Budget 2016 brought along many amendments in the existing Taxation Acts.Some of these changes are applicable from 01.06.2016.This article will discuss such provisions and amendments.
– Krishi Kalyan Cess
This cess is applicable @0.5% of the value of taxable services. Hence now service tax will be as follows.
| Tax | Rate |
| Service tax rate | 14% |
| Swach Bharat Cess (effective form 15.09.2015) | 0.50% |
| Krishi Kalyan Cess | 0.50% |
| Service Tax applicability | 15% |
The act allows the credit of Krishi Kalyan Cess paid on input services for payment of the cess.
– Service tax on transportation of passengers
Earlier, this item was in the negative list.However Budget 2016 amended the negative list for taxing the same. Hence, transportation of passengers by stage carriage will be covered under service tax.Such transportation may or may not include accompanied baggage.The applicable abatement in this case would be 60%. However Mega exemption notification still exempts Non AC carriage transportation.
– Service Tax on transportation of goods by vessel outside India upto Customs Station in India.
Budget 2016 omitted this entry from the negative list with effect from 01.06.2016.Henceforth this service will be liable for service tax.This will allow Indian Shipping lines to avail input tax credit.
– Income Declaration Scheme (IDC) 2016
The Income tax Act has given an opportunity to disclose 100% of income and pay tax @45% under ICD.This will cover undisclosed income for any years till FY 2015-1016.This scheme will cover following cases.
a. Reopened cases
b. Survey or search cases
c. Where information received from other countries under Black Money Act.
d. Cases pending Before CIT (A) relating to tax arrears.
However this scheme will be wound up as on 30.09.2016. There will be no further scrutiny in respect of declared income. Also the assesse will have immunity from prosecution.
– TCS on sale of vehicles and any goods or services (other than bullion or jewellery)
TCS @ 1% shall be applicable on the following services
a. Sale of motor vehicles above value of Rs. 10 lakhs
b. Sale of any goods or services (other than bullion or jewellery) in cash above Rs.2 lakhs.
– Exemption from PAN furnishing by NR (Non Residents )
Henceforth , any NR or foreign company wont be required to submit PAN.Such exemption is available only if prescribed conditions are fulfilled.
– Non deduction of TDS under section 194I
The Act has been amended to the effect that filing of Form 15G or 15H will be available to rental recipients.The recipient can present form 15G or 15H for non tax deduction on rental payments received.
– Advance tax payments
The Budget 2016 has amended the advance tax instalments due dates. Now all assesses will be required to pay advance tax on following dates
15th June – 15%
15th September –45%
15th December –75%
15th March – 100%
However , assesses covered under section 44AD, shall be required to pay whole advance tax on or before 15th March.
– Interest under section 234C
Necessary amendments shall be made as per advance tax deferment in interest calculation under section 234C.
Also the Act provides for no interest levy for first timers having income from business or profession.
– STT in case non exercise of options contract
| Situation | Existing rate | Amended rate |
| STT where option not exercised | 0.017% | 0.05% |
– Buyback of unlisted shares by domestic company
Earlier buyback under section 77 was only covered for levy for buyback tax.Buyback tax to be applicable on any buyback of unlisted shares from now onwards.
– Conversion or dissolution of Charitable Trusts
When the Trust registered under section 12AA gets dissolved, net assets as on date represents accreted income.The Act now levies tax at Maximum Marginal Rate on Net assets as on date of conversion.
Also , where assets are not transferred by dissolved trust to another charitable institution, the same treatment follows.The accreted income not transferred will bear tax at Maximum Marginal Rate.
– Alternate Investment Funds (AIF)
| Category | TDS rate |
| Category I and II AIF – | |
| Resident | 10% |
| Non Residents | As applicable |
Such assesses can request for Tax deduction at lower or nil rates and can obtain TDS certificate to such effect.
– Changes in TDS rates and threshold limits
| Section | Head | New threshold | New rate |
| 192A | Payment of accumulated balance due to an employee | 50000 | No change |
| 194BB | Winnings form horse race | 10000 | No change |
| 194C | Payment to contractors | 100000 | No change |
| 194LA | Payment of compensation on acquisition of immovable property | 250000 | No change |
| 194D | Insurance Commission | 15000 | 5% |
| 194G | Commission on sale of lottery tickets | 15000 | 5% |
| 194H | Commission or brokerage | 15000 | 5% |
| 194DA | Payment in respect of life insurance policy | No change | 1% |
| 194EE | Payment in respect of NSS deposits | No change | 10% |
– Legal framework for paperless assessment
The Act has been amended to the effect , that now department can send notice or any other communication in paper or electronic form.
– Equalisation Levy
The person making payments to Non Resident for amount above Rs.1 lakh shall deduct tax @6% on gross value.Such NR would not have Permanent Establishment in India.This tax is basically introduced for taxing foreign E commerce companies.
– Time limits for completion of assessments in certain cases.
| Section | situations | Time limit for completion of assessment |
| Section 153A | For each assessment year falling in 6 assessment years (Sec 153 (1)(b)) | 21 months from the end of financial year in which last of authorizations was issued. |
| For assessment year relating to previous year in which search or requisition is conducted. | ||
| Section 153C | Completion of assessment of other person referred to therein. | 21 months from end of financial year in which last authorizations for search or requisitions was executed. |
– Payment of interest on refund
| situation | Interest calculated from |
| Return of income filed after due date | Date of filing return |
| Self assessment tax | Date of tax payment or date of return filing , whichever is later |
| Refund on account of appeal effect delayed beyond prescribed time | Additional interest @ 3% p.a. from date of expiry of period or extended period. |
CONCLUSION
This article focuses on gist of the top amendments.For full text of these provisions , please refer to the Amended Income Tax Act.There have been drastic changes with respect to TDS rates and advance tax regime.Also Krishi Kalyan Cess and Income Declaration Scheme are surprise factors.So plan wisely by considering applicable provisions.
Related Tags Budget 2016, Income Tax, Incometax, Ind-As, Indirect Taxes, Industry., International Financial Reporting Standard, Servicetax,Tax, TDS
