Budget reflects finance minister’s vision of reforms

consensus is for a threshold of ₹750 million equivalent in local currency — about ₹55,000 crore. This is, however, not specified in the Bill.

EQUALISATION LEVY ON DIGITAL TRANSACTIONS In order to address challenges in taxing digital transactions, a new Chapter titled “Equalisation Levy” is proposed to be inserted in the Finance Bill. This is in line with OECD recommendations on BEPS, and relates to consideration from specified services received or receivable by a non-resident Indian from a resident Indian.

The government chose to adopt a separate 6% levy, instead of tax under Income-tax Act, which may lead to points of doubt as, from a foreign tax credit perspective, it is highly debatable how this levy would be characterised in the home country of the recipient, as the term “tax” Article 2 of DTAA is tax under Incometax Act 1961, which the proposed levy is not.

TAXATION OF INCOME FROM PATENTS

A special tax rate of 10% (plus surcharge and cess) on gross basis will apply for eligible resident assessee (in whose name the patent is registered) who earns income from the exploitation of patents registered in India.

DIRECT TAX DISPUTE RESOLUTION SCHEME

This is applicable where cases are pending for disposal before the CIT(A) as on February 29, 2016 against any assessment or penalty order and for appeals based on any retrospective amendments made in the Income Tax Act or Wealth Tax Act . It has laid down conditions for settling pending appeals with minimum or no penalty.

INCOME DECLARATION SCHEME

The Bill proposes a Declaration Scheme for persons having undisclosed income for up to 2015-16, to declare the income and pay tax at a proposed rate of 30%, and 25% surcharge on the tax payable (to be called the Krishi Kalyan cess), as well as a 25% penalty of tax payable – all totalling to 45% of the undisclosed income. This scheme is not to be construed as any benefit, concession or immunity on any person other than the one making the declaration.