Budget 2014: Preliminary Highlights

[CA MANJUNATH R S]

Budget 2014: Preliminary Highlights

• Advance Ruling facility extended to resident indirect taxpayers; Scope of Settlement Commission expanded
• To reduce transaction cost 24X7 cargo clearance facility extended to more airports
• ST exemption granted to micro insurance providers
• Cenvat Credit Rules, 2004 to be amended to allow credit to sectors like tour operators
• Excise duty hiked on cigarette and tobacco
• Service tax levied on online and mobile advertising
• Customs duty reduced on diamond and precious stones
• 2% duty regime proposed for sports goods
• Central Excise Duty reduced to 6% on SMEs engaged in footwear industry
• Export duty on bauxite hiked to 20%
• Customs duty reduced to 2% on ship-scrapping iron imports
• Import duty rationalised for all types of coal
• 4% SAD exemption granted to wind generators
• 4% SAD exemption granted to certain telecom parts used in Computers + Import duty sops granted to TV manufacturers + Inputs for solar industry exempted from BCD
• Govt to lose Rs 22000 Cr because of income tax concessions
• Govt to review DTC provisions before tabling same in House
• Income of FIIs in securities to be treated as capital gains
• Transfer Pricing Reforms: APA Scheme to have ROADMAP provisions for future transactions; Arithmetic mean benefits to be made available; Multiple year data to be taken for selecting comparables
• Concessional tax regime extended to all types of bonds
• 10-Yr Tax Holiday for Power generators and distributors granted
• Manufacturing Sector: Investment allowance @ 15% allowed for investment in capital assets - threshold reduced from Rs 100 Cr to Rs 25 Crore
• Sec 80C limit hiked to Rs 1.5 lakh
• No change in surcharge for either Corporate or individual taxpayers
• Personal Income tax: Exemption limit hiked to Rs 2.5 lakh; Rs 3 lakh for Sr Citizens
• Tax targets set by P Chidambaram retained by Jaitley
• Rs 500 Cr allocated to rehabilitate displaced Kashmiri Pandits
• Govt to set up Sports Univ in Manipur; Rs 100 Cr earmarked
• National Sports Academy to be set up to promote sports
• Rs 100 allocated for study on interlinking rivers
• AAR scope proposed to be expanded.
• Resident taxpayers allowed to approach AAR with some threshold,  more AAR benches proposed 
• Scope of settlement commission is proposed to be expanded 
• Personal income tax basic exemption limit proposed to be raised to Rs. 2.5 lacs from 2 lacs for general category of individuals
• New branch of NACEN to be set up in Seemandhra
• Bio-tech parks to be set up in Faridabad + Bangalore
• Rs 3000 Cr allocated for modernisation of Police forces
• PPF Scheme: Limit to be hiked from Rs 1 lakh to Rs 1.5 lakh per annum
• Special small savings scheme for girl child to be introduced
• Rs 500 Cr earmarked for developing solar projects
• Rs 500 Cr earmarked for developing solar projects
• New Accounting Standards to be made mandatory from 2017
• 5% Witholding tax benefits for corporate bonds to be extended up to 2017
• 16 New Ports to be set up
• Rs 37800 Cr allocated for National Highways + State Highways; Rs 3000 Cr earmarked for N-E
• Six more textile clusters to be set up; Rs 200 Cr allocated
• Bankruptcy framework to be put in place for SMEs
• Rs 10,000 Cr allocated for venture capital fund to finance start-up Companies
• Govt to revive SEZ by giving more sops
• National Industrial Corridor Hqs to be set up in Pune to coordinate industrial corridor activities; Rs 100 Cr allocated
• Rs 4000 Cr allocated to housing banks for building affordable houses
• Rs 100 Cr earmarked for metro projects in Lucknow + Ahmedabad
• Rs 100 Cr allocated for developing good governance programmes
• 12 more Medical Colleges to be set up; FM promises AIIMS in every State
• Rs 100 Cr earmarked for setting up virtual classes; 5 more IITs + IIMs to be set up for Rs 500 Cr
• Rs 7060 Cr earmarked to develop SMART Cities
• FDI to be allowed in many sectors without prior approval
• FM puts emphasis on hiking TAX: GDP Ratio
• FDI to be allowed in select sectors - Limit hiked to 49% in defence; FDI
• FDI to be allowed in select sectors - Limit hiked to 49% in defence + insurance
• Advance Ruling facility extended to resident taxpayers + Settlement Commission role to be expanded
• Government will not ordinarily bring any retrospective amendments 
• All cases of indirect transfers arising out of retrospective amendments to be scrutinized by a high level committee of CBDT , before initiating any action
• For senior citizens basic exemption limit proposed to be raised to Rs. 3 lacs from 2.5 lacs
• FM proposed no change in surcharge and cess & no change in corporate tax rate
• Sec 80 C deduction limit proposed to be increased to Rs. 1.5 lacs from 1 lac
• Interest on housing loan – deduction proposed to be increased from Rs. 1.5 lacs to Rs. 2 lacs in case of self- occupied property
• FM proposes additional investment allowance at 15% to manufacturing companies that invests Rs. 25 cr in any year for next 3 years
• FM extends 10 year tax holiday for power sector for units starting generation/transmission etc by March 2017
• Income arising out of portfolio investment scheme of foreign funds proposed to be characterized as capital gains
• Use of multiple year data proposed to be allowed for transfer pricing benchmarking
• Sec. 40(a) disallowance proposed to be reduced to 30% from 100% in case of TDS on payments to resident
• DTC will be reviewed and take a view on the matter.
• Mutual funds - Capital gains rate proposed to be increased to 20% and holding period for long term MF increased to 3 yrs (instead of 12 months)
• Infrastructure and REIT - tax  pass through status to be granted 
• Investment linked deduction  proposed to beextended for 2 more sectors
• FM promises No retrospective amendment in tax laws
• FM fixes fiscal deficit target of 3.6% for current fiscal
• Govt to frame New Urea Policy
• Govt to introduce scheme for savings in Kisan Vikas Patra
• Sr Citizens welfare scheme: Age reduced to 60
• e-visas to be introduced at 9 airports
• PSUs to invest Rs 2.5 lakh crore this fiscal
• Govt to grant greater autonomy to banks
• FDI to be allowed in many sectors without prior approval like construction
• Govt to frame New Urea Policy
• FM fixes fiscal deficit target of 3.6% for current fiscal
• Govt needs to be more watchful about CAD + enlarged subsidy burden
• FM puts emphasis on need for fiscal prudence
• FM Proposes 15% reduced tax rate for foreign dividends to continue without sunset clause
• APA rollback provisions proposed to be introduced 
• FM proposes "range concept" for ALP computation instead of arithmetical mean, except where adequate number of comparables are not available

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Thanks & Regards,

CA Manjunath R S  BBM, ACA
Partner

M/s Suman & Manjunatha
Chartered Accountants,
No 20/3, 1st Floor,
Opp Vasavi Convention Hall,
Vanivilas Road, Basavanagudi,
Bangalore - 560 004


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