The Hon’ble Finance Minister, Mr. Arun Jaitley announced the Union Budget 2015, setting the tone for growth in earnest, with a slew of provisions aimed at propelling the Indian Economy, alongside making it investor friendly. Post the announcement, BDO India has put together the Key Highlights of the proposals
4. NUMBER HIGHLIGHTS
GDP Estimates
7.4% for FY 2014-15
next year estimated at 8.0 to 8.5%
Fiscal deficit estimates
4.1% for FY 2014-15
3.9% for next year
to be reduced to 3% by FY 2017-18
Inflation likely to be below 6%
Second best performing stock market amongst major economies
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Budget Highlights 2015 - A BDO India Presentation
5. KEY POLICY ANNOUNCEMENTS
GST to be operational from April 1, 2016
Roadmap for direct tax regime at par with international standards
Competitive tax rates
Limit deduction / exemptions and incentivize investment
Predictable and non adversarial tax regime
Rigorous new law proposed to combat black money
New bankruptcy code to be at par with global standards
Ease of doing business in India
Launch of e-portal for quick approvals
Multiple prior permissions to be replaced with pre-existing regulatory mechanisms
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Budget Highlights 2015 - A BDO India Presentation
7. KEY DIRECT TAX AMENDMENTS
Tax rates remain unchanged with a promise to reduce the corporate tax rate to 25% from 30% over next four years
No change in tax rates for individuals – Specific tax benefits provided
Additional surcharge of 2% levied on tax payers having income in excess of Rs. 10 million
Abolition of wealth tax
Royalty and Fees for Technical Services payable to Non Residents taxable at reduced rate of 10% from 25%
Provisions for taxability of Indirect Transfers clarified:
Specific exemption to small shareholders and smaller Indian contribution in value terms (INR 100 million)
Threshold value contribution by the Indian assets - specified at 50%
Only the income proportionate to the value attributed by Indian assets to be taxed in India
Indirect Transfer due to offshore mergers and demergers not to be taxed, subject to certain conditions
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Budget Highlights 2015 - A BDO India Presentation
8. Income of FII earned on the sale of listed security, excluded from the chargeability of MAT
Implementation of GAAR has been deferred by a period of two years
Will apply in relation to the investments made after March 31, 2017
Separate tax regime outlined for Alternate Investment Funds registered as Category I (sectors having positive impact) and
Category II (other closed ended funds) with SEBI
Complete tax pass-thru status
Distribution made by the funds now made subject to 10% withholding
No tax pass-thru for losses, as loss incurred by AIF to be carried forward in the hands of AIF
Fund managers based in India not to constitute business connection (or the permanent establishment) for offshore funds, thereby
restricting the taxability of offshore funds in India
Test prescribed for ‘eligible fund manager’ and ‘eligible investment fund’
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KEY DIRECT TAX AMENDMENTS
Budget Highlights 2015 - A BDO India Presentation
9. Test of examining residential status of a foreign company for Indian tax purposes made stringent
Shift from ‘controlled wholly’ to ‘place of effective management’
Monetary threshold for compliance with domestic transfer pricing increased to INR 200 million from INR 50 million
Fund managers based in India not to constitute business connection (or the permanent establishment) for offshore funds, thereby
restricting the taxability of offshore funds in India
Test prescribed for ‘eligible fund manager’ and ‘eligible investment fund’
Tax regime for REIT and Infrastructure Investment Trusts have been simplified. However, certain key issues remain un-addressed
Payment of interest by an Indian Permanent Establishment of a company engaged in the banking business, taxable in India
Cost and period of holding of assets in case of demerger to relate back to the cost and period of the demerged company. This is
line with the tax treatment in case of merger of companies.
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KEY DIRECT TAX AMENDMENTS
Budget Highlights 2015 - A BDO India Presentation
11. KEY INDIRECT TAX AMENDMENTS
Date of implementation of GST to be April 1, 2016. Game changing reforms on the anvil for GST
RATES OF TAXES/ DUTIES
Basic Customs Duty (BCD) rate retained at 10%
Excise Duty/CVD increased from 12% to 12.5%. Education and Secondary Higher Education Cess to be exempted
Service Tax rate increased from 12.36% to 14%. Education and Secondary Higher Education Cess subsumed in the rate of 14%
Swachh Bharat Cess proposed to be levied at 2% on all taxable services
CUSTOMS
BCD on certain imports, raw materials, intermediaries and their components reduced to minimise the impact of duty inversion
SAD reduced on import of certain inputs and raw materials to address the problems of CENVAT credit accumulations
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Budget Highlights 2015 - A BDO India Presentation
12. KEY INDIRECT TAX AMENDMENTS
CENTRAL EXCISE
Online Central Excise registration to be facilitated in 2 workings days
Central Excise assesses allowed to use digitally signed invoices
Penalty provisions rationalised to encourage compliance and early dispute resolution
SERVICE TAX
Negative list trimmed to widen the tax base
All reimbursable expenditure or cost incurred and charged by the service provider to form part of taxable services
Service Tax payable on reverse charge basis by a business entity on all services received from the Government and Local
Authority, unless specifically exempted
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Budget Highlights 2015 - A BDO India Presentation
13. KEY INDIRECT TAX AMENDMENTS
Service Tax to be levied on services provided by way of access to amusement parks, certain entertainment events, concerts,
pageants, etc
Service Tax exemption withdrawn in relation to construction, erection, commissioning of original works of an airport or port
Service Tax to be levied on any process/ jobwork for manufacture of alcoholic liquor for human consumption
Service Tax to be levied on activities undertaken by chit fund foremen, in relation to chit, and lottery distributors and selling
