INDEX Direct Taxation Indirect Taxation Corporate and Other Laws International Trade

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NEWSLETTER –AUGUST 2014

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INDEX

• Direct Taxation

• Indirect Taxation

• Corporate and Other Laws

• International Trade

• Statutory Due Dates for August 2014

Newsletter –August 2014

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DIRECT TAXATION Index

• Budget 2014

The following are the major highlights of the Union Budget presented on 10th July 2014:

Personal Income-tax exemption limit raised by ` 50,000/- that is, from ` 2 lakh to `₹ ₹ ₹2.5 lakh in the case of individual taxpayers, below the age of 60 years. Exemption limit raised from ` 2.5 lakh to 3 lakh in the case ₹ ₹of senior citizens.

Investment limit under section 80C of the Income-tax Act raised from ` 1 lakh to ` 1.5 lakh.₹ ₹Deduction limit on account of interest on loan in respect of self occupied house property raised from ` 1.5 lakh ₹

to ` 2 lakh.₹Investment allowance at the rate of 15 percent to a manufacturing company that invests more than ` 25 crore ₹

in any year in new plant and machinery. The benefit to be available for three years i.e. for investments upto 31.03.2017.

Investment linked deduction extended to two new sectors, namely, slurry pipelines for the transportation of iron ore, and semi-conductor wafer fabrication manufacturing units.

Newsletter – August 2014

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Continued….

10 year tax holiday extended to the undertakings which begin generation, distribution and transmission of power by 31.03.2017.Income arising to foreign portfolio investors from transaction in securities to be treated as capital gains.Concessional rate of 15 percent on foreign dividends without any sunset date to be continued.The eligible date of borrowing in foreign currency extended from 30.06.2015 to 30.06.2017 for a concessional tax rate of 5 percent on interest payments. Tax incentive extended to all types of bonds instead of only infrastructure bonds.Introduction of a “Roll Back” provision in the Advanced Pricing Agreement (APA) scheme so that an APA entered into for future transactions is also applicable to international transactions undertaken in previous four years in specified circumstances.Introduction of range concept for determination of arm’s length price in transfer pricing regulations.

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Continued….

Allowed use of multiple year data for comparability analysis under transfer pricing regulations. Removed tax arbitrage, rate of tax on long term capital gains increased from 10 percent to 20 percent on transfer of units of Mutual Funds, other than equity oriented funds.Income and dividend distribution tax to be levied on gross amount instead of amount paid net of taxes.In case of non deduction of tax on payments, 30% of such payments will be disallowed instead of 100 percent.

•IT department adds to the woes of SEZ units

The income-tax department on Wednesday 30th July 2014 clarified that businesses running Special Economic Zones (SEZs) in the IT and ITeS sector would not be eligible for income-tax sops if these export units have more than 20% of their employees deputed from other units by way of business restructure .For SEZ units, which were disappointed with the government not removing the minimum alternate tax (MAT) and dividend distribution tax (DDT) in the first full-year Budget of the Modi government, the tax department’s move brings added woe to IT sector.

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INDIRECT TAXATION Index

•Budget 2014

The following are the Budget highlights with respect to Indirect Taxes:

There are no major changes in the rate of tax/duty.Sale of space on all media such as internet, bill boards, aerial advertising etc are now liable for Tax.Sale on print media continues to remain in Negative list. Limitation of 6 months is introduced to claim cenvat credit on input and input services.Deposit of 7.5% to 10% of the total tax and penalty demanded proposed, made a mandatory pre-condition for being eligible to file an appeal under service tax and excise legislations.Increased rate of interest on delayed payment of service tax

- Interest of 24% to be payable on delay of over 6 months to a year

- Interest of 30% for delay beyond one year


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CORPORATE AND OTHER LAWS Index

•Same person can hold Chairman & MD post in large public companies

Large public companies can now appoint an individual as Chairperson as well as Managing Director or Chief Executive Officer at the same time. This dispensation will be available for public companies with a paid-up capital of Rs. 100 crore or more and an annual turnover of Rs. 1,000 crore or more. It will only be available for companies engaged in multiple businesses and have appointed a CEO for each such business. This would mean that large public companies with multiple businesses would not be governed by the new company law requirement of having different individuals for the positions of Chairperson, Managing Director or CEO.

The new company law – which came into effect from April 1– had stipulated that a company cannot appoint an individual to the post of Chairman as well as Managing Director at the same time.

However, this stipulation did not apply if the Articles of Association of a company explicitly provided for such an appointment. Also, it will not apply if the company concerned does not have multiple businesses.

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INTERNATIONAL TRADE Index

•BRICS gets its act together by forming BRICS Bank

Leaders of the five BRICS countries - Brazil, Russia, India, China and South Africa have launched the long-promised development bank and a reserve currency pool, marking their foray in global finance independent from

the West-developed IMF and World Bank system.

The bank will be an additional source of long term finance for infrastructure projects in India. In addition, such a bank will also be instrumental for increasing economic cooperation among BRICS countries, which will ensure more productive use of resources among the 5 nations.The bank aims to support infrastructure and sustainable development projects - public or private - in BRICS and other emerging market economies and developing countries through loans, guarantees, equity participation and other financial instruments. It will also cooperate with international organisations, as well as national entities, public or private, in particular with international institutions and national development banks. Besides, it will provide technical assistance for the preparation and implementation of the projects to be supported by the Bank.


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STATUTORY DUE DATES FOR AUGUST 2014 Index

•Statutory Due Dates Calendar for August 2014


Due Date Statutory Compliance

5th August 2014 Payment of Service Tax/ Excise duty

7th August 2014 Payment of TDS

15th August 2014 Payment of Provident Fund contribution/ Profession Tax

21st August 2014 Payment of ESIC/ MVAT

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Newsletter –August 2014

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INDEX Direct Taxation Indirect Taxation Corporate and Other Laws International Trade

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