BUDGET 2013 – IMPORTANT TAX PROPOSALS
(Financial Year 2013 -14)
DIRECT TAX PROPOSALS
v Tax Slab Rates:
ü Individuals:
Tax Rates for the Individuals will remain the same as per last Financial Year 2012-13, which is as follows :-
- Tax Rates for all the Individual Assessee below 60 years of age
Income Level Rate of Tax
Upto Rs. 2,00,000/- – Nil
Rs. 2,00,001 to Rs. 5,00,000/- – 10%
Rs. 5,00,001 to Rs. 10,00,000/- – 20%
Above Rs. 10,00,000/- – 30%
- In Case of Resident Individuals, who is of the age of 60 years or more but less than 80 years at any time during the previous year:-
Income Level Rate of Tax
Upto Rs. 2,50,000/- – Nil
Rs. 2,50,001 to Rs. 5,00,000/- – 10%
Rs. 5,00,001 to Rs. 10,00,000/- – 20%
Above Rs. 10,00,000/- – 30%
- In Case of Resident Individuals, who is of the age of 80 years or more at any time during the previous year:-
Income Level Rate of Tax
Upto Rs. 5,00,000/- – Nil
Rs. 5,00,001 to Rs. 10,00,000/- – 20%
Above Rs. 10,00,000/- – 30%
The above Slab rates will remain common in case of Hindu Undivided Family, Association of Persons, Body of Individuals, Artificial Juridical Person.
ü Partnership Firms:
There is no change in the rate of Income-tax in respect of Partnership Firms and will be charged @ 30% as Income-tax on their Income.
ü Companies:
There is no change in the rate of Income-tax in respect of Companies and will be charged @ 30% as Income-tax on their Income.
ü Surcharge:
- In respect of Individuals, Hindu Undivided Family, Association of Persons, Body of Individuals, Artificial Juridical Person, Co-Operative Societies, Local Authorities and Partnership Firms surcharge will be levied at the rate of 10%, in case of having a total Income exceeding Rs. 1 Crore. However, Marginal Relief is applicable.
- In respect of Domestic Companies, Surcharge will be levied at the rate of 5% if the total income exceeds Rs. 1 Crore but does not exceed Rs. 10 Crores, will be levied at the rate of 10% if the total income exceeds Rs. 10 Crores. However, Marginal Relief is applicable in both the cases.
- In respect of Companies other than Domestic Companies, Surcharge will be levied at the rate of 2% if the total income exceeds Rs. 1 Crore but does not exceed Rs. 10 Crores, will be levied at the rate of 5% if the total income exceeds Rs. 10 Crores. However, Marginal Relief is applicable in both the cases.
- In other cases, (Including Sections 115-O, 115QA, 115R or 115TA), Surcharge will be levied at the rate of 10%.
ü Cess:
Education Cess @ 2% and Secondary Education Cess @ 1% shall continue to be levied in respect of all types of assesses.
v In Case of Non-Residents, who are having Income by way of Royalty and Fees for technical services as under section 115A, tax rate is proposed to be increased from 10% to 25% in pursuance of an agreement entered after 31.03.1976.
v The New Section 32AC of the Income tax Act has come to provide deduction at the rate of 15% of aggregate amount of actual cost of new assets acquired and installed, for the Companies engaged in the business of manufacture of an article or thing and investing a sum of more than Rs. 100 Crores in Plant and Machinery during the period 1st April 2013 to 31st March 2015, also leaves the restriction that the plant and machinery must not be transferred for a period of 5 years.
v Individuals having total income of Rs. 5 Lakhs or below, can claim the rebate to the extent of Income-tax payable or Rs. 2,000/- whichever is Less.
v The New Section 80EE of the Income Tax Act has been inserted to benefit the individuals (First Home Buyers) who avail the Housing Loan for Rs. 25 Lakhs and invest Rs. 40 Lakhs or below in Construction or acquisition of residential house property. The Interest payable on such loan will be allowed as deduction u/s 80EE to the extent of Rs. 1 Lakh. In case, the interest payable for the previous year is less than Rs. 1 Lakh, the balance amount shall be allowed in the next assessment year. This deduction is over and above the existing deduction of Rs. 150000/- on account of Interest on borrowed capital , in respect of self occupied properties.
v In respect of LIC policies, the restriction to claim the exemption under the clause 10D of Section 10 and deduction under (3A) of section 80C, the existing condition of premium payable for any of the years during the term of the policy must not exceed 10% of the ‘actual capital sum assured’ has been relaxed to the extent of 15%. As a result, a sum equal to 15% of the policy amount , paid as premium can now be claimed as deduction as against the existing limit of 10%.
v The existing provisions of section 80CCG (Rajiv Gandhi Equity Savings Scheme) is proposed that investment in listed units of an equity oriented fund shall also be eligible for deduction for three consecutive assessment years and also the limit of gross total income is increased to Rs. 12 Lakhs from the existing limit of Rs. 10 Lakhs.
