Highlights of Union Budget 2015-16

TAX SLABS:

INCOME	TAX RATE
Up to Rs. 2.5 lacs	Nil
Above Rs.2.5 to 5 lacs	10%
Above Rs.5 lacs to 10 lacs	20%
Above Rs.10 lacs	30%
FOR SENIOR CITIZENS
Above 60 Years Up-to Rs. 3 lacs	Nil
Above 80 Years Up-to Rs 5 lacs  Above 80 Years above Rs. 5 lacs	Nil  20%

Key Highlights in Direct Tax:

• Corporate Tax has been reduced to 25% from 30% over the next 4 years.
• To curb black money the following was introduced:
• Evasion of Tax in relation to Foreign Assets to have a punishment of Rigorous imprisonment up to 10 years, be non-compoundable, have a penalty rate of 300% and the offender shall not be permitted to approach the Settlement Commission.
• Non filing of returns or filing the return with inadequate disclosures to have a punishment of Rigorous imprisonment up to 7 years.
• Undisclosed income from any Foreign Assets to be taxed at the Maximum Marginal Rate.
• Mandatory filing of return in respect of Foreign Assets.
• Concealment of income/Evasion of income in relation to a Foreign Asset to be made a predicate offence under PML Act, 2002.
• All entities, banks, financial institutions including all individuals are liable for prosecution and penalty.
• Benami Transactions (Prohibition) Bill is introduced.
• Acceptance or re-payment of an advance of Rs. 20,000 or more in the form of cash for purchase of immovable property to be prohibited.
• Furnishing of PAN is mandatory for purchase or sale above Rs. 1 lakh.
• Tax “Pass through” is to be allowed on both Category I and Category II alternative investment funds.
• Rationalization of Capital Gains regime for the sponsors exiting at the time of listing of the units of REITs and InvITs.
• GAAR (General Anti Avoidance Rule) to be deferred by 2 years and will apply to investments made on or after 01.04.2017.
• Additional Investment Allowance (15%) and additional depreciation (35%) to new manufacturing areas set up during the period from 01.04.2015 to 31.03.2020 in notified backward areas of Andhra Pradesh and Telengana.
• Rate of tax on Royalty and Fees for Technical Services reduced from 25% to 10% (Sec 115A).
• Balance of 50% of additional depreciation @ 20% for new plant and machinery installed and used for less than six months by a manufacturing unit or a unit engaged in generation and distribution of power is to be allowed immediately in the next year.
• NBFC’s whose net worth is more than 500 crores will be deemed to be financial institutions.
• Wealth tax has been abolished with the introduction of an additional surcharge of 2% on the super-rich whose taxable income is more than Rs. 1 Crore.
• Domestic transfer pricing threshold limit increased from Rs.5 Crore to Rs.20 Crore.
• MAT rationalized for FIIs and members of an AOP. 
• Donation made to National Fund for Control of Drug Abuse (NFCDA) to be eligible or 100% deduction u/s 80G of Income-tax Act.

For Individual Tax payers:

• Limit of deduction of health insurance premium increased from Rs.15,000 to Rs.25,000 for senior citizens limit increased from Rs.20,000 to Rs.30,000.
• Senior citizens above the age of 80 years, who are not covered by health insurance, to be allowed deduction of Rs.30000 towards medical expenditures.
• Deduction limit of Rs.60,000 with respect to specified disease of serious nature enhancedto Rs.80,000 in case of senior citizen.
• Transport Allowance has been increased to Rs.1,600 per month against the existing Rs.800 per month
• Additional deduction of Rs.25,000 allowed for differently abled persons.
• Limit on deduction on account of contribution to a Pension Fund and the new Pension Scheme increased from Rs.1 lakh to Rs.1.5 lakh.
• Additional deduction of Rs.50,000 for contribution to the new Pension Scheme u/s 80CCD.
• Tax free infrastructure bonds have been introduced towards Road and Rail Projects.

Key Highlights in Indirect Tax:

• Service Tax has been increased to 14% against the existing 12.36%.
• Swachh Bharat Cess at 2% on the value of taxable services, thus increasing the Service Tax to 16%
• GST to be implemented from 01.04.2016.
• Basic Custom duty on certain inputs, raw materials, inter mediates and components in 22 items, reduced to minimize the impact of duty inversion. 
•  Time limit for taking CENVAT credit on inputs and input services increased from 6months to 1 year.
• Service Tax exemption to pre-cold storage for fruits and vegetables.
  

Key Highlights in FEMA:

• Limits for remittances out of India  increased from $75000 to $250000 under Liberalized Remittance Scheme
• Fair valuation of shares at Arm’s length price can be done with any methodology in case of Unlisted Companies during the Issue of Shares to Nonresidents/transfer of shares between Residents and Non-Residents of India.
• Filing of Advance remittance form (Reporting FDI inflow to RBI) and FCGPR Form (Reporting Issue of Eligible Instruments to Overseas Investors) can be done online with RBI.
• NBFC can be registered for factoring if their financial assets in the factoring business are at least 50% of the total assets and the income derived is not less than 50% of the Gross Income.

Key Highlights in Banking Sector:

• KYC norms are simplified in such a way that a minor of the age below 10 years can open a Bank A/c through a legal/natural guardian whereas a minor of the age above 10 years can open and operate Bank accounts independently.

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   Disclaimer:

            This document was prepared on the basis of the Union Budget 2015 and referring the Budget Speech and Budget Highlights and does not form a whole document based on which financial decisions can be taken. Neither G K Management Services (India) Limited nor any of the persons associated to this document will be liable to testify before any statute or any authority for any misuse of this document.