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Union Budget, 2014. Indian Merchants’ Chamber C H Bhabha Memorial Endowment Public Meeting . July 11, 2014. Presented by Ketan Dalal. BJP manifesto on Taxes. Provide a non adversarial and conducive tax environment Rationalize and simplify the tax regime

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Union Budget, 2014

Indian Merchants’ Chamber

C H Bhabha Memorial Endowment Public Meeting

July 11, 2014

Presented by KetanDalal

bjp manifesto on taxes
BJP manifesto on Taxes
  • Provide a non adversarial and conducive tax environment
  • Rationalize and simplify the tax regime
  • Overhaul the dispute resolution mechanisms
  • Bring on board all State governments in adopting GST, addressing all their concerns
  • Provide tax incentives for investments in R&D, geared towards indigenization of technology and innovation


direct tax the big picture
Direct Tax: The Big Picture
  • REITs and Infra investment trusts tax clarity.
  • FII Income: some clarity
  • Some aspects on tax dispute management addressed
  • Investment allowance and power sector: Incentives extended .
  • DTC not archived
  • Retro amendments on indirect transfer not neutralised; several ambiguities still untouched
  • CSR tax deduction
  • No cognisance of Tax Administrative Reforms Commission


personal tax some key changes
Personal Tax – Some Key Changes
  • TDS @ 2% on maturity receipts from taxable life insurance products w.e.f. from 1 October 2014 (if >= INR 1 lakh)
  • Relatively marginal benefits; amendments to DDT and debt funds a neutraliser


transfer of shares in non indian companies vodafone controversy
Transfer of shares in non Indian companies (Vodafone controversy)
  • Status quo on existing disputes
  • Fresh cases to be scrutinised by high level CBDT committee
  • Recommendations of Shome Committee not implemented
  • Existing disputes continue
  • Going forward, lack of clarity on computation, applicability to small shareholders, listed foreign companies, etc


investment allowance
Investment Allowance
  • Sunset by 31 March 2017
  • Yearly investment threshhold; no aggregation over 3 years
  • 5 year lock-in (except in merger/demerger)
  • Current Investment allowance (100 cr.) scheme for investments continues (31st March 2015)
  • Carry forward not provided for –affects loss making / low profit making companies


business deductions incentives
Business Deductions / Incentives
  • 10-year tax holiday for Power sector (S.80IA) extended till March 31, 2017
  • Investment-linked deduction (S.35AD) – 100%; extended to 2 other items
  • Corporate Social Responsibility (CSR) expenses
    • CSR expenses expressly disallowed (though not for MAT purposes)
  • Disallowance of domestic payments for non-compliance of TDS; disallowance restricted to 30% of expense; salary now covered
  • IFRS convergence and Tax Accounting
    • Move towards Tax Accounting Standards (TAS) – Mandatory from FY 2016-17


capital market related
Capital market related
  • FII taxation clarity; but what about private equity?
  • DDT related
    • Increase (companies) (no set off for foreign recipients) from 17% to 20.5% (approx)
    • Increase (Mutual funds) from 25% to 40% (individual recipients) and 34% to 51% (company recipients)
  • Holding period for unlisted shares / securities and non EOMF increased to 36 months (from 12 months)
  • Increase in tax rate on sale of debt oriented Mutual Funds from 10% to 20%
  • Lower TDS of 5% on all cross border borrowings


real estate sector tax changes
Real estate sector: tax changes
  • REIT taxation now operationalised (single stage) (similarly Infrastructure Investment Trust)
    • Sponsor not liable to transfer of SPV to REIT
    • Interest income exempt in hands of Trust, but not for investor
    • Capital gains will be converse
  • Interest deduction for housing loan
  • Capital gains set off now restricted for one house (in India)


addressing tax disputes
Addressing tax disputes
  • Transfer pricing
    • Roll back mechanism introduced in APA
    • APA team to be strengthened to expedite disposals
    • Range concept alongside arithmetic mean and use of multiple year data proposed – alignment with global best practices
  • Advance Ruling
    • Advance Rulings facility extend for residents tax payer
    • Tax liability above defined threshold
  • Settlement Commission
    • Scope of Settlement Commission to be enlarged


summing up
Summing up

Lets look at this budget and February 2015 as one integrated exercise !


thank you
Thank You