This presentation takes one through the impact of budget 2014 on the direct tax provisions. Efforts have been made to simplify the amendments in the best way

1. Sandesh Mundra & Associates
1

2. Sandesh Mundra & Associates
2

3. CHANGE IN BASIC EXEMPTION LIMIT
3
Taxable
Income
2,50,000 3,00,000 10,00,000 5,00,000 15,00,000
Current Tax 3,090 8,240 28,840 1,33,900 2,88,400
Proposed
Tax
Nil 3,090 23,690 1,28,750 2,83,250
Savings in
Tax (Rs)
3,090 5,150 5,150 5,150 5,150
•Senior citizen increased from
Rs. 2.5 to 3 Lacs
•(below age of 60 years)
Rs. 2 to 2.5 Lacs
Impact of such Change-
( for below 60 years of age)

4. 4
• Impact of change in exemption limits on tax savings in case of Senior
Citizen (60 to 80 years of age)-
Taxable
Income
2,50,000 3,00,000 10,00,000 5,00,000 15,00,000
Current Tax Nil 3,090 23,690 1,28,750 2,83,250
Proposed
Tax
Nil Nil 18,540 1,23,600 2,78,100
Savings in
Tax (Rs)
Nil 3,090 5,150 5,150 5,150

5. 5

6. LETS SEE DEFINITIONS
6
Business Trust [Sect ion 2(13A)]
a trust registered as an Infrastructure Investment Trust
(Invit) or a Real Estate Investment Trust (REIT),
 the units of which are required to be listed on a recognized
stock exchange, in accordance with the SEBI Act ,1992
and notified by the Central Government in this behalf .
(w.e.f . October 1, 2014)
Capital Asset [Section 2(14)]
securities held by Foreign Institutional Investor (FI I ),
Which has invested in such securities in accordance with
SEBI regulations shall now be considered as a capital asset
and shall be subject to tax on capital gains .
(w.e. f . A.Y.2015-2016)

7. 7
Income [Section 2(24)]
any sum of money received as an advance or otherwise
in the course of negotiating transfer of a capital asset,
if the said amount is forfeited and
negations do not result in transfer of such capital asset.
The said income shall now be taxed under the head ‘
Income from Other Sources’.
(w.e.f . A.Y. 2015-16)
Short Term Capital Asset [Sect ion 2(42A)]
mutual fund units (other than equity oriented unit ) and
unlisted security which would now include
unlisted shares held in companies
will be considered as short term capital asset if held
for not more than thirty six months.
(w.e. f . A.Y. 2015-16)

8. EXEMPTIONS
8
♦ Income of certain educational institutions, universities and hospital
[Section 10(23C)]
Change Effective
Date
 educational institution, hospital or other institution
1. is funded through government grant upto a
prescribed percentage
2. Then it shall be considered as being substantially
financed by the Government for that previous year.
Proviso
A trust or institution registered for availing exemption
under this Section
1. is restricted to claim exemption under provisions of
Section 10 (except in respect of agricultural income
and under clause (23C)).
A.Y. 2015-
16)

9. 9
• Income of Business Trust [Section 10(23FC)]
Change Effective Date
Clause (23FC) granting exemption to a
Business Trust
On income by way of interest received or receivable
from “special purpose vehicle”
SPV to mean an Indian company engaged in
business of Infrastructure and Real Estate Projects
 in which the business trust holds controlling interest
and any specific percentage of shareholding or
interest, as may be required by the concerned trust
laws.
Interest Income of such trust to unit holder is
taxable and any other income is exempt.
A.Y. 2015-16

10. 10

11. • INCOME OF CHARITABLE TRUST
11
Change Effective
Date
Insertion of sub section (6) to provide that in computing
total income under section 11,
when application of income for acquiring assets is allowed
as deduction,
no further deduction on account of depreciation on the said
asset shall be allowed notionally.
no simultaneous claim for exemption under Section 11 and
other clauses of Section 10 (except in respect of agricultural
income and exemption under clause (23C)) shall be allowed.
This section is proposed to be amended to nullify effect
of judgments in the case of CIT vs. Tiny Tots society
(P&H HC), DIT vs. Vishwa Jagriti Mission (Delhi HC), etc.
October
01,2014
Computation of Income [Section 11 & 12A]

