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Budget 2013 Direct Tax Perspective

Pavