The document summarizes various amendments made by the Finance Act 2014 related to tax rates, exemptions, deductions, and provisions for income from house property, business or profession, capital gains, mutual funds, deductions, TDS, charitable trusts. It provides examples and practical questions related to computing taxable income and tax liability for individuals and companies.

1. APPLICABLE FOR MAY 2015/NOV 2015
G K M AL I K &
AS S O C I AT E S C h a r t e r e d
Ac c o u n t a n t s
FINANCE ACT 2014
CA KARISHMA
www.cakarishma.co
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2. TAX RATES
AMENDMENTS
BASIC EXEMPTION LIMIT 250000/300000/500000
SURCHARGE & MARGINAL
RELIEF
Same (10% if net income
exceeds 1crore)
REBATE u/s 87A Same (Rs 2000- Resident
Individual if NI does not
exceed 5Lakhs)
GK MALIK & ASSOCIATES CA KARISHMA
Chartered Accountants www.cakarishma.co

3. INCOME FROM HOUSE PROPERTY
GK MALIK & ASSOCIATES Chartered Accountants
24(b) OLD NEW
INTEREST ON
BORROWED
CAPITAL
150000 200000
Q1.Mr. Rajesh purchased a residential house property for self-occupation
at a cost of ` 30 lakh on 1.6.2013 in respect of which he took a housing
loan of ` 24 lakh from Punjab National bank @ 11% p.a. on the same
date. Compute the eligible deduction in respect of interest on housing
loan for A.Y. 2014-15 and A.Y.2015-16 under the provisions of the Income-
tax Act, 1961, assuming that the entire loan was outstanding as on
31.3.2015 and he does not own any other house property.
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4. PROFITS AND GAINS OF BUSINESS OR
PROFESSION
GK MALIK & ASSOCIATES Chartered Accountants
PARTICULARS OLD NEW
Investment
Allowance to a
Manufacturing
Company
DEDUCTION:
15%
32AC(1) 32AC(1A)
1-4-2013 to 31-03-
2015
1-4-2014 to 31-03-
2017
Invest more than
100 crores in new
plant and
machinery
Invest more than
25 crores in new
plant and
machinerywww.cakarishma.co

5. PRACTICAL QUESTION
GK MALIK & ASSOCIATES Chartered Accountants
Q2. Compute the admissible deduction under section 32AC for A.Y. 2014-15
& A.Y. 2015-16 in each of the following cases
Manufacturing
company
Investment in new plant and
machinery
(` in crores)
P.Y.2013-14 P.Y. 2014-15
A Ltd. 80 22
B Ltd. 70 25
C Ltd. 60 30
D Ltd. 75 25
E Ltd. 105 15
F Ltd. 70 30
G Ltd. 70 40
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6. CAPITAL EXPENDITURE ON SPECIFIED BUSINESS
GK MALIK & ASSOCIATES Chartered Accountants
1. Two new businesses included
 Laying and operating a slurry pipeline for the
transportation of iron ore.
 Setting up and operating a semiconductor wafer
fabrication manufacturing unit.
2. Capital asset claimed must be used for “specified
business” for a period of eight years
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7. PROFITS AND GAINS OF BUSINESS OR
PROFESSION
GK MALIK & ASSOCIATES Chartered Accountants
SECTION OLD NEW
37(1) General
Deduction
CSR expenditure
allowed
Disallowed
40(a)(i)
Disallowance of
expenditure – Non
resident
Disallowed if Tax
deducted was not
paid before the end
PY
Disallowed if Tax
deducted was not
paid before the due
date of ROI
40(a)(ia)
Disallowance of
expenditure –
Resident
100 % Disallowed 30% Disallowed
44AE Presumptive
Income
HGV-5000 p.m
OGV-4500 p.m
Any vehicle 7500
p.m
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8. GK MALIK & ASSOCIATES Chartered Accountants
Q3. XYZ Ltd. made the following payments in the month of
March 2015 to residents without deduction of tax at source.
What would be the tax consequence for A.Y. 2015-16,
assuming that the resident payees in all the cases
mentioned below, have not paid the tax, if any, which was
required to be deducted by XYZ Ltd?
Salary to its employees 1500000
Non-compete fees to Mr. X 70000
Directors’ remuneration 25000
Would your answer change if XYZ Ltd. has deducted tax on
the above in April, 2015 from subsequent payments made to
these persons and remitted the same in July, 2015?
PRACTICAL QUESTION
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9. PRACTICAL QUESTION
GK MALIK & ASSOCIATES Chartered Accountants
Q4. Mr. X commenced the business of operating goods vehicles
on 1.4.2014. He purchased the following vehicles during the
P/Y 2014-15. Compute his income u/s 44AE for A/Y 2015-16.
Type of Vehicle Number Date of
purchase
Light Goods
Vehicles
2 10-3-15
1 15-3-15
Medium Goods
Vehicles
3 16-7-14
1 2-1-15
Heavy Goods
Vehicles
2 29-8-14
1 23-3-15 www.cakarishma.co

