The Union Budget 2014-15
was presented in Parliament today. In his address, Finance Minister
Arun Jaitley commented on goals of the Indian economy and laid out his
budget proposals for 2014-15. The budget speech also mentioned a few
changes to some Acts. These include the Goods and Services Tax, the
Direct Taxes Code, the Indian Financial Code (FSLRC), the Mines and
Minerals Act, the Insurance Laws (raising FDI), the Apprenticeship Act,
and the Price Chits and Money Circulation Schemes Act.
Policy Highlights of the Budget
Personal Income Tax
Dividend Distribution Tax: Earlier, the tax was
imposed on the dividend distributed. Now the tax amount will also be
grossed up to compute the base on which it will be imposed.
Effectively, the tax rate has increased from 15% to 17.65%.
Long Term Capital Gains Tax: Generally, a person has
to hold an asset for 36 months for it to be classified as long term;
however, this period is only 12 months in the case of a share in a
company or any other listed security, a mutual fund unit or a zero
coupon bond. The latter is being amended and increased to 36 months for
an unlisted security or a mutual fund unit (other than an equity
Real Estate Investment Trusts: A specific tax regime
is being placed that clarifies the tax to be paid by the trust, the
sponsor of an SPV from whom the asset is acquired, and the unit holder.
Incentives for investment
Indirect Taxes: Several rates have been changed in
customs and excise. There are also a few retrospective exemptions in
excise duty. The negative list for service tax has been pruned.
PRS will be further releasing a Vital Stats document on the Budget analysing key issues tomorrow.