UNION BUDGET HIGHLIGHTS

1ST FEBRUARY, 2018

CORPORATE TAXATION DEPARTMENT

 BUDGET HIGHLIGHTS
 Budget 2018-19 reflects the government’s firm commitment to substantially boost
investment in Agriculture, Social Sector, Digital payments, Infrastructure and
Employment generation.

 Fiscal Deficit was brought down from 4.1% in 2014-15 to 3.9% in 2015-16, and to
3.5% in 2016-17. Revised Fiscal Deficit estimates for 2017-18 are Rs. 5.95 lakh crore
at 3.5% of GDP. Projected Fiscal Deficit is 3.3% of GDP for the year 2018-19.

 India achieved an average growth of 7.5% from 2014-15 to 2016-17. Indian

economy is now 2.5 trillion dollar economy – seventh largest in the world. India
is expected to become the fifth largest economy very soon. On Purchasing Power
Parity (PPP) basis, India is already the third largest economy. IMF, in its latest
Update, has forecasted that India will grow at 7.4% during 2018-19.

 Government is providing free LPG connections to the poor of this country

through Ujjwala Yojana. Initially target was to provide free LPG connections
to about 5 crore poor women which has now been increased to 8 crores.

 Under Saubhagya Yojna, 4 crore household are being provided with electricity
connections.

 Under Swachh Bharat Mission, Government has already constructed more than
6 crore toilets and is planning to construct around 2 crore more toilets.

 Government has launched a major initiative named ‘‘Revitalising Infrastructure

and Systems in Education (RISE) by 2022’’ with a total investment of Rs. 1,00,000
crore in next four years. Higher Education Financing Agency (HEFA) would be
suitably structured for funding this initiative.

 Government has launched a flagship National Health Protection Scheme to cover

over 10 crore poor and vulnerable families (approximately 50 crore beneficiaries)
providing coverage upto 5 lakh rupees per family per year for secondary and
tertiary care hospitalization.

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 Infrastructure is the growth driver of economy. Our country needs massive
investments estimated to be in excess of Rs. 50 lakh crore in infrastructure to
increase growth of GDP, connect and integrate the nation with a network of
roads, airports, railways, ports and inland waterways and to provide good
quality services to our people.

 The attempts made by Government for reducing the cash economy and for
increasing the tax net have paid rich dividends. The growth rate of direct tax
collections in the financial year 2016-17 is 12.6% and in 2017-18 upto 15th January,
2018 is 18.7%.

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 INCOME TAX
A. CORPORATE TAX:-

1. Tax Rate:

No reduction in corporate Tax rates of Companies having turnover of more than Rs. 250
Crore. Currently a Cess of 3% on income tax and surcharge was payable as Education
Cess and Secondary Higher Education Cess which has been replaced with 4% Education
and Health Cess.
Effective tax rate has now increased from 34.608% to 34.944%.

2. Rationalization of Long Term Capital Gains (LTCG) having impact on sale of any listed
stock:

a. Tax @10% shall be applicable on LTCG earned by any assessee exceeding Rs. 1
lakhs.
b. The calculation of LTCG will be without giving benefit of indexation.
c. Grandfathering clause has been brought in for shares acquired prior to 1st Feb,
2018. Cost of acquisition of such shares shall be deemed to be higher of actual cost
or the amount lower of fair market value as on 31st Jan, 2018 or sale consideration
of such shares.
d. The benefit of lower tax rate of 10% without indexation shall be available only if
Security Transaction Tax (STT) is paid at the time of purchase as well as sale of
shares. However government may notify subsequently nature of acquisitions
where such condition shall be relaxed.
e. Deduction under chapter VIA and Tax rebate u/s 87A shall not be available on
these LTCG.

3. Income Computation and Disclosure Standards (ICDS):

Section 145 of the Income Tax Act, 1961 empowers the Central Government to notify
Income Computation and Disclosure Standards (ICDS). In pursuance the central
government has notified ten such standards effective from 1st April 2017 relating to
Assessment year 2017-18.

In view of the recent judgement of Delhi High Court, legal backing has been given to ICDS
provisions in the Finance Bill by making suitable amendments. All these amendments
have been brought w.e.f. 1st April, 2017 and will apply in relation to A.Y. 2017-18 onwards.

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4. Penalty for Non-filing Statement of Financial Transaction:
The Statement of Specified Financial Transactions is required to be furnished under sub-
section (1) of section 285BA of the Income Tax Act, 1961 every Financial Year in Form no.
61 A.

List of specified financial transactions applicable to BPCL are given below:

S.No. Nature and value of transaction Person responsible

Receipt of cash payment exceeding two lakh Any person who is liable
1.
rupees for sale, by any person, of goods or for audit under section
services of any nature 44AB of the Act.
Receipt from any person of an amount A company or institution
2.
aggregating to ten lakh rupees or more in a issuing bonds or
financial year for acquiring bonds or debentures debentures.
issued by the company or institution (other than
the amount received on account of renewal of
the bond or debenture issued by that company).
Receipt from any person of an amount A company issuing
3.
aggregating to ten lakh rupees or more in a shares.
financial year for acquiring shares (including
share application money) issued by the
company.
Buy back of shares from any person (other than A company listed on a
4.
the shares bought in the open market) for an recognized stock
amount or value aggregating to ten lakh rupees exchange purchasing its
or more in a financial year. own securities under
section 68 of the
Companies Act, 2013 (18
of 2013).

