The document summarizes key aspects of the Finance Bill 2015 presented by the Indian government. It highlights that the bill aims to create a more investment-friendly environment by lowering the corporate tax rate to 25% over 4 years and providing tax exemptions for REITs and offshore fund management. However, it also notes that the burden of economic spending has been shifted to states and public sector units. The document also provides details on changes to personal income tax, corporate tax, indirect taxes like service tax and customs duty.

1. © VGGlobal 2015. www.vgglobal.co.in
VGGLOBAL HIGHLIGHTS OF THE FINANCE BILL 2015

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From the Desk of:
CA Ved Parkash Gupta
Managing Partner
Email: vedgupta@vgglobal.co.in
Dear All,
Pragmatism…in the right direction
This seems to be at the heart of the Union Budget 2015-16, whereby the finance minister has tried to make the investment environment for the
market participants as conducive as possible. However, the burden of kick-starting the economy has been passed on to the states and PSUs.
Even though, the government has been consistent in its communication and intent about no big-bang reforms/announcements, market participants
have been expecting this. To that extent, as also, a postponement of 3% fiscal deficit target by 1 year, the budget could be termed pragmatic
rather than disappointing on the margin.
Key positives
• Pro-investment regulatory environment (Clarity on GAAR, taxation issue on offshore fund management, pass-through for REIT and AIF)
• Greater federalism by transferring higher amount to the states
• Government borrowing at the low end of estimate in spite of higher than expected fiscal deficit
• Potential for surprise on revenue exists
• Stress on Social security
• Increased allocation towards road and rail infrastructure
• Lower corporate tax from 30% to 25% over next 4 years
• Re-iterating commitment towards GST implementation by FY16
• New bankruptcy act
Key negatives
• Lack of a directed public spending – Onus of spending shifted to states and PSU
• Lack of details on themes like “Make in India” and “smart cities” which have the potential to accelerate capex
Thank you.
CA Ved Parkash Gupta

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TABLE OF CONTENTS
A. DIRECT PROPOSALS ................................................................................................................................................................................4
1. Rate of tax..............................................................................................................................................................................................4
2. Personal Taxation...................................................................................................................................................................................5
3. Corporate Taxation.................................................................................................................................................................................5
4. International Taxation ............................................................................................................................................................................6
B. INDIRECT TAX PROPOSALS......................................................................................................................................................................7
1. Service Tax .............................................................................................................................................................................................7
2. Excise.....................................................................................................................................................................................................7
3. Customs .................................................................................................................................................................................................8
1.

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A. DIRECT TAX PROPOSALS
1. Rates of Taxes
• Basic corporate tax rate shall be reduced to 25% from the exitsing 30% over the next 4 years starting from the next
financial year.
• Levy of surcharge @ 12% in case of firm if the total income exeeds 1 crores.
• In case of a company, levy of surcharge @ 7% if the total income is between 2 -10 crores and @ 12% if the total
income exceeds 10 crores.
• No change announced in the tax rates or tax slabs for individual tax payers. The tax slabs for FY 2015-16 shall
remain to be same as for FY 2014-15.
Individual (Other than Senior
Citizen)
Senior Citizens (aged 60 years &
above but below 80 years)
Very Senior Citizen (aged 80 years &
above)
• Income upto Rs. 250,000 – Nil tax • Income upto Rs. 300,000 – Nil tax • Income upto Rs. 500,000 – Nil tax
• Income from Rs. 250,001 to Rs.
500,000 – 10% tax
• Income from Rs. 300,001 to Rs.
500,000 – 10% tax
• Income from Rs. 500,000 to Rs.
10,00,000 – 20% tax
• Income from Rs. 500,0001 to Rs.
10,00,000 – 20% tax
• Income from Rs. 500,0001 to Rs.
10,00,000 – 20% tax
• Income above Rs. 10,00,000 – 30%
tax
• Income above Rs. 10,00,000 – 30%
tax
• Income above Rs. 10,00,000 – 30%
tax
• An additional surcharge of 2% shall be imposed on super rich i.e. individuals earning Rs 1 Crore or more annually.

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2. Personal Taxation
• Wealth tax stands abolished w.e.f.
April 1, 2016
• Section 80C and Section 10:
Investments made under the Sukanya
Samriddhi Account Scheme
(designed for a girl child) will be
eligible for deduction under section
80C of the Income-tax Act. The
interest accruing on the deposits in
such account will be exempt from tax
while the withdrawal from the scheme
in accordance with the rules of the
scheme will also be exempt.
• Section 80CCC and Section 80CCD:
Deduction limit for contribution to a
pension fund and New Pension
Scheme increased from Rs 1 Lacs to
Rs 1.5 Lacs.
• Section 80D: Limit of deduction for
health insurance premium enhanced
from from Rs 15000 to Rs 25000 per
annum. For senior citizens, the same
has been increased from Rs 20000 to
Rs 30000 per annum.
3. Corporate taxation
• Wealth tax stands abolished w.e.f.
April 1, 2016
• Section 11 and 13: In case charitable
organization is not able to invest at
least 85% of the income in the current
in the financial year will have file a
deceleration with assessing officer
before the due date of filing its return
of Income and file the return of
Income upto the due date.
• Inclusion of Yoga or publishing of
books under the ambit of the
charitable activities and
consequentially the availability of
exemption of tax thereon.
• Section 32: In case of any assets is
acquired by the assessee engaged in
the manufacturing sector for period
less than 180 days, only 50% of the
additional depreciation (20%) was
allowed. Now, balance 50%
deduction for the additional
depreciation shall be allowed in the
immediate succeeding assessment
year. Additional depreciation rate to
be 30% instead of 20% for the assets
acquired in notified areas of state of
Andhra Pradesh and Telangana.
• Section 32AC: Additional deduction
for investment in new plant and
machinery in notified areas of state of
Andhra Pradesh and Telangana.
• Section 47: In case, stake in the
Indian company is transferred due to
amalgamation/ demerger of the
foreign company, the transaction
would not be deemed as transfer
subject to certain conditions. Further,
wherein the transfer has been made
of units of the mutual funds due to
consolidation of the schemes of
mutual funds, it shall not regarded as
transfer.
• Section 115JB: Rationalizing
Minimum Alternate Tax for FII’s, Profit
corresponding to their income from
capital gains on transactions in
securities, which are liable to tax at a
lower rate, shall not be subject to
MAT.