12. REGISTRATION OF CHARITABLE TRUST [SECT ION 12AA]
12
Change Effective Date
where a trust or an institution has been granted
registration and subsequently it is noticed that –
- the funds are not used for the benefit of general
public or
- the funds are used for the benefit of any
particular religious community or cast or
- any income or property of the trust is used for the
benefit of
-trustees, author of the trust or
-funds are invested in prohibited modes,
then, the Commissioner or Principal
Commissioner may by order in writing cancel the
registration of such trust or institution
October 01,2014

13. INCOME FROM HOUSE PROPERTY
DEDUCTION IN RESPECT OF INTEREST ON HOUSING LOAN [SECTION 24(B)]
13
Change Effective Date
Deduction of interest on housing loan
has been increased
from Rs.1,50,000/- to Rs.2,00,000/- in
case of self–occupied property.
A.Y. 2015-16

14. 14

15. BUSINESS INCOME
15
Deduction for investment in new plant & machinery (Section 32AC)
Change Effective
Date
Insert sub section (1A) to provide that
Company Manufacturing
Acquires and installs new assets after 31-03-14 but
before 01-04-17
above Rs. 25 crore,
Deduction @ 15% of the actual cost in the previous year.
The deduction for First AY, shall be allowed
either under sub section (1A) or sub section 1(b).
A.Y.2015-
2016

16. LETS LOOK AT AN EXAMPLE
16

17. 17
♦ Deduction in respect of capital expenditure on specified business
(Section 35AD)
Change Effective
Date
Two new businesses as “specified business”
for this deduction, which are:-
(a) laying and operating a slurry pipeline for the
transportation of iron ore;
(b) setting up and operating a semiconductor
wafer fabrication
manufacturing unit, if such unit is notified
by the Board in accordance with the
prescribed guideline.
No deduction shall be further allowed under
section 10AA of the Act.
minimum period of eight years to use such
capital assets
only for the specified business and for no
other Purposes is prescribed
A.Y. 2015-
16.

18. ♦ AMOUNT ELIGIBLE AS BUSINESS EXPENDITURE
(SECTION 37)
18
Change Effective
Date
expenditure incurred on the activities for
corporate social responsibility
prescribed in section 135 of the
Companies Act, 2013
shall not be deemed to be an
expenditure
incurred for business or profession.
However, the CSR expenditure which is
of nature
described in Section 30 to 36 of the Act,
shall be allowed deduction under those
sections
A.Y.2015-
2016

19. ♦ AMOUNT NOT ALLOWED AS EXPENDITURE FOR NON-DEDUCTION OF TAX AT
SOURCE (SECTION 40)
19
Previous Change Effective
Date
Interest, commission,
brokerage, rent ,royalty,
fee for professional or
technical services
 and contract Payment
made to a resident are
100% disallowed
 if tax is not deducted at
source
or not paid after
deduction
Before the due date
specified under section
200 (1)
The disallowance has
been reduced from
100% to 30%.
 Scope of
disallowance
Has been extended
From any payment
On which tax is
deductible under
Chapter XVI I –B
due date has been
extended up to the date
of filing the return of
income
A.Y.2015-
2016

20. ♦ SPECULATIVE TRANSACTION IN RESPECT OF COMMODITY
DERIVATIVES (SECTION 43)
20
Change Effective
Date
Eligible transaction in respect of trading
In commodity derivatives carried out
 In a recognized association
And chargeable to commodities transaction
tax
Shall not be considered to be a speculative
transaction.
A.Y.2014-
2015

21. ♦ BUSINESS OF PLYING, HIRING OR LEASING GOODS
CARRIAGES (SECTION 44AE)
21
Change Effective
Date
Presumptive income of Rs.7,500 for
every month (or part of a month)
for all types of goods carriage vehicles
without any distinction between
Heavy Goods Vehicle (HGV) and vehicle
other than HGV.
A.Y.2015-
2016

22. 22
CAPITAL GAINS:
♦ Capital Gains arising from transfer an asset by way of
compulsory acquisition (Section 4)
Previous Change Effective
Date
Presently Income is
taxable
In the year in which
compensation is received
Amount of
compensation received
Shall be deemed to be
income in the previous
year
in which the final order
of court, Tribunal or
other authority is made
A.Y.2015-
2016

