KEY UNION BUDGET 2015-16 ANNOUNCEMENTS
Indirect Tax Announcements
Policy (Positive)
• Excise duty on chassis for Ambulance reduced from 24% to 12.5%
• Education cess and higher education cess removed
• Basic Customs Duty on Commercial Vehicles increased from 10% to 20%
• Concession on customs and excise duty on select parts used in the manufacture of Electric & hybrid vehicles extended upto 31.03.2016
• Rs 75 crores given to Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme
Policy (Negative)
• General excise duty rate increased to 12.5% from 12%, thereby increasing excise duty on small cars, CVs, 2Ws and 3Ws
• Service tax rate increased to 14%
• The Government can impose a Swachh Bharat Cess of 2% of Value of Service on Certain or All services if need arises.
Procedural (Positive)
• Time Limit for availing cenvat credit on Inputs and Input Services increased from 6 months to 1 year.
• Cenvat allowed on Inputs directly sent to job worker without bringing first to manufacturer premises. (Provided input is again received in factory of manufacturer within 180 days)
• Cenvat allowed on Capital goods directly sent to job worker without bringing first to manufacturer premises. (Provided capital goods is again received in factory of manufacturer within 2 years)
• Digital Signatures on Invoices allowed
• Beneficial for Service Tax Invoices
• Benefit Negated by Government for Excise Invoices (since manufacturer has to take a print out of digitally signed invoice and self-attest the same)
Direct Tax Announcements
Positive
• It has been proposed to reduce corporate tax rate from 30% to 25% for next 4 years. Tax rate cut to be accompanied by removal of tax exemptions over next four years. However, no Change in basic corporate tax rate has been proposed for the FY 2015-16.
• Wealth tax has been proposed to be abolished from FY 2015-16.
• Benefit of additional depreciation of 10% (ie 50% of 20%) on the plant and Machinery acquired and used for less than 180 days shall now be allowed in the immediately succeeding previous year.
• Donation to Swachh Bharat Kosh & Clean Ganga Fund will be eligible for 100% tax deduction u/s 80G.
• Reduction in rate of withholding tax from 25% to 10% on Income by way of Royalty and Fees for technical services in case of non-residents, has been proposed.
• Implementation of GAAR has been proposed to be deferred by two years and GAAR provisions be made applicable to the income of the financial year 2017-18 (Assessment Year 2018-19) and subsequent years by amendment of the Act. Further, investments made up to 31.03.2017 have been proposed to be protected from the applicability of GAAR by amendment in the relevant rules in this regard.
Negative
• Surcharge has been proposed to be increased to 12% from 10% in case where taxable income is more than Rs ten Cr. Hence the effective tax rate has gone up to 34.608% from 33.99% (increase of 0.618%).
• Corporate dividend tax has been proposed to be increased to 20.358% from 19.994%.