HOTEL AND RESTAURANT ASSOCIATION WESTERN INDIA Presentation on 3 rd March, 2015 ON FINANCE BILL, 2015 D.M. HARISH & CO., ADVOCATES.

HOTEL AND RESTAURANT ASSOCIATIONWESTERN INDIA

Presentation on 3rd March, 2015ON

FINANCE BILL, 2015

D.M. HARISH & CO.,ADVOCATES

ByMR. ANIL HARISH,

PartnerD.M. Harish & Co., Advocates

305-09, Neelkanth, 98 Marine Drive, Mumbai 400 002

Email: dmhco@dmharish.comTel: 022-22817272, 43342000

Finance Minister’s Speech

“We must address the problem of black money”

“High Level Committee to be to be formed to interact with Trade and Industry on a regular basis.”

“100 Smart Cities”

“Urban RenewalDevelop housing, Safe Drinking Water, Solid Waste Management, Digital Connectivity”

“Housing for all by 2022”

“e-Biz Platform by 31.12.2014”

“Tourism”

“Visas on Arrival”

Only Overseas Black Money. Bill to be introduced.

Not yet done.

Swachh Bharat Abhiyaan.

Repeated.

Started.

25 Cultural World Heritage Sites to be restored.

43 countries done, to go up to 150 countries.

D.M. HARISH & CO.,ADVOCATES3

2014 2015

IFC World Bank Rankings - India(2014 & 2015)

Criteria 2014 2015

Starting a business 156 158

Ease of doing business 140 142

Dealing with Construction Permits

183 184

Enforcing Contracts 186 186

Registering Property 115 121

Paying Taxes 154 156

Trading across borders 122 126

Ease of doing business in India(Overall)

2008 (120)

2009 (122)

2010 (133)

2011 (134)

2012 (132)

2013 (132)

2014 (140)

2015 (142)

• Portal through which a person would be able to apply and manage all licenses, clearances, registrations, filings etc.

• Not required to go to various departments individually.• Finance Minister’s speech (para 52)

“I have myself launched the e-Biz Portal which integrates 14 regulatory permissions at one source. Good States are embracing and joining this platform.”

• At present www.ebiz.gov.in offers services such as– entrepreneurs willing to engage in manufacturing activities to obtain

Industrial License, which is required for certain sectors falling under the aegis of compulsory licensing as per the Industries Development and Regulation Act, 1951.

– Application Form for issue in Importer Exporter Code(IEC) Number– Name availability, DIN, Certificate of Incorporation – Employer registration with Employee Provident Fund Organisation

Wealth Tax

• No Wealth Tax from Assessment Year 2016-17.• However, information about personal assets to be

given in Income-tax Returns. • A table for the same appears in ITR-3 [Return to

be filled in by Individuals/HUFs being partners in firms and not carrying out business or profession under any proprietorship] and in ITR-4 [For Individuals/HUFs having income from a proprietory business or profession]

Schedule AL

Asset and Liability at the end of the year (other than those included in Part A – BS of the return of the Firm in which partner) (Applicable in a case where total income exceeds Rs. 25 lakh) In case total income exceeds 25lakh, AL Schedule is mandatory.The values in all the fields have to be zero or above. In case total income is Rs 25 lakh or below, the schedule AL is optional

DETAILS

OF ASSET AND

LIABILTY

A Particulars of Asset Amount (Cost) (Rs.)

1. Immovable Asset a Land 1a b Building 1b 2. Movable Asset a Financial Asset

i Deposits in Bank (including balance in any account) 2ai

ii Shares and securities 2aii iii Insurance policies 2aiii iv Loans and Advances given 2aiv v Cash in hand 2av b Jewellery, bullion etc. 2b

c Archaeological collections, drawings, painting,

sculpture or any work of art 2c d Vehicles, yachts, boats and aircrafts 2d 3 Total 3 0

B Liability in relation to Assets at A B D.M. HARISH & CO.,

ADVOCATES8

Black Money Bill

Bill to be introduced in Parliament to achieve the objective of curbing black money.

Punishment :

Inadequate disclosure or evasion related to foreign assets

Imprisonment upto 10 Years, and/orPenalty may also be levied at 300% of the tax due. Such offence will be Non –compoundable offence.

For non filing of returns or filing of returns with inadequate disclosure of foreign assets.

Rigorous imprisonment upto 7 years

Offender will not be permitted to approach Settlement Commission

Black Money Bill

Who will be liable for penalty and prosecution ?

Individuals, Banks, Entities, Financial Institutions

Other Points:• Date of opening of foreign account would be mandatorily

required to be specified by the assessee in the return of income.• One time opportunity may be given to the Black money holder to

pay taxes and repatriate their funds. This facility is likely to be announced upon introduction of comprehensive legislation in the session of Parliament.

Black Money Bill

Post Budget

Revenue Secretary, Mr. Shaktikanta Das• “One-time compliance opportunity”• “Will not affect students and professionals”• “Penalties and other charges payable but no

prosecution in this compliance period.”• Other Steps: Such as Hotel Payments over

Rs.5,000/- by credit or debit cards.

Prevention of Money Laundering Act, 2002

• (u) "proceeds of crime" means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property OR WHERE SUCH PROPERTY IS TAKEN OR HELD OUTSIDE THE COUNTRY, THEN THE PROPERTY EQUIVALENT IN VALUE HELD WITHIN THE COUNTRY;

• “Special Court” has replaced Adjudicating Authourity• Additional power of “Special Court”:

– The Special Court may order the Central Government to restore confiscated property to a claimant with a legitimate interest in the property & has suffered a quantifiable loss.