23. TRANSACTIONS NOT REGARDED AS TRANSFER (SECTION 47)
23
Change Effective Date
Capital asset , being a Government
Security
Carrying a periodic payment of
interest,
made outside India through an
intermediary
by a non- resident to another non-
resident
 shall not be considered as Transfer
Issue of units of the Business Trust
on transfer of shares of a special
purpose vehicle,
shall not be considered as Transfer
within the meaning of Section 2(47) of
the Act .
A.Y.2015-2016

24. COST WITH REFERENCE TO CERTAIN MODE OF ACQUISITION OF CAPITAL
ASSET (SECT ION 49)
24
Change Effective Date
cost of acquisition of units of a
Business trust
shall be deemed to be the cost
of acquisition
of shares held in Special Purpose
Vehicle,
when such units become the property
in consideration of transfer of shares of
the Special Purpose Vehicle
as per provisions of Section 47(xvii ).
A.Y.2015-2016

25. ADVANCE MONEY RECEIVED IN NEGOTIATIONS OF TRANSFER OF CAPITAL ASSET (SECT
ION 51)
25
Previous Change Effective
Date
 advance money
received in
negotiations
of transfer of
capital asset
if forfeited is
reduced
from the cost of
acquisition of the
capital asset
The amount
forfeited
shall be taxable as “Income
from Other Sources”
and hence the same shall
not be deducted from the
cost of acquisition
This is change is proposed
in view judgment of Hon’ble
Apex Court in the case of
Travanacore Rubber & Tea
Co. Ltd. vs. CIT [(2000)
243 ITR 158 (SC)] .
A.Y.2015-
2016

26. CAPITAL GAIN ON SALE OF PROPERTY USED FOR RESIDENCE (SECT
ION 54)
26
Previous Change Effective
Date
where capital gain
arises
from the transfer of a
long- term capital asset
being a residential
house,
and new residential
house is purchased or
constructed
Then the amount of
capital gains
to the extent invested
in the new residential
house is exempted.
Exemption is
available,
only if the
investment is made
 in purchase or
construction of
one residential
house
situated in India.
A.Y.2015-
2016

27. CAPITAL GAIN NOT TO BE CHARGED ON INVESTMENT IN CERTAIN BONDS
(SECT ION 54EC)
27
Change Effective
Date
 Proviso in sub-section (1)
Is inserted so as to clarify
that the investment made
 in certain specified bonds
 shall not exceed fifty lac rupees.
A.Y.2015-
2016

28. CAPITAL GAIN ON TRANSFER OF CERTAIN CAPITAL ASSETS NOT TO BE
CHARGED IN CASE OF INVESTMENT IN RESIDENTIAL HOUSE (SECT ION 54F))
28
Previous Change Effective
Date
Capital gain arises
from the transfer of a long-
term capital asset and
if the assessee purchases,
or constructs,
 new residential house,
then the amount of capital
gains will be exempt.
Exemption is
available,
if the investment
is made
only in one
residential house
situated in India
A.Y.2015-
2016

29. LOSSES IN SPECULATION BUSINESS:
29
Existing Provisions Proposed Amendment Effective
Date
Explanation to sect ion 73
provides that
 in case of a company
deriving its Income
mainly under the head
“Profits and gains of business
or profession”
and where any part of its
business
consists of purchase or sale
of shares,
such business shall be
deemed to be speculation
business
A company whose
principal business
is the business of trading
in shares
does any trading
otherwise than by actual
delivery(speculation)
then any loss arising from
such delivery
 would be considered as
loss
From speculation
business which initially was
considered as business
loss.
A.Y.2015-
2016

30. DEDUCTIONS TO BE MADE IN COMPUTING TOTAL
INCOME:
DEDUCT ION U/S. 80C – RAISING THE L IMI T OF DEDUCT ION
30
Change Effective Date
The limit of investments eligible for
deduction
Is increased from the existing limit of Rs.
1,00,000/- to Rs.1,50,000/-
consequential amendments in sections
80CCE
whereby total deduction claimed u/s . 80C,
80CCC and 80CCD shall not exceed Rs.
1,50,000/-
A.Y.2015-2016

31. TIME FOR A BREAK
31

32. DEDUCT ION U/S. 80CCD – CONTRIBUTION TO PENSION SCHEME OF
CENTRAL GOVERNMENT
32
Current Change Effective
Date
An individual ,
employed
by any other
employer
on or after 1s t
January, 2004,
An individual ,
employed
by any other
employer
(Words on or after 1st
January, 2004 is
deleted)
A.Y.2015-
2016
Deduct ion of
amount
shall not exceed
10 % of salary
Deduction of amount
shall not exceed 10%
of salary
or Rs 1,00,000/-
whichever is lower

