AMIT BAJAJ ADVOCATE

BUDGET 2016 PROPOSALS

INCOME DECLARATION SCHEME 2016

·         Government to bring Income Declaration Scheme 2016, to give opportunity to persons who have not paid full taxes in the past to come forward and declare their undisclosed income and pay tax. Scheme will start from 1st June 2016 and will remain open till date to be notified. Tax @ 30%, Surcharge @ 7.5% and penalty @ 7.5% (Total 45% ) will be charged by the Government on the undisclosed income. The tax will have to be paid on or before the date to be notified by the Central Govt.

TAX RATES

·         No change in personal income tax slabs has been proposed. However Rebate of Rs.5000/- in tax will be allowed to individuals earning upto Rs.500000/- per year. Earlier this rebate was Rs.2000/-.

PRESUMPTIVE TAXATION SCHEME

·         Turnover limit for Presumptive Taxation for Businesses has been increased from Rs.1 Crore to Rs. 2 Crore. Net Profit @ 8% will have to be declared in the Income Tax Return, if Sale is less than 2 Crores, otherwise Tax Audit will apply. Firms will have to declare income @ 8% of the Sales and pay tax on the same. Salary and interest to partners will not be allowed as deduction, as was being allowed earlier.

·         Any person paying tax under presumptive taxation scheme (section 44AD) will have to pay tax under the scheme for a continuous period of 5 years. If he opts out of the scheme during any year, then the option to pay tax on presumptive basis will not be allowed to him for next 5 years, and he will have to maintain proper books of accounts and get them audited during those 5 years.

·         Presumptive Tax introduced for Professionals like doctors, engineers, chartered accountants, architects. Professionals will have to declare income @ 50% of Gross receipts, otherwise will have to get the books of accounts audited. Tax Audit Limit for professionals increased to Rs. 50 lakhs.

ADVANCE TAX & RETURNS

·         Advance Tax will now have to be paid in four installments by all assessees – 15th June, 15th September, 15th December, 15th March. Earlier these installments were only for the Companies.

·         If Income Tax Return (in which Refund is due) is filed late, then department will not pay interest for the delayed period.

·         Now Income Tax Return can be filed only till one year from the end of the Financial Year. Earlier this limit was 2 years.

·         Income Tax Return which was filed after the due date could not be revised. Now the late filed return can also be revised if there is any mistake in the original return.

·         Earlier Dividends were exempt in the hands of the recipients. Now Dividend recipient will be liable to pay tax @ 10% if dividend received during the year is more than 10 lakhs.

TDS/TCS

·         Threshold limit for deduction of TDS on Commission has been increased from Rs.5000/- to Rs.15000/-. TDS on Commission reduced from 10% to 5%.

·         Threshold limit for deduction of TDS on Contract (Section 194C) increased to Rs.100000/- per year from Rs.75000/-.

·         Recipients of  Rental Income can also file Form 15G/15H for non deduction of TDS, if total income is below taxable limit.

·         TCS @ 1% introduced on Sale of any Goods or Services in Cash exceeding Rs.2 lakhs. If any Goods/Services are sold and payment is received in Cash exceeding Rs. 2 lakhs, then TCS will have to be collected from the person and paid to the government on monthly basis.

SERVICE TAX

·         Krishi  Kalyan Cess @0.5% introduced. W.e.f. 1st June 2016, effective rate of service tax will be 15% (Service Tax 14%, Swach Bharat Cess 0.5%, Krishi Kalyan Cess @ 0.5%).

·         Annual Return of Service Tax introduced. Earlier there were only two half yearly returns of service tax. Now there will be three returns -  2 Half yearly and one annual.

·         Delayed payment of Service Tax, Interest @ 15% will have to be paid. However if Service Tax is collected but not paid to Government, then interest @ 24% will have to be paid 

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

CENTRAL BOARD OF DIRECT TAXES

NEW DELHI

Circular No. 17/2015

Dated : 06th October, 2015

SUBJECT : MEASUREMENT OF THE DISTANCE FOR THE PURPOSE OF SECTION 2(14)(III)(B) OF THE INCOME-TAX ACT FOR THE PERIOD PRIOR TO ASSESSMENT YEAR 2014-15.

"Agricultural Land" is excluded from the definition of capital asset as per section 2(14)(iii) of the Income-tax Act based, inter-alia, on its proximity to a municipality or cantonment board.  The method of measuring the distance of the said land from the municipality, has given rise to considerable litigation. Although, the amendment by the Finance Act  2013  w.e.f. 1.04.2014 prescribes the measurement of the distance to be taken aerially, ambiguity persists in respect of earlier periods.

2. The matter has been examined in light of judicial decisions on the subject. The Nagpur Bench of the Hon. Bombay High Court vide order dated 30.03.2015 in ITA 151 of 2013 in the case of Smt. Maltibai R Kadu has held that the amendment prescribing distance to be measured aerially, applies prospectively i.e. in relation to assessment year 2014-15 and subsequent assessment years. For the period prior to assessment year 2014-15, the High Court held that the distance between the municipal limit and the agricultural land is to be measured having regard to the shortest road distance. The said decision of the High Court has been accepted and the aforesaid disputed issue has not been further contested.

3. Being a settled issue, no appeals may henceforth be filed on this ground by the officers of the Department and appeals already filed, if any, on this issue before various Courts/ Tribunals may be withdrawn/ not pressed upon.  This may be brought to the notice of all concerned.

(D S CHAUDHRY)

CIT (A & J), CBDT, New Delhi.