agents, in relation to lotteries
Uniform abatement of 30% of service value proposed for transport by rail, road (GTA) and vessels subject to non-availment of
CENVAT credit
Air transport of passengers by business class now costly. Abatement reduced from 60% to 40%
Abatement for services provided in relation to chit funds withdrawn
Manpower supply and security services, services provided by Mutual Fund agents and distributors and agents of lottery distributors
brought under full reverse charge
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Budget Highlights 2015 - A BDO India Presentation
14. KEY INDIRECT TAX AMENDMENTS
Service Tax exemptions extended to certain pre-cold storage services in relation to fruits, vegetables, etc so as to incentivise this
crucial sector
Service Tax exemptions extended to certain services like insurance premium on Varishta Beema Yojna, ambulances, admissions to
museums, zoo, etc
Online Service Tax registration (single premise) to be facilitated in 2 workings days
Service Tax assesses allowed to use digitally signed invoices
Penalty provisions rationalised to encourage compliance and early dispute resolution
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Budget Highlights 2015 - A BDO India Presentation
15. KEY INDIRECT TAX AMENDMENTS
CENVAT CREDIT
Time limit for availing CENVAT credit on input and input services increased from 6 months to 1 year
Time limit for return of capital goods from the job worker being raised from 6 months to 2 years
Direct dispatch of inputs and capital goods to job worker to be allowed subject to the prescribed conditions
CENVAT credit of Service Tax paid under partial reverse charge can be taken immediately on payment of such service tax by the
service recipient
Penal provisions introduced for incorrect availment of CENVAT credit
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Budget Highlights 2015 - A BDO India Presentation
17. ABOUT BDO
Our global network
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Leading
consolidation in
the mid tier
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1,328 offices
across globe
1,300+
Presence in 152
Countries across
globe
150+
Over 59,000
employees
worldwide
59,000+
• BDO is an international accounting network that provides advisory
services and is comprised of a number of independently managed
firms operating under the BDO brand
• BDO member firms offer an international network for
organizations looking to operate beyond their domestic
boundaries. The firms specialize in combining their local
knowledge and experience with an understanding of the
international context to provide global service.
• BDO’s global vision is ‘Exceptional Client Service delivered by
Empowered People’ – our clients can expect a consistently
exceptional level of service from each of the member firms and
such service will be tailored to their specific business needs.
• The network’s dedication to exceptional client service requires
the highest ethical and technical standards and BDO supports its
team to make that a reality.
Budget Highlights 2015 - A BDO India Presentation
18. BDO IN INDIA
People
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BDO India offers Strategic, Operational, Accounting and Tax &
Regulatory advisory & assistance for both domestic and international
organisations across a range of industries.
Dedicated
Service Levels
Robust Technical
Background &
Experience
Business-centric And
Result-oriented
Approach
Ability To Tailor Business
Solutions To Client
Requirements Aligning To
Global Best Practices.
Quick And Efficient
Response To Client’s
Needs
Budget Highlights 2015 - A BDO India Presentation
19. BDO IN INDIA
Who We Are
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• Our tax team is one of the best in India and we have been consistently
Rated as one of the leading tax firms in India by ‘International Tax
Review – the Comprehensive Guide to the World’s Leading Tax Firms’
for the years 2012-2015.
• Rated as one of the leading Transfer Pricing firms in India by the
World Transfer Pricing 2014 & 2015 – the Comprehensive Guide to
the World’s Leading Transfer Pricing Firms.
Budget Highlights 2015 - A BDO India Presentation
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SERVICE PORTFOLIO
Service Offerings
INDIRECT TAX
• Health Checks
• Multi State VAT Services
• Taxation of Goods & Services
• Foreign Trade Policy
• Transfer Pricing and Import Duty Study
• SEZ Compliance & Advisory
• STPI & EOU Compliance & Advisory
• Representation & Litigation Support
• Outsourcing and Compliance
• Location specific strategy for setting up new business/
industry in India - Special Incentive Schemes
TRANSACTION ADVISORY SERVICES
• Mergers & Acquisition, JV and Hive-offs- Structuring,
Negotiation, Documentation &
Implementation
• Corporate Restructuring - Advisory & Implementation
• Valuation
• Due Diligence
• Exchange Control & Corporate Law- Advisory & Compliance
• Corporate Finance & Investment Banking
• Capital Markets
• Employee Stock Option Plans
• India Entry Advisory & Support
DIRECT TAX
• Global Tax Services
• Cross Border Taxation
• Transfer Pricing
• Structuring Inbound/ outbound investments &
income
• Effective Tax Rate (ETR) minimization strategy
• Tax Advisory & Compliance
• Human Capital Services
• Representation & Litigation Support
• Information Exchange compliances
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OUTSOURCING
• Treasury operations
• Bookkeeping
• Management Reporting
• Payroll Processing
• Audit assistance
• Employee taxation handling
• Accounts Receivable / Payable Management
• Design / Set up of accounting systems
BUSINESS ADVISORY
• Business Modelling : Business Plan Forecasting-
Structuring-Implementation & Review
• Project Finance :Working Capital Management- Cost to Revenue
Implications/Assessment
• Industry Analysis and Business Viability Studies
• Litigation Support
• Project Performance & Management Studies
• Financial Strategy
RISK ADVISORY SERVICES
• Internal Audit
• Standard Operating Procedures
• Performance Improvement Studies
• Enterprise Risk Management
• Corporate Governance
• SOX Advisory & Compliance
• IT Advisory
• ERP Advisory
• Forensic Advisory Services
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Budget Highlights 2015 - A BDO India Presentation