– The claim should be by person acting good faith and should have taken reasonable precautions.

Real Estate – Benami Transactions

• A separate bill viz. Benami Transactions (Prohibition) Bill will be introduced to deal with black money associated with Benami Transactions in real estate.

• It will allow for confiscation of benami property and provide for prosecution, blocking a major avenue for generation of black money.

• Section 269SS - Advance of more than Rs.20,000/- in cash for purchase of property – Penalty on seller of 100%

• Section 269T – repayment of such advances in Cash – Penalty on seller of 100%

• Quoting of PAN is being made mandatory for any purchase or sale exceeding Rs.1,00,000/-

Gold Monetization Scheme

• Interest will be earned by depositors. • Jewellers can obtain loans.• Sovereign Gold Bonds will carry interest

and be redeemable in cash in terms of the face value of the gold.

New Section 37A:

Seizure of Indian assets or funds equivalent to foreign exchange

Section 6 to be amended to provide that Central Government and Reserve Bank of India may prescribe permissible capital account transactions (not involving debt instruments) and limits &conditions for the same.

Section 6

• Foreign Company will be Resident of India if its place of effective management, at any time in that year, is in India

• “place of effective management” means a place where key management and commercial decisions that are necessary for the conduct of the business of an entity as a whole are, in substance made.

• Section 195 – Payment to Non-Resident

Payer has now to give information to Income-tax Department.

• Section 271-I

Penalty of Rs.1,00,000/- for failure to furnish information.

Section 115A

Withholding tax on • Royalty or • Technical Know-how fees

10% as against 25%.

SEBI Regulations for REITs have been framed.

Section 10(23FCA)• Any income of a REIT by way of renting or leasing or

letting out any real estate asset owned directly shall be exempt in the hand of the REIT.

• But taxable in the hand of the investor.

Section 194-I• No TDS on Rental Income paid to REIT.

Section 32

Depreciation

If asset is used for less than 180 days then 50% of normal rate of depreciation is given.Now remaining 50% shall be allowed in the next financial year

eg. Cost Rs.100 & Depreciation 20% & asset used for less than 180 days

Section 32

(i) (ii)

Section 80JJAA

• Additional deduction of 30% of salary, for new workmen in a factory, if it has more than 50 workmen (as compared to 100 earlier).

• Presently only for Company; Proposed for all assessees.

(Available for 3 years, if workers are there for more than 300 days in the year.)

Section 92BA

Domestic Transfer Pricing

Shall apply if such transactions are of more than Rs.20,00,00,000/- as against Rs.5,00,00,000/-

Section 95

“GAAR” – postponed to Assessment Year 2018-19.

“Direct Taxes Code” – dropped.

Section 2(15)

• Yoga treated as a “Charitable Purpose”

• Trust may earn income from(i) Business activity undertaken in the normal

course

(ii) Aggregate receipt from such activity is 20% of total

Section 11

Charitable Trusts• Application for accumulation has to made in

such form and manner as may be prescribed before the due date of filing of the return.

• Further, the return has to be filed in time, and money has to be invested in approved form u/s 11(5)

Section 158AA

If a question of law arises in the case of an assessee and which is identical with a case pending before the Supreme Court then instead of filing an Appeal to the appellate tribunal the CIT may direct that an application be filed before tribunal to keep matter in abeyance.• If assessee agrees.• If assessee does not agree, Appeal will be filed. • If assessee does agree – later, when Supreme Court

decision comes, the Department may file the Appeal.

• On Salaries

Section 192 – Deductor to obtain all proofs of deduction claimed.

• On Payments to Contractors

Section 194C – TDS will be deductible on payments to transporters who have more than 10 goods carriages, unless they give a certificate.

Section 255

Single member bench of ITAT may be constituted for additions of upto Rs.15,00,000/- (instead of upto Rs.5,00,000/-)

Section 263 – Revision by Commissioner

AO’s order shall be deemed to be erroneous if:

a) passed without making enquiries or verification which should have been made.

b) order is passed allowing any relief without enquiring into the claim.

c) the order has not been made in accordance with any directions of the CBDT u/s. 119

d) the order has not been made in accordance with any Supreme Court or jurisdictional High Court decision, which is contrary to assessee’s stand.

The Vodafone Issue

Section 9 - Transfer of shares of Overseas Company will be taxable in India if it derives its value substantially from assets “tangible & intangible” located in India.

i. Value of Indian assets exceeds Rs.10 crore and

ii. Represents atleast 50% of value of all assets of the Company

Explanation 7

However, if Transferor does not have the right of management or control or does not hold voting rights or interest exceeding 5%, such transfer will not be taxable in India

Rates of Tax

• Maximum Rate of Income-tax

Because of 2% increase in surcharge on higher incomes, has gone up to 34.608%

• Service Tax

Gone up to 14%• Swachh Bharat Cess

Enabling Provision for levy of 2% additional cess on taxable services.

Proposed Rates

• For Companies, rate will be brought down to 25% over the next 4 years.

• Not for Individuals or Partnership firms or Limited Liability Partnerships.

Disclaimer

The material contained herein is not exhaustive and contains certain

generalisations.

THANK YOU

HOTEL AND RESTAURANT ASSOCIATION WESTERN INDIA Presentation on 3 rd March, 2015 ON FINANCE BILL, 2015 D.M. HARISH & CO., ADVOCATES.

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