The provisions of section 44AD of the Income-tax Act, the threshold limit of presumptive taxation increased from ` 1 crore to Rs 2 crore. If the taxpayer opts for the presumptive taxation scheme, he has to remain in that scheme for 5 years. If he does not offer the income as per the said scheme in any of the five years, he shall not be eligible to claim the benefit under the scheme for next 5 years.

Taxpayer eligible for presumptive taxation scheme under section 44AD of the Income-tax Act shall pay whole amount of advance tax in one instalment on or before the 15th March of the financial year.

Presumptive taxation scheme extended to professionals with gross receipts up to `50 lakh with the presumption of profit being 50% of the gross receipts.

• The determination of residency of foreign company on the basis of Place of Effective Management is proposed to be deferred by one year. It shall now apply with effect from1.04.2017.
• The provisions of section 115JB of the Income-tax Act so as to provide that Minimum Alternate Tax (MAT) shall not be applicable to a foreign company, w.e.f. 01.04.2001 if the foreign company does not have as a permanent establishment under relevant Double Taxation Avoidance Agreement (DTAA) or a place of business in India
• Capital gain arising from transfer of a long term asset being share of a private limited company shall be chargeable to tax at the rate of ten per cent.
• Acquisition of shares by an individual or HUF as a consequence of demerger or amalgamation of a company shall not attract tax liability under section 56(2)(vii) of the Income tax Act.
• A monetary limit of `1.5 lakh is proposed to be provided for annual contribution by an employer to a recognised provident fund as well as superannuation fund.
• Exemption is proposed to be provided for one-time portability from a recognised provident fund or superannuation fund to National Pension System.
• The date of agreement fixing the amount of consideration for the transfer of immovable property and not the date of registration shall be taken for the purposes of computing capital gains in case of transfer of immovable property if any payment in consequence of such agreement has been made by the purchaser of the property through any mode other than cash.
• Fees paid for obtaining right to use the spectrum is to be amortized over the period for which the right to use the spectrum has been granted.
• No set off of losses shall be allowed against deemed undisclosed income u/s 68 to 69D (Unexplained Income & Expenditure) of the Income-tax Act
• where a trust or institution registered u/s 12AA of the Income-tax Act ceases to be charitable organisation or if on dissolution a charitable trust or institution does not transfer all its assets within one year of dissolution to another charitable organization, the amount of accreted income to the extent not transferred shall be charged to additional income-tax at the maximum marginal rate

• The companies located in international financial services centre shall not be liable to dividend distribution tax.
• Minimum Alternate Tax shall be charged at the rate of nine per cent from units located in international financial services centre.
• The transaction in foreign currency of sale of equity share or units of equity oriented funds or units of a business trust taking place on a recognised stock exchange established in international financial services centre shall not be liable to securities transaction tax.
• It is also proposed that the gains arising from transfer of such long term capital asset shall be exempt from tax.
• The transaction in foreign currency of sale of commodity derivatives taking place on a recognised association established in international financial services centre shall not be liable to commodity transaction tax.

I. Foreign Direct Investment (FDI) through Automatic route.

• 49% in Insurance and Pension Sectors
• 100% in Asset Reconstruction Companies

II. 100% FDI will be allowed through FIPB route in marketing of food products produced and manufactured in India

III. Investment limit for foreign entities in Indian stock exchanges will be enhanced from 5 to 15% on par with domestic institutions

IV. The existing 24% limit for investment by FPIs in Central Public Sector Enterprises, other than Banks, listed in stock exchanges, will be increased to 49% to obviate the need for prior approval of Government for increasing the FPI investment.

Withdrawal up to 40% of the corpus at the time of retirement to be tax exempt in the case of National Pension Scheme (NPS).

Annuity fund which goes to legal heir will not be taxable.

In case of superannuation funds and recognized provident funds, including EPF, the same norm of 40% of corpus to be tax free will apply in respect of corpus created out of contributions made on or from 1.4.2016.

Limit for contribution of employer in recognized Provident and Superannuation Fund of ` 1.5 lakh per annum for taking tax benefit.

Exemption from service tax for Annuity services provided by NPS and Services provided by EPFO to employees.

Reduce service tax on Single premium Annuity (Insurance) Policies from 3.5% to 1.4% of the premium paid in certain cases.

Corporate Tax rate proposals:

1. New manufacturing companies incorporated on or after 1.3.2016 to be given an option to be taxed at 25% + surcharge and cess provided they do not claim profit linked or investment linked deductions and do not avail of investment allowance and accelerated depreciation.

2.  Lower the corporate tax rate for the next financial year for relatively small enterprises i.e companies with turnover not exceeding ` 5 crore (in the financial year ending March 2015), to 29% plus surcharge and cess.

3. 100% deduction of profits for 3 out of 5 years for startups setup during April, 2016 to March, 2019. MAT will apply in such cases.

4. 10% rate of tax on income from worldwide exploitation of patents developed and registered in India by a resident.

5. Complete pass through of income-tax to securitization trusts including trusts of ARCs. Securitisation trusts required to deduct tax at source.

6.Period for getting benefit of long term capital gain regime in case of unlisted companies is proposed to be reduced from three to two years.

7. Non-banking financial companies shall be eligible for deduction to the extent of 5% of its income in respect of provision for bad and doubtful debts.

8. Determination of residency of foreign company on the basis of Place of Effective Management (POEM) is proposed to be deferred by one year.

9. Commitment to implement General Anti Avoidance Rules (GAAR) from 1.4.2017.

10. Exemption of service tax on services provided under Deen Dayal Upadhyay Grameen Kaushalya Yojana and services provided by Assessing Bodies empanelled by Ministry of Skill Development & Entrepreneurship.

11. Exemption of Service tax on general insurance services provided under ‘Niramaya’ Health Insurance Scheme launched by National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disability.

12. Basic custom and excise duty on refrigerated containers reduced to 5% and 6%.

Accelerated depreciation wherever provided in IT Act will be limited to maximum 40% from 1.4.2017

Benefit of deductions for Research would be limited to 150% from 1.4.2017 and 100% from 1.4.2020

Benefit of section 10AA to new SEZ units will be available to those units which commence activity before 31.3.2020.

The weighted deduction under section 35CCD for skill development will continue up to 1.4.2020

 

1. 40% of withdrawal at the time of retirement under National Pension Scheme to be tax exempt.
2. Fiscal deficit at 3.5% of GDP in 2016-17.
3. Rs. 25,000 crore for recapitalisation of public sector banks. General insurance companies owned by the govt to be listed in stock exchanges.
4. Small shops should be given the choice to remain open on all 7 days a week.
5. Hub to support SC/ST entrpreneurs.
6. LPG connection for women members of rural homes.
7. Infrastructure and agriculture cess to be levied.

1. New cess introduced for Petrol & Diesel Cars
2. Income Tax surcharge increased to 15% from 12% for those having income above a crore