Shri Arun Jaitley , Hon’ble Minister for Finance , Defence and Corporate Affairs presented Union Budget 2014 which is progressive & growth oriented Union Budget paving way for strong and vibrant India.

CA.K Raghu, President, ICAI said, “First of all, ICAI welcomes the announcement by the Hon’ble Finance Minister that there is an urgent need to converge the Indian Accounting Standards with the International Financial Reporting Standards (IFRS). In this regard, the Hon’ble Financial Minister has proposed that the new Indian Accounting Standards (Ind AS) converged with IFRS shall be adopted by the Indian Companies from the financial year 2015-16 voluntarily and from the financial year 2016-17 on mandatory basis. The Institute of Chartered Accountants of India has always propagated the need to converge with IFRS at the earliest to bring the financial reporting practices of the Indian corporates at par with the global standards which are used in more than one hundred countries. This would also enable India to fulfill its G-20 commitments in this regard. ICAI has already finalised the Indian Accounting Standards in accordance with the corresponding IFRS effective as of this date. The ICAI feels that to reap the advantage of convergence, the latest IFRS should be used for the purpose of formulation of Ind AS as already done by the ICAI. The new/amended Indian Accounting Standards converged with IFRS will be examined by the relevant authorities of the Ministry of Corporate Affairs before being notified under the Companies Act 2013” .

The Minister has introduced sweeping tax reforms in tax administration for a stable tax regime. Announcement regarding retrospective amendments would facilitate a healthy investment climate in India. ICAI welcomes the advance ruling to resident tax payers with respect of income tax liability and has welcomed the constitution of additional IT benches and enlarging the scope of Settlement Commission.

On the personal taxation front, ICAI is happy to note that its suggestions have been considered favorably by the Finance Minister.Some of them are, an increase of basic exemption by Rs. 50,000, additional interest deduction of Rs. 50,000 in respect of self-occupied property, and increase in investment limit under section 80C from Rs.1 lakh to Rs.1.50 lakh. An individual tax payer in the highest tax bracket would be able to save Rs.36,050 on account of the above proposals. The ordinary man’s “achhe din” are on their way.

Benevolent Proposals in International Tax

A few favourable amendments are proposed in Transfer Pricing. The Finance Minister has announced liberal range of Arms Length Price. The range will be notified through rules. He proposes to amend Section 92CC to provide for roll back mechanism for dealing with Arms Length Price issues relating to transactions entered into during the period prior to Advance Pricing Agreement. Roll back relief will be provided on case to case basis for four years preceding the first previous year for which Advance Pricing Agreement applies.

Finance Minister proposes to continue to tax certain dividends received from foreign subsidiaries at the concessional rate of 15%.

Incentives to boost investment

In order to give a fillip to the manufacturing sector, the Finance Minister has extended the benefit of investment allowance@15% of investment made in excess of Rs.25 crore in any year in new plant and machinery. This proposal of the Finance Minister, considering ICAI’s suggestion in its Post-budget Memorandum 2013 relating to reduction of limit of investment as well as increase in time limit, will, no doubt, go a long way in incentivizing small entrepreneurs. Further, the extension of investment linked deduction to two new sectors, namely, slurry pipelines for the transportation of iron ore, and semi-conductor wafer fabrication manufacturing units is yet another positive measure to boost investment in these two significant sectors.

The proposal to extend the terminal date for availing 10 year tax holiday to the undertakings which begin generation, distribution and transmission of power by 31.03.2017 is in line with ICAI’s suggestion. This will help ensure stability in the Government’s policy to help the investors better plan their investments.

The proposal to reduce basic customs duty on specified inputs for manufacture will encourage domestic manufacture as also address the issue of inverted duties. Further, the proposal to reduce the basic customs duty on reformate, ethane, propane etc. would also go to boost new investment and capacity addition in the chemicals and petrochemicals sector. Furthermore, to provide a fillip to the capital goods, consumer durables and automobile sectors, the excise duty concessions have been extended beyond 30th June 2014 for a period of 6 months up to 31st December 2014.

With all these measures, it can be hoped that the industry will show positive results in the days to come.