BUDGET ON DIRECT TAXES 2014 (Private & Confidential) VINOD K.MEHTA & CO. B-5 SATYAM SHOPPING CENTRE, M.G.ROAD,GHATKOPAR(E), MUMBAI TEL: ID:

TOTAL INCOME Individual, HUFIndividual (> 60yrs & < 80 yrs) Individual ( > 80 yrs ) UP TO Rs. 2,50,000NILNil Rs. 2,50,001 TO Rs. 3,00, %Nil Rs. 3,00,001 TO Rs. 5,00, % Nil Rs. 5,00,001 TO Rs. 10,00, % Above Rs. 10,00, % Slab Rates ParticularsRate of Tax For Company, Firm & LLP30 % flat on Total Income

Surcharge in Income Tax ParticularsExistingProposed Individual /HUF/ Firm/ Co- op Soc./ Local Auth. 10% If TI > 1 Cr. Domestic Company5% If TI > 1Cr 10% If TI > 10 Cr 5% If TI > 1 Cr & < 10 Cr 10% If TI > 10 Cr Other than Domestic Co.2% If TI > 1Cr 5% If TI > 10 Cr 2% If TI > 1Cr & < 10 Cr 5% If TI > 10 Cr Non-Resident Person10% if TI > 1Cr

Dividend Distribution Tax – Change in Manner of Computation ParticularsExisting CalculationProposed Calculation Dividend85 DDT12.75 (15% on Net Rs. 85) 15 (15% on Gross Rs. 100) Cost to Company Thus, Tax Liability on DDT increased by 2.25 % Applicable W.E.F. 1 st October 2014.

Classification for Short – Term Capital Asset TYPE OF COMPANYExisting Period Of Holding Proposed Period of Holding Unlisted & Private Company12 Months or less36 months or less Listed on a recognized Stock Exchange 12 Months or less12 months or less Debt Oriented fund12 Months or less36 Months or less Equity Oriented Fund12 Months or less Applicable W.E.F 01 st April 2015 i.e. from A.Y and Subsequent years. The Period of Holding for treating Capital Gain as Short Term has been Changed for UNLISTED Shares and DEBT Oriented Mutual Fund as under :

Long term Capital Gains on Debt Oriented Listed Mutual Fund ParticularsExisting Tax RateProposed Tax Rate Mutual Funds (Other than equity Oriented) 10 % without Indexation OR 20 % with Indexation Mutual Funds (Equity Oriented ) 10 % without Indexation OR 20 % with Indexation 10 % without Indexation OR 20 % with Indexation Applicable W.E.F 01 st April 2015 i.e. from A.Y and Subsequent years. Tax rate on sale of Long Term Listed Mutual Fund (other than Equity oriented Mutual Fund) is proposed to be increased from 10% to 20 %. The summarized impact is as under :

INVESTMENT ALLOWANCE TO A MANUFACTURING COMPANY ParticularsExistingProposed Investment in P & M100 Crore25 Crore Deduction Rate15 % Due Date of Investment In order to encourage the companies engaged in business of manufacture and production of an article or thing to invest substantial amount in acquisition and installation of plant & machinery the following amendments has been made. Applicable W.E.F 01 st April 2015 i.e. from A.Y and subsequent years.

SUN-SET DATE U/S 80IA FOR POWER SECTOR ParticularsExistingProposed Terminal Date For Deduction of Profit & Gains Sunset Clause for Claiming deduction under section 80-IA for power sector undertaking has been extended to 31 st March, 2017 Applicable W.E.F 01 st April 2015 i.e. from A.Y and Subsequent years.

RAISING THE LIMIT U/S 80C ParticularsExistingProposed 80C1 Lakh1.5 Lakhs The maximum deduction limit under section 80 C is proposed to increase from Rs. 1 Lakh to Rs. 1.5 Lakhs The investments qualify for deduction, include life insurance premium, contributions to provident fund, schemes for deferred annuities etc. Applicable W.E.F 01 st April 2015 i.e. from A.Y and Subsequent years.