10. CAPITAL GAINS
GK MALIK & ASSOCIATES Chartered Accountants
SECTION OLD NEW
54 & 54F Investment in “a
residential house”
Investment in one residential
house situated in India
54EC Restricts the
investment during
any financial year to
50 lakh
Restricts the investment
during Relevant PY&
subsequent PY to 50 lakh
2(42A) Definition of STCA
HP <=36M Others
unlisted securities
Others
Unlisted securities
Unlisted shares
Units of Debt oriented MF
HP <=12M Shares Listed shares
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11. TAX TREATMENT OF MF
GK MALIK & ASSOCIATES Chartered Accountants
TYPE OF MF HOLDING PERIOD TAX TREATMENT
DEBT OREINTED MF
STCA <=36M Tax at normal rates
LTCA >36M Tax at 20% with
Indexation
EQUITY OREINTED MF
STCA <=12M 111A @15%
LTCA >12M
If STT is paid Exempt u/s 10(38)
If STT is not paid Option1: Indexation
+20% www.cakarishma.co

12. PRACTICAL QUESTION
GK MALIK & ASSOCIATES Chartered Accountants
Q5. Mr. Ram working as a CEO with ABC Ltd., furnishes the following
particulars of assets transferred by him during the P.Y. 2014-15
Particulars Date of
transfer
Rs.
1 A residential house in Bangalore which
he had purchased in February, 2000 at
a cost of Rs.15,56,000
13/01/15 1450000
0
2 Listed shares of Indian companies
purchased in May 2012 at cost of Rs.1
Lakh
14/02/15 20000
3 Unlisted shares purchased in May 2012
at cost of Rs.50,000
14/02/15 75000
4 Units of equity oriented fund purchased
in May 2012 at a cost of Rs.30,000
14/02/15 65000
5 Units of debt oriented fund purchased 14/02/15 75,000www.cakarishma.co