v In case of donations made to the National Children’s Fund, the assessee can avail the whole amount (100%) as deduction u/s 80G instead of 50%
v Section 115BBD has been introduced to provide taxation at the rate of 15% on gross dividend received by an Indian Company from a specified foreign company (in which it has shareholding of 26% or more)
v The New Section 194-IA has been inserted to provide that every transferee, at the time of making payment or crediting of any sum of consideration of Value not less than Rs. 50 Lakhs, for transfer of immovable property (other than agricultural land) to a resident transferor, shall deduct tax at the rate of 1% of such sum and remit the same to the Government Account.
v Securities Transaction Tax (STT):
| S. No. | Nature of Taxable Securities Transaction | Payable by | Existing Rates(In %) | Proposed Rates (In %) |
|
1. |
Delivery based purchase of units of an equity oriented fund entered into in a recognised stock exchange |
Purchaser |
0.1 |
Nil |
|
2. |
Delivery based sale of units of an equity oriented fund entered into in a recognised stock exchange |
Seller |
0.1 |
0.001 |
|
3 |
Sale of a futures in securities |
Seller |
0.017 |
0.01 |
|
4 |
Sale of a unit of an equity oriented fund to the mutual fund |
Seller |
0.25 |
0.001 |
The Proposed amendments in the rates of Securities Transaction Tax will be effective from 1st June 2013.
v The provision of Section 80D will also be applicable in respect of any payment or contribution made by the assessee to other health schemes as may be notified by the Central Government.
v The Consideration paid by the company for purchase of its own unlisted shares which is in excess of the sum received by the company at the time of issue of such shares will be charged to tax and the company would be liable to pay additional income-tax @ 20% of the distributed income paid to the shareholder. The income arising to the shareholders in respect of such buy back by the company would be exempt where the company is liable to pay the additional income-tax on the buy-back of shares. This Amendment will take effect from 1st June 2013.
v The New Section 43CA has been inserted to provide that where the consideration for the transfer of an asset (Other than Capital Asset), being land or building or both, is less than the stamp duty value, the value so adopted or assessed or assessable shall be deemed to be the full value of the consideration for the purposes of computing income under the head “Profits and Gains of business or profession”, the stamp duty value may be taken as on the date of the agreement for transfer and not as on the date of registration for such transfer. This exception shall apply only where amount of consideration or a part thereof for the transfer has been received by any mode other than cash on or before the date of the agreement.
v The New Provision has been inserted in the Section 56 (2) (vii) to provide that the stamp duty value may be taken as on the date of the agreement instead the date of registration, if both the dates are different. This exception shall apply only where amount of consideration or a part thereof for the transfer has been paid by any mode other than cash on or before the date of the agreement fixing the amount of consideration for transfer of such immovable property.
v The return of Income Filed without payment of Self Assessment Tax will be treated as Defective Return.
v New Sections 14A and 14B has been introduced in the Wealth Act to facilitate electronic filing of annexure-less return of net wealth. This amendment will apply from 1st June 2013. As a result, wealth tax returns can be filed online like that of Return of Income.
v Definition of Capital Asset (Agricultural Land)
Under the existing provisions of the Income-tax Act, when a property
(a) is an agricultural land situated in any area within the jurisdiction of a municipality or cantonment board having population of not less than ten thousand, according to last census; or
(b) an agricultural land situated in any area within such distance not exceeding 8 kms from the local limits of any municipality or cantonment board,
Will be treated as Capital asset and the sale of the same will be covered by Capital Gains Tax.
The above condition is modified as below :-
The distance shall be measured aerially (shortest aerial distance)
(i) not being more than 2 kms from the local limits of any municipality or cantonment board referred in item (a) above and which has a population of more than ten thousand but not exceeding one lakh; or
(ii) not being more than 6 kms, from the local limits of any municipality or cantonment board and which has a population of more than one lakh but not exceeding ten lakhs ; or
(iii) not being more than 8 kms, from the local limits of any municipality or cantonment board and which has a population of more than ten lakhs
will be treated as Capital assets and the sale of such property will be covered by Capital Gains Tax.
INDIRECT TAX PROPOSALS – SERVICE TAX
- Service tax will be leviable on taxable service provided in restaurants with air-conditioning or central air heating in any part of the establishment at any time during the year.
- The exemptions are being withdrawn on services provided by an educational institution by way of renting of immovable property, on services by way of vehicle parking to general public, on services provided to Government, a local authority or a governmental authority by way of repair or maintenance of aircraft.
- The temporary transfer or permitting the use or enjoyment of a copyright relating to cinematographic films will be exempted only to the extent of exhibition of cinematograph films in a cinema hall or a cinema theatre.
- The Exemption will be provided for the services of transport of goods by road and rail/vessel and for charitable organizations providing service towards any other object of general public utility.
- Amnesty Scheme is proposed to provide one time amnesty by way of waiver of interest and penalty and Immunity from prosecution to the stop filers or non-filers or non-registrants or services providers who pay the “tax dues” on or before the specified due dates. Those assessees who have registered with Service Tax and not paid the Service Tax Due/ Not filed the Service Tax returns shall make use of this scheme and get immunity from Interest,Penalty & Prosecution.
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