33. DEDUCTION UNDER SECTION 80IA TO POWER SECTOR
33
Change Reason of
Change
Effective Date
Sunset date
under section
80IA
For the power
sector
To avail the tax
incentive,
 is proposed to
be extended by
 a further period
of three years
i.e. up to 31s t
March,2017.
With a view to
provide further
time to the under
takings
 to commence
the eligible
activity
A.Y.2015-2016

34. 34

35. DETERMINATION OF TAX IN CERTAIN SPECIAL CASES
35
Income Source Change Effective
Date
Short Term
Capital Gain on
transfer of units
of Business
Trust
To tax the transfer of
a unit of a business trust
As they apply in case of a unit of an equity
oriented fund @ 15 % u/s 111A(1)
A.Y.2015-
2016
Long Term
Capital Gain on
Listed Units
the listed “Units”
are proposed to be taxed @ 20% u/s 112(1).
Anonymous
donation to be
taxed in certain
Cases
Tax would be levied after reducing the
Income by 30% u/s 115BBC
Tax on
distributed
income being
interest
the total income of a non- resident (not
being a company)
or a foreign company
includes distributed income
being interest
 such income shall be taxable @ 5 %.

36. LOWER RATE OF TAX ON DIVIDENDS RECEIVED FROM
FOREIGN COMPANIES
36
Change Effective Date
taxation of gross dividends
@ 15% u/s 115BBD
received by an Indian
Company from a
specified foreign company
in which it has a share
holding of 26% or more
 for the financial year 2014-
2015 and subsequent years,
Which was previously up to
financial year 2013-2014.
A.Y. 2015-16

37. 37
Change Effective
Date
Clause (iii) in sub-section (2) to section 115JC
Is inserted that the total income
shall be increased by the
deduction claimed u/s. 35AD
as reduced by the amount of depreciation
allowable
 (on such assets on which deduction u/s 35AD
has already been claimed to arrive at total
income)
in accordance with the provisions of section 32
to arrive at adjusted total income.
A.Y. 2015-
16
CHANGE IN COMPUTATION OF ALTERNATE MINIMUM TAX (AMT) :

38. 38

39. 39
Change Effective
Date
Insert new clause © in sub-section (1) so as to
apply
the said Chapter -XI I BA
to a person who has claimed deduction u/s. 35Aexisting
provisions of sub-section (2) of section 115JEE
provide that the Chapter shall not be applicable
 to an individual or an HUF or an association of persons or a
body of individuals (whether
incorporated or not ) or an artificial juridical person
if the adjusted total income
does not exceed Rs . 20 lac.
A.Y.2015-
2016
TAX CREDIT OF ALTERNATE MINIMUM TAX (AMT):

40. INSERTION OF NEW CHAPTER XI I-FA IN RELATION TO “SPECIAL
PROVISIONS RELATING TO BUSINESS TRUST :
40
Change Effective
Date
special provisions relating to Business Trust –
- the distributed income in the hands of the unit holders will be
of
-the same nature and in the same proportion as the income in
the hands of the trust ;
- the total income of the trust other than capital gain would be
-taxed in the hands of the trust at the maximum margin rate and
capital gain would be taxed in accordance with sections 111A
and112;
-any distributed income received by a unit holder
-from the business trust is of the same nature as the income
referred
-to in clause (23FC) of section 10, then,
-such distributed income
-shall be deemed to be the income of such unit holder
and shall be charged to tax as income of the previous year ;
A.Y.2015-
2016

41. DIVIDEND DISTRIBUTION TAX ON PROFITS OF COMPANIES AND
INCOME TO UNIT HOLDERS
41
Change Effective Date
There is an increase of 3%
in the rate of dividend distribution tax u/s. 115-O
Similar amendments are also proposed
in section 115-R related to tax
on distributed income to unit holders..
A.Y.2015-2016

42. 42

43. REFERENCE TO VALUATION OFFICER
43
Change Effective Date
AO given the power to refer to Valuation officer for
valuation of “any asset”
Earlier –
Any Investment, Bullion, Property
A.Y.2015-2016