DEDUCTION FROM INCOME FROM HOUSE PROPERTY ParticularsExistingProposed Interest On Borrowed Capital1.5 Lakh2 Lakhs The maximum deduction Limit in respect of Interest on Home Loan for Self Occupied Property is proposed to raise from 1.5 Lakhs to 2 Lakhs. Applicable W.E.F 01 st April 2015 i.e. from A.Y and Subsequent years.

Taxability of advance forfeited for transfer of a capital asset Proposed : It is proposed to provide for the taxability of any sum of money, ◦ Received as an advance or otherwise in the course of negotiations for transfer of a capital asset. And ◦ Such sum shall be chargeable to income-tax under the head ‘income from other sources’ if such sum is forfeited and the negotiations do not result in transfer of such capital asset. Applicable W.E.F 01 st April 2015 i.e. from A.Y and subsequent years.

TDS Applicable to Maturity Proceed under non-exempt life insurance policy Existing : Any sum received under a life insurance policy, is exempt subject to fulfillment of conditions specified under section. 10(10D). Proposed : It is proposed to insert a new section in the Act to provide for deduction of tax at the rate of 2 per cent. on sum paid (if it is more than Rs 1 Lac)under a life insurance policy, including the sum allocated by way of bonus, which are NOT EXEMPT under section 10(10D) of the Act. Applicable W.E.F 01 st April 2015 i.e. from A.Y and subsequent years.

Corporate Social Responsibility It is proposed to treat any expenditure incurred by an Assessee on the activities relating to corporate social responsibility as per Companies Act, 2013 as not allowable business expense and hence shall not be allowed as deduction. However, the CSR expenditure which is of the nature described in section 30 to section 36 of the Act shall be allowed deduction under those sections subject to fulfillment of conditions, if any, specified therein. Thus, CSR will be NON Deductible and has to be incurred on Income After Tax (Like Dividend). Applicable W.E.F 01 st April 2015 i.e. from A.Y and subsequent years.

Disallowance of expenditure for non-deduction of TDS ParticularsExistingProposed Non-Payment or Non- Deduction of TDS payments u/s 40(a)(ia) 100 % Disallowance30 % Disallowance Existing : In case of non-deduction or non-payment of tax deducted at source (TDS) from certain payments made to residents, the entire amount of expenditure on which tax was deductible is disallowed under section 40(a)(ia). Proposed : In case of non-deduction or non-payment of TDS on payments made to residents as specified in section 40(a)(ia) of the Act, the disallowance shall be restricted to 30% of the amount of expenditure claimed. Applicable W.E.F 01 st April 2015 i.e. from A.Y and subsequent years.

Business of Plying, Hiring or Leasing Goods Carriages The existing provisions of section 44AE of the Act provides for presumptive taxation in the case of an Assessee who is engaged in the business of plying, hiring or leasing goods carriages and not owning more than ten goods carriages at any time during the previous year. Income from the said business is calculated as under: Types of Goods Carriages EXISTING Amt of Presumptive Income PROPOSED Amt of Presumptive Income Heavy Goods Vehicle(HGV) Rs for every Month Rs. 7,500 for Every Month Vehicles Other than HGV Rs for every Month Rs. 7,500 for Every Month Applicable W.E.F 01 st April 2015 i.e. from A.Y and subsequent years.

Speculative Transaction in respect of Commodity Derivatives Proposed : It is proposed to provide that eligible transaction in respect of trading in commodity derivatives carried out in a recognized association AND Chargeable to commodities transaction tax under Chapter VII of the Finance Act, 2013 shall not be considered to be a speculative transaction. Applicable retrospectively from 01 st April 2014 i.e. from A.Y and subsequent years.

Capital Gains Exemption if Investment in a Residential Property  Existing: Under the provisions of section 54 & 54F, Long term capital gain was exempted if, invested (purchased) with in a period of a) one year before OR b) Two years after the date of transfer (i.e. realization of capital gain) OR c) with in period of 3 years constructs Residential House. It was not specified about the Location of Residential Property (Whether in India Or Abroad).  Proposed : It has been proposed to restrict the exemption only if, the property is acquired in INDIA. It is also proposed to allow the said exemption, if Invested in ONE House Only Applicable W.E.F 01 st April 2015 i.e. from A.Y and subsequent years.