Important direct tax amendments for AY :2014-15

IMPORTANT DIRECT TAX AMMENDMENTS BY FINANCE BILL 2013

1.       For every person with a total income of Rs.2,00,000 to Rs.5,00,000 , a tax credit of Rs.2000 will be provided.

2.       For every person (individual, HUF, firms and entities with similar status) with a total income of more than Rs.1 crore a surcharge of 10 % is introduced.

3.       Surcharge on domestic companies with income more than 10 crore increased from  5% to 10%

4.       Surcharge on foreign companies with income more than 10 crore increased from 2% to 5%

5.       In all other cases including dividend distribution tax or tax on distributed income, surcharge increased from 5% to 10%. For companies (both domestic and foreign) with income 1 crore to less than 10 crore the existing surcharge rates applicable.

6.       Additional deduction of Rs.1,00,000 for interest paid on housing loan if used for purchase of first house and if loan not exceeding 25 lakhs. This seduction will be available u/s 80EE subject to other conditions specified in the section.

7.       For persons suffering from disability or certain ailments, the permissible premium rates for life insurance has been increased from 10% to 15%.

8.       Donations made to national children’s fund will be eligible for 100% deduction under chapter VI A

9.       Investment allowance at the rate of 15% to a manufacturing company that invests more than 100 crores in plant and machinery during the period 1-4-2013 to 31-3-2015

10.   TDS @ 1% to be deducted by the buyer of an immovable property where consideration is more than 50 lakhs. Agricultural land will be exempt from this provision.

11.   Withholding tax @ 20% on profits distributed by unlisted companies to shareholders through buyback of shares.

12.   Rate of tax on payments by way of royalty & fee for technical services to non-residents have been increased from 10% to 25%.If DTAA exists , the rate prescribed therein will be applicable.

13.   Reduction in securities transaction tax.

(i)                  Equity futures:                                                from 0.017% to 0.01%

(ii)                MF/ETF redemptions at fund counters:    from  0.25% to 0.001%

(iii)               MF/ETF purchase or sale on exchange:     from 0.1% to 0.001%, only on the seller.

14.   Commodities transaction tax (CTT) has been introduces on non-agricultural commodities futures contracts @ 0.01%. Trading in such commodities derivatives will no longer be speculative transaction but business & CTT will be an allowable business deduction.