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• Section 111A: The benefit of the
concessional tax i.e. tax @15% on
Short Term Capital Gains and
exemption on long term capital gains
will now be available to the sponsors
of the REIT on sale of units received
in lieu of shares of the special
purpose vehicle subject to levy of
STT.
• Section 158AA: Extension of time for
filing an appeal with ITAT by the
revenue if any an identical question of
law is pending in SC subject to
certain conditions.
• Wealth tax stands abolished w.e.f.
April 1, 2016
• Section 194A: Applicability of TDS@
10% on the accumulated balance of
EPF if the premature withdrawal is
made.
• Section 269SS/ 269T: Applicability on
section 269SS/269T on purchase of
immovable property exceeding Rs
20,000.
• Section 285A and Section 271G:
Furnishing of certain Information by a
Indian company in case a an entity
outside India is holding substantial
values of assets as per section 9A
and levy of penalty upto 2%/ Rs5
Lacs if the Indian concern fails to
furnish such information.
• Section 288: The conditions for
appointment of tax auditor/
accountant providing other certificates
has been made in line with the
requirements of section 141 of the
Companies Act, 2013 which prohibits
any relative being appointed as
auditor.
• Section 255: Raising the limit to Rs
15 lacs from Rs 5 lacs in respect of
cases which can be heard by single
member ITAT bench.
4. International taxation
• Section 9: Earlier budget has
specifically included income from
transfer of shares/interest in the
overseas company which derives its
value substantially from the assets of
the Indian company to be deemed to
accrue/arise in India. In the current
budget, specific definition of the
situation, wherein a overseas
company shall be deriving its value
substantially from the assets of the
company in India has been provided.
• Section 9A: Income of foreign fund is
not said to taxable in India merely
because fund manager undertaking
fund management activities on its
behalf situated in India subject to
certain conditions.
• Section 91: Amendment of section 91
to empower CBDT to notify the rules
for the giving the forign tax credit in
respect of income which has already
been taxed outside India.
• Secton 92BA: The threshold limit for
applicability of domestic transfer
pricing provisions has been changed
from Rs 5 Crores to Rs 20 crores.
• Section 115A: The tax rate of royalty/
fee for technical services has been
substantially reduced from 25% to
10%.

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B. INDIRECT TAX PROPOSALS
1. Service Tax
• Rate of service tax has been
increased to 14% from
12.36%.
• Swach bharat cess@2% levied
on the certain taxable services.
• Broadening of tax base by
inclusion of following services
among others by pruning of the
negative list:
(i) Access to amusement facility
providing fun or recreation
(ii) Service Tax to be levied on
service by way of admission to
entertainment event of
concerts, non-recognized
sporting events, pageants,
music concerts, award
functions, if the amount
charged is more than Rs 500.
• Review of general exemption
provided in circular 25/2012:
(i) Exemption on construction,
erecting and
commissioning services to
government is limited to:
• Historical/astrological/
national importance site
• Canal/ dam/ Irrigation
work
• Pipeline, conduit or
plant for water supply,
water treatment, or
sewerage treatment or
disposal.
• Manpower supply and security
services when provided by an
individual, HUF, or partnership
firm to a body corporate are
being brought to full reverse
charge.
• Aggregator of transport, has
been made liable to pay
service tax either by
aggregator or its agent.
• Benefit of paying 15%/25% of
the penalty of the additional tax
is being paid within 30 days of
the notice/order of the central
excise officer/ appellate
authority.
2. Excise
• Education Cess and
Secondary & Higher Education
Cess leviable on excisable
goods are being subsumed in
Basic Excise Duty and
subsequently CENVAT stands
increased at 12.5%.from 12%.
• However, the total incidence of
various duties of excise on
petrol and diesel remains
unchanged. Other Basic
Excise Duty rates (ad valorem
as well as specific) are not
being changed. Education
Cess and Secondary & Higher
Education Cess levied on
imported goods as a duty of
customs will continue.
• Excise duty on leather
footwear with retail price higher
than Rs 1000 per pair reduced
to 6%

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• Excise duty increased 25% for
cigarettes of length less than
65mm and 15% for cigarettes
of other lengths.
• Amendments in the CENVAT
Credit Rules, 2004
(i) Time limit for taking
CENVAT credit on inputs
and input services
enhanced from the present
6 months to one year
(ii) Time limit for return of
capital goods from a job
worker enhanced from the
present 6 months to two
years
(iii) Provision relating to
reversal for CENVAT credit,
presently applicable to
exempted goods and
services, made applicable
to non-excisable goods
also
(iv)CENVAT credit taken, but
NOT utilized, also to be
recovered
3. Customs
• Rationalization of penalty
provisions.
• All goods except populated
printed circuit boards, falling
under any Chapter of Customs
Tariff, for use in the
manufacture of ITA Bound
Items, are being fully
exempted from SAD, subject to
actual user condition.

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Thank You
For more information, please feel free to contact:
Jatin Gupta
Partner
VGGlobal Advisors Private Limited
Mobile:+ 91 9891191000
Email: jatingupta@vgglobal.co.in
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