13. PRACTICAL QUESTION
GK MALIK & ASSOCIATES Chartered Accountants
 Mr. Ram made the following investments, out of the capital gains arising
on sale of residential house.
Purchased a residential flat in Pune on 21/5/2015 3500000
Purchased a residential flat in Madurai on 14/7/2015 2500000
3 years bonds of NHAI on 20/3/2015 4000000
3 years bonds of RECL on 15/5/2015 3000000
Compute the total income and tax liability of Mr. Ram for A.Y. 2015-16, if his
salary income(computed) is Rs.24 lakh and interest on fixed deposits
with banks is Rs.1 lakh. Assume that he has contributed Rs.1,50,000 to
PPF and paid medical insurance premium of Rs.12,000 to insure his
health.Cost Inflation Index of F.Y. 1999-2000: 389; F.Y.2009-10: 632;
F.Y.2012-13: 852; F.Y.2014-15: 1024
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14. IFOS
GK MALIK & ASSOCIATES Chartered Accountants
PARTICULARS OLD NEW
Advance forfeited
for transfer of a
capital asset
If any amount was
forfeited upto
31.3.2014 then it
shall be deducted
from the cost of
acquisition as per
old sec. 51.
Advance forfeited
due to failure of
negotiations for
transfer of a
capital asset to be
taxable as
“Income from
other sources”
[Section 56(2)]
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15. DEDUCTIONS
GK MALIK & ASSOCIATES Chartered Accountants
Section Particulars Ceiling limit (`)
80C Investment in specified
instruments
1,50,000
80CCC Contribution to certain
pension funds
1,00,000
80CCD(1) Contribution to new
pension scheme of
Government
1,00,000
80CCE Aggregate deduction
under section 80C,
80CCC & 80CCD (1)
1,50,000
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16. PRACTICAL QUESTION
GK MALIK & ASSOCIATES Chartered Accountants
1.Mr. X invested 1,20,000 in pension plan of insurance
company.
How much deduction he can claim u/c VI-A?
2.Mr. Y invested total 1,20,000 in NPS. How much
deduction he can claim u/c VI-A?
3.Mr. Z invested total 1,20,000 in PPF+NSC+LIP.
How much deduction he can claim u/c VI-A?
4.Mr. A invested total 1,20,000 in Pension plan of
insurance company and 40,000 in PPF. How much
deduction he can claim u/c VI-A?
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17. TDS
GK MALIK & ASSOCIATES Chartered Accountants
PARTICULARS 194DA 194LBA
NATURE OF
PAYMENT
Any sum under
LIC
Distributed
incomeu/s 115UA
DEDUCTOR Insurance
Companies
Business Trust
DEDUCTEE Resident Unit Holder
RATE 2% Resident- 10%
Non Resident 5%
EXEMPTION (a)Upto 100000
(b)If exempt u/s
10(10D)
Nil
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18. PRACTICAL QUESTION
GK MALIK & ASSOCIATES Chartered Accountants
 Examine the applicability of the provisions for tax deduction
at source under section 194DA in the above cases -
(i) Mr. X, a resident, is due to receive ` 4.50 lakhs on 31.3.2015,
towards maturity proceeds of LIC policy taken on 1.4.2012,
for which the sum assured is ` 4 lakhs and the annual
premium is ` 1,25,000.
(ii) Mr. Y, a resident, is due to receive ` 2.20 lakhs on 31.3.2015
on LIC policy taken on 1.4.2010, for which the sum assured is
` 2 lakhs and the annual premium is ` 35,000.
(iii) Mr. Z, a resident, is due to receive ` 95,000 on 1.10.2014
towards maturity proceeds of LIC policy taken on 1.10.2010
for which the sum assured is ` 90,000 and the annual
premium was ` 19,000.
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19. CHARITABLE TRUSTS & INSTITUTIONS
GK MALIK & ASSOCIATES Chartered Accountants
 Taxability of anonymous donations
Section 115BBC has been amended to provide that the
income-tax payable shall be the aggregate of –
(i) the amount of income-tax calculated @30% on the
aggregate of anonymous donations received in excess of
5% of the total donations received by the assessee or one
lakh rupees, whichever is higher; and
(ii)the amount of income-tax with which the assesse
would have been chargeable had his total income been
reduced by the aggregate of the anonymous donations
received in excess of 5% of the total donations received by
the assessee or ` 1 lakh, as the case may be
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20. PRACTICAL QUESTION
GK MALIK & ASSOCIATES Chartered Accountants
 Income from property held under trust is ` 6 lakh.
The voluntary contributions received by a trust is `
20 lakh, which includes anonymous donations of `
4 lakh and corpus donations of ` 5 lakh. The trust
has applied ` 10 lakh to purchase a building on
1.8.2014 for meeting its objective. Compute the
tax liability of the trust for A.Y.2015-16.
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21. THANK YOU
G K M AL I K &
AS S O C I AT E S C h a r t e r e d
Ac c o u n t a n t s
www.cakarishma.co
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