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There is nothing to cheer in Union Budget 2013-13. A routine affair with elections in mind is the effort by our Honourable Finance Minister Mr. P. Chidambaram, who is tough Finance Minister –he has tried to show growth of economy-to win elections! He has not given any fruitful concessions to anyone but it is good that he has not levied new taxes like Inheritance tax on common people –repeat election to win by Congress is the motto.

For Women:

The higher income tax  exemption limit which was prevailing earlier is not restored  but he has tried to please women by allowing to bring duty free jewellery   up to Rs.100, 000 as against  to Rs.50, 000 in the case of a male passenger; proposed to set up India’s first exclusive Women’s Bank as a public sector bank to lend mostly to women and women-run businesses, which employs predominantly women; proposes to set up a fund calling it the Nirbhaya Fund – to empower women and to keep them safe and secure. In fact special treatment and behaviour for women makes them weaker-as otherwise why they need such a preferential treatment security and behavior?

Middle class shall be poorer now!

This budget provisions are against rising middle class. A tax credit of Rs.2000 for income up to Rs. 5 Lakhs is offset against its intrinsic value in this inflationary trend.Duty on Set Top Boxes is increased from 5 to10 percent. The cost of digitilisation of TV shall be more as government has made compulsory in many cities and slowly it shall spread all over the country.TV is a necessary item of even poor class as even jhuggis have now TV connections. Why then poorer people are made to pay more for it? Even maid servants, and lowest staff –poor people have mobiles .Now duty on mobile phones priced at more than Rs.2000 is raised to 6 percent. The limit of Rs.2000 is too low an amount. It must be dropped.

There is a proposal to levy Service Tax on all air conditioned restaurant.  Already there is VAT too. It is a double taxation on single transaction. Already eating out is much dearer and for a family it is a must for better health and output which increased Gross Domestic Production (GDP) of the country. Why then a drain on GDP? The existing provision to levy service tax only on air conditioned restaurants where liquor is served is enough. Non-liqour serving restaurants etc must be out of ambit of service tax.

The only provision in favour of middle class is that a person taking a loan for his first home from a bank or a housing finance corporation up to  Rs.25,00,000 during the period 1.4.2013 to 31.3.2014 will be entitled to an additional deduction of interest of up to  Rs.100,000.

Good for Sports: A proposal to set up the National Institute of Sports Coaching at Patiala at a cost of  Rs.250 Crore over a period of three years.

Good for FM listeners: The proposal to expand private FM radio services to 294 more cities.  About 839 new FM radio channels will be auctioned in 2013-14 and, after the auction; all cities having a population of more than 100,000 will be covered by private FM radio services.

Other Income Tax Provisions:

Simplification Matters:

Tax Deduction at Source (TDS) at the rate of 1 percent on the value of the transfer of immovable properties where consideration exceeds Rs. 50 lakhs. This is an additional avoidable administrative burden. It shall lead to more cumbersome procedure for persons involved in such transactions. The cost of properties shall be more as tax practioners shall be required to be employed for it. Also it shall increase the tax department work too, which is already extra burdened with work. To simplify it is better to drop it altogether. Also for simplification proposed surcharge and even education cess must be dropped. To offset revenue loss increase tax rates by one/quarter percent for all assesses, and to give relief for non-super rich class raise exemption limit to Rs. 3 Lakhs at least. Drop Securitisation Transaction Tax (STT) completely.

Good Measures: Investment allowance. The proposal to provide an investment allowance at the rate of 15 percent to a manufacturing company that invests more thanRs.100 Crore in plant and machinery during the period 1.4.2013 to 31.3.2015. Also it is good that Tax holiday for power plants is extended to March 2014. In fact it shall continue for next decade.

Refunds: A number of administrative measures are proposed such as extension of refund banker system to refund more than Rs. 50,000, technology based processing, extension of e-payment through more banks and expansion in the scope of annual information returns by Income-tax Department.  But the fact is that Refunds are  pending for last many years therefore, refunds due for last  6 years not received by assesses  must be paid off immediately on an application made to special cell with duplicate copies as in thousand of refund  cases all efforts with department fails. Even follow up with officers/higher officers have no results, assesseees are asked to visit hundreds times with duplicate copies or on their computer records no info is available etc. All time and efforts goes in vain.

Service Tax:

‘Voluntary Compliance Encouragement Scheme:

Out of nearly 17 lakh registered assesses under Service Tax only 7 lakhs file returns regularly. Need to motivate them to file returns and pay tax dues. A onetime scheme called ‘Voluntary Compliance Encouragement Scheme’ proposed to be introduced. Defaulter may avail of the scheme on condition that he files truthful declaration of Service Tax dues since 1st October 2007. Why there is non- compliance? It is because basic provisions are not with changed time and need of the society. The exemption limit must be raised to Rs. One Crore. The rate of service tax must be dropped to its original rate of 5%.

(Mahesh Kapasi)

M. Com., LL.B., FCA, FCMA, FCS

New Delhi-110 049


Published by

Mahesh Kapasi
(Practising CA)
Category Others   Report

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