44. INCOME COMPUTATION AND DISCLOSURE STANDARDS
44
Change Effective Date
Clarity that the said standards would
only apply at the time of making a
computation of income
A.Y.2015-2016

45. ASSESSMENT OF INCOME OF A PERSON OTHER THAN
THE PERSON WHO HAS
BEEN SEARCHED (153C)
45
Change Effective Date
proceed against each such other person and issue
such other person notice and asses s or reassess
income of such other person in accordance with the
provisions of section 153A
if he is satisfied that the books of account or
documents or assets seized or requisitioned have a
bearing on the determinat ion of the total income of
such other person
for the relevant assessment year or years refer red to
in sub-section (1) of sect ion 153A.
1st October, 2014

46. INTEREST LIABILITY ON DEMAND
46
Change Effective Date
220(1A) – Continuation of Demand Notice till the
disposal by the last authority
1st October, 2014

47. 47

48. PROVISIONS PERTAINING TO TDS/TCS
48
Head Change Effective
Date
TDS on interest distributed by
Real Estate Investment Trust
(REIT) &
Infrastructure Investment Trust
(Invit)
 Clause 194A(3) (xi ) TDS
would be deducted at the rate
of 10%
 on payment of
interest made to resident unit
holders.
1s t
October ,
2014
TDS in respect of payment of
any sum under life insurance
policy:
section 194DA according to
which
TDS with be deducted at 2%
on any sum paid to resident
under a life insurance
policy including bonus on
such policy
 exceeding Rs. 1,00,000.
1s t
October ,
2014

49. 49
Head Change Effective
Date
TDS on income distributed by
Real Estate Investment Trust
(REIT) &
Infrastructure Investment Trust
(Invi t):
section 194LBA wherein
TDS
at the rate of 5% on
payment
 made to non- resident unit
holders and
at the rate of 10% on
payment made
to resident unit holders
1s t
October ,
2014
TDS on interest distributed by
Real Estate Investment Trust
(REIT) &
Infrastructure Investment Trust
(Invit) to non-resident
Section 194LC extends
benefit of
reduced rate of 5% on
interest payment on external
commercial borrowings and
long- term Bond made
to non- resident by business
trust
1st
October ,
2014

50. FILING OF TDS CORRECTION STATEMENT :
50
Previous Change Effective
Date
without any express
provisions in the Act,
 the deductor is allowed to
file correction statement
for rectification / updation of
information furnished in
original return of TDS filed.
to amend section 200(3) by
inserting
proviso to provide deductor to
file correction statement in order
to
bring legality to filing of correction
statement.
to amend provisions of section
200A
of the Act for enabling processing
of correction statement Filed
1st October
, 2014

51. SURVEY
51
133A (2A) – Power to survey given to ensure TDS / TCS compliance

52. SECTION 92B – MEANING OFINTERNATIONAL
TRANSACTION
52
Previous Change Effective
Date
The sub-section as
presently worded has led
to a doubt
whether or not , for the
transaction
to be treated as an
international transaction,
The unrelated person
should also be
a non- resident
A transact ion shall be
deemed to
an international transact
ion
irrespective of whether
such other (unrelated)
person
 is a nonresident
or not.
Rulings of Hyderabad ITAT
in the case of Swarnandhra
IJMI I
Integrated Township
Development vs. DCI T and
IJM (India) vs. ACI T are
nullified.
A.Y.2015-
2016

53. ROLL BACK MECHANISM IN THE APA SCHEME
53
Changes Effective date
sub section (9A) to provide roll back
mechanism
in the APA scheme.
 It may, provide for
determining the arm’s
length price
 or for specifying the manner in which
arm’s length price
 is to be determined in relation
to an international transaction
entered into by a person
October 01,2014

54. FILING RETURN OF INCOME [SECTION -139(4C) AND (4E)]
54
Changes Effective
date
section (4C) of the Act so to include–
- Mutual Fund refer red to in clause (23D) of
section 10,
- securitization trust refer red to in clause (23DA)
of section 10 and
-Venture Capital Company or
-Venture Capital Fund referred to in
clause (23FB) of section 10
for filling the return of income.
new sub-section (4E)
provide for filing of return of income
by business trust
 which is not required to furnish return of
income or loss
under any other provision of the section.
A.Y. 2015-
16

55. NO DISCUSSION ON
55

56. NO DISCUSSION ON
56
DTC
GAAR
Settlement Commission

57. 57

58. 58