Section 271FA has been amended to increase the penalty amount for not filing Statement
of Financial Transaction (SFT) from Rs. 100 per day to Rs. 500 per day. Further in cases
where SFT has not been furnished even after receiving a notice in this regards, penalty
has been increased from Rs. 500 per day to Rs. 1000 per day.

5. Country by Country Reporting:

Due date of filing Country by Country reporting has been extended from due date of filing
of Income Tax return to within 12 months from the end of the reporting accounting year
i.e. 31st March of the financial year subsequent to the previous year for which reporting is
to be done.

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B. PERSONAL TAXATION:
1. No changes in tax slabs, however currently a Cess of 3% on income tax and surcharge
was payable as Education Cess and Secondary Higher Education Cess which has been
replaced with 4% Education and Health Cess.

2. Standard Deduction of Rs 40,000 for salaried employees. However benefit of transport

allowance of Rs 19,200 as provided in Section 10(14) r.w.r. 2BB and Medical
Reimbursement of Rs 15,000 as provided in Section 17(2) are being withdrawn (However,
the transport allowance at enhanced rate shall continue to be available to
differently- abled persons.).

3. Relief to senior citizen:

a. Deduction of interest income on deposits with banks and post offices to be

increased from Rs. 10,000/- to Rs. 50,000/- and TDS shall not be required to be
deducted on such income.

b. Raising the limit of deduction for health insurance premium and/ or medical
expenditure from Rs. 30,000/- to Rs. 50,000/-, under section 80D. All senior citizens
will now be able to claim benefit of deduction up to Rs. 50,000/- per annum in
respect of any health insurance premium and/or any general medical
expenditure incurred.

c. Raising the limit of deduction for medical expenditure in respect of certain

critical illness from, Rs. 60,000/- in case of senior citizens and from Rs. 80,000/-
in case of very senior citizens, to Rs. 1 lakh in respect of all senior citizens, under
section 80DDB.

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 EXCISE
1. Road and Infrastructure Cess (Finance Bill 2018)

a) Road and Infrastructure Cess at the rate of Rs. 8 per litre has been introduced on
Motor Spirit (MS) and High Speed Diesel (HSD)
b) NO Road and Infrastructure Cess is leviable on Ethanol blended petrol and diesel
blended with bio-diesel subject to the following condition:
a. Appropriate duties of Excise has been paid on petrol and diesel
b. GST has been paid on ethanol and bio-diesel used for blending

(Notification No. 10, 11, 12/2018-Central Excise dated 2nd February 2018)

2. Revised duties under Excise on MS and HSD

Changes in Excise Duty rates

Revised Rates
Description
Tariff
of Excisable Existing Rates Effective 02.02.2018
Heading
goods
00:00 hrs

2710 12 19 Motor spirit commonly known as petrol

Basic Excise Duty- Rs.5.66/-

Basic Excise Duty- Rs.7.66/- per
litre+ AED (Road Cess) of Rs. 6/-
per litre +
Branded MS
SAD of Rs. 7/-per litre
Total = Rs. 20.66/- per litre
per litre+ AED (Road Cess)
of Rs. 0/- per litre +
Additional Excise Duty
(Road and Infrastructure
Cess) of Rs. 8/- per litre
SAD of Rs. 7/-per litre
Total = Rs. 20.66/- per litre

Basic Excise Duty- Rs.

Basic Excise Duty- Rs. 6.48/- per
litre+ AED (Road Cess) of Rs. 6/-
Un- per litre +
branded MS
SAD of Rs. 7/-per litre
Total = Rs. 19.48/- per litre
4.48/- per litre+ AED (Road
Cess) of Rs. 0/- per litre +
Additional Excise Duty
(Road and Infrastructure
Cess) of Rs. 8/- per litre
SAD of Rs. 7/-per litre
Total = Rs. 19.48/- per litre

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 2710 19 30 High Speed Diesel (HSD)
Basic Excise Duty- Rs. 10.69/-
per litre + AED (Road Cess) of
Rs. 6/- per litre + SAD of Rs. 1/-
Branded HSD per litre
Total = Rs. 17.69/- per litre
Basic Excise Duty- Rs. 8.33/- per
litre+ AED (Road Cess) of Rs. 6/-
Un- per litre + SAD of Rs. 1/-per litre
branded HSD
Total = Rs. 15.33/- per litre
3. Exemption for North-East States
Vide Notification No. 10/2018-Central Excise dated 2nd February 2018, exempts 50%
of Excise Duty, Additional Duty of Excise (Road and Infrastructure Cess) and Special
Additional Excise Duty when cleared from Numaligarh Refinery.
Basic Excise Duty- Rs.
8.69/- per litre + AED
(Road Cess) of Rs. 0/- per
litre + Additional Excise
Duty (Road and
Infrastructure Cess) of Rs.
8/- per litre
SAD of Rs. 1/-per litre
Total = Rs. 17.69/- per litre
Basic Excise Duty- Rs.
6.33/- per litre+ AED (Road
Cess) of Rs. 0/- per litre +
Additional Excise Duty
(Road and Infrastructure
Cess) of Rs. 8/- per litre
SAD of Rs. 1/-per litre
Total = Rs. 15.33/- per litre
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 CUSTOMS
1. Road and Infrastructure Cess of Rs8/- levied and replacing Additional Duty of
Customs ( Road Cess) and reduction in CVD under Section 3(1) in line with Excise
Law.

2. Introduction of Social Welfare Surcharge replacing Education Cess and Higher &
Secondary Education Cess for imports.

3. Social Welfare Surcharge on MS and HSD is 3%. Surcharge on rest of the non-GST
products is 10%

4. Social Welfare Surcharge on all other GST products is 10%.