Read the fine print of the Union Budget:
• Capital gains exemption in case of investment in a residential property under Section 54: Capital gains tax on selling property was exempt if the money was invested in a residential property in India or abroad. This was interpreted as buying more than one flat in an apartment building. It has now been clarified that exemption from capital gains would be restricted to only one house and within India.
• The Budget has extended the income-tax break granted to the Special Undertaking of the Unit Trust of India for five years till March 31, 2019. The entity was created when the Unit Trust of India collapsed in 2001 to hold stakes in Axis Bank, ITC and L&T. It was given income-tax exemption initially up to 2008, later extended to 2014.
• Amendments in Section 115JC: Companies claiming investment-linked deductions under Section 35AD would have to pay an alternate minimum tax at the rate of 18.5% even if they have exempt status under any other sections from paying taxes. This has been done to widen the tax base.
• The Budget has entailed that income earned by foreign institutional investors on sale of securities will be treated as capital gains. This decision creates some much-needed clarity in a scenario that until now has been marred by uncertainty on the treatment of income that accrues to foreign institutional investors from share sales as capital gains or business income. Section 2 (14) of the Income Tax Act defines the term “capital asset” to include property of any kind held by an assessee, whether or not connected with his business or profession, but does not include any stock-in-trade or personal assets as provided in the definition.
• The central outlay on health expenditure is pegged at R8,426 crore, a nearly 75% fall from 2013-14 budgeted number. However, R25,459 crore has now been budgeted as state and Union Territories outlay, which implies operational control in hands of states.
• The government has restructured about 126 existing centrally sponsored schemes (inclusive of healthcare plans) to about 66 schemes which includes 17 flagship programmes.
Service tax exemption extended to clinical research on human participants is withdrawn.
• Service tax levied on service provided by common biomedical waste treatment facility operators to clinical establishments is now exempt.