF s) Wealth tax has been abolished Additional 2% surcharge on taxable income of Rs 1 crore & above Corporate tax to be reduced from 30% to 25% over next four years Contribution to EPF would be made optional. The employees can contribute towards NPS FPI and FDI clubbed to provide composite caps in respect of foreign investments PAN being made mandatory for any purchase or sale transaction exceeding Rs. 1 lakh FPI Foreign Portfolio Investments FDI Foreign Direct Investments EPF - Employee Provident Fund NPS - New Pension Scheme

15 Thank you

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.