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11. Deduction in respect of interest on loan sanctioned during financial year 2013-14 for acquiringresidential house property

Amendmenta. Additional One time Deduction of Upto Rs. 1,00,000 towards interest shall be allowed to

individuals to whom a loan has been sanctioned during Previous Year 2013-14 by a FinancialInstitution / Banks / Housing Finance Companies, subject to;i. Loan Amount should not exceed Rs. 25 Lacs

ii. Value of Residential Property does not exceed Rs. 40 Lacs

iii. Assesse does not own any other Residential Property, on the date of sanction of loan.b. The aforesaid deduction will be allowed only during Assessment Year 2014-15 and AssessmentYear 2015-16 so that the total deduction does not exceed Rs. 1,00,000.

c. The deduction is in addition to a deduction of upto Rs. 1,50,000 allowed to an assesse every year.Impact

a. This provision will not achieve the desired objective of attracting larger investments in the housing

sector as the deduction is only one time deduction whereas the loan so availed will require paymentof interest during the full loan

12. Section 80G: 100% DeductionIt is proposed to allow 100% deduction for amounts donated to National Childrens Fund, being afund of National Importance.13. Section 80GGB & 80GGC: Contribution to a Political Party or and Electoral Trust will not beallowed as a deduction if the same is contributed by way of Cash

14. Deduction for Power Companies

The Sunset clause in terms of Section 80IA providing for deduction to Power generation, distributionand/or transmission companies has been allowed to set up or start transmission / distribution up to31 st March, 2014 i.e. by 1 year.15. Section 80JJAA: Deduction for Additional Wages in Manufacturing Sector

Amendment

The existing provisions contained in Section 80JJAA have been amended to permit deduction of anadditional amount equal to 30% of Additional wages paid to the new regular workman employed bythe assesse in a factory manufacturing goods. Such deduction will be available for three assessmentyears including the assessment year relevant to such previous year in which employment isprovided.

ImpactThe existing Provision had a anomaly, permitting such deduction for all kind of companies and wasbeing used even for white collar employees.16. Section 87: Rebate in Tax of Rs. 2,000

Resident Individuals having total income up to Rs. 5,00,000 will be provided a rebate of up to Rs.2,000 or Tax Payable, whichever is lower.17. General Anti Avoidance Rule (GAAR)

The provisions of Chapter X-A & Section 144BA vide which GAAR was introduced last year hasbeen omitted, a fresh Chapter X-A & Section 144BA has been introduced for General Anti Avoidance

Rule with effect from 1st April, 2016. Similarly the related provisions impacting Double Taxation

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Avoidance Agreements (DTAA) and other similar provisions have been amended to postpone GAARProvisions overriding effect to 1st April, 2016.

The following further amendments have been made in GAAR:-a. An arrangement, the main purpose of which is to obtain a tax benefit, would be considered as animpermissible avoidance arrangement. The current provision of section 96 providing that it should

be the main purpose or one of the main purposes has been proposed to be amended accordingly.b. An arrangement shall also be deemed to be lacking commercial substance, if it does not have asignificant effect upon the business risks, or net cash flows of any party to the arrangement apartfrom any effect attributable to the tax benefit that would be obtained but for the application ofChapter X-A.

c. The Approving Panel shall consist of a Chairperson who is or has been a Judge of a High Court; oneMember of the Indian Revenue Service not below the rank of Chief Commissioner of Income-tax;and one Member who shall be an academic or scholar having special knowledge of matters such asdirect taxes, business accounts and international trade practices.

d. The directions issued by the Approving Panel shall be binding on the assessee as well as theincome-tax authorities and no appeal against such directions can be made under the provisions ofthe Act.

e. The factors like, period or time for which the arrangement had existed; the fact of payment oftaxes by the assessee; and the fact that an exit route was provided by the arrangement, would berelevant but not sufficient to determine whether the arrangement is an impermissible avoidancearrangement.

There are several consequential amendments in other sections relating to procedural matters.

18. Royalty & Fee for Technical Services (Section 115A)

The Tax Deduction at Source on Royalty & Fee for Technical Services has been raised to 25% from current level of 10% .

This is one of the most significant proposed amendments.

19. Dividend received from Foreign Companies (Section 115BBD)

Section 115BBD of Income-tax Act provides for taxation of gross dividends received by an Indiancompany from a specified foreign company (in which it has shareholding of 26% or more) at the rateof 15% if such dividend is included in the total income for the Financial Year 2012-13 i.e. AssessmentYear 2013-14.

The above provision was introduced as an incentive for attracting repatriation of income earnedby residents from investments made abroad subject to certain conditions.

In order to continue the tax incentive for one more year, it is proposed to amend section

115BBD to extend the applicability of this section in respect of income by way of dividends receivedfrom a specified foreign company in Financial Year 2013-14 also, subject to the same conditions.This amendment will take effect from 1st April, 2014 and will, accordingly, apply in relation to

the assessment year 2014-15.It is proposed that where the tax on dividends received from the foreign subsidiary is payable

under section 115BBD by the holding domestic company then, any dividend distributed by theholding company in the same year, to the extent of such dividends, shall not be subject to DividendDistribution Tax under section 115-O of the Income-tax Act. This amendment will take effect from 1 stJune, 2013.

20. Tax on distributed income by the Mutual Funds

Under the existing provisions of section 115R any amount of income distributed by the specifiedcompany or a Mutual Fund to its unit holders is chargeable to additional income-tax. In case of any

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distribution made by a fund other than equity oriented fund to a person who is not an individual andHUF, the rate of tax is 30% whereas in case of distribution to an individual or an HUF it is 12.5% or25% depending on the nature of the fund.

In order to provide uniform taxation for all types of funds, other than equity oriented fund, it isproposed to increase the rate of tax on distributed income from 12.5% to 25% in all cases where

distribution is made to an individual or a HUF.

21. Infrastructure Debt Fund

In order to bring parity in taxation of income from investment made by a non-resident Investorin an IDF whether set up as a IDF-NBFC or IDF-MF, it is proposed to amend section 115R to providethat tax @ 5% on income distributed shall be payable in respect of income distributed by a MutualFund under an IDF scheme to a non-resident Investor.

This amendment will take effect from 1 st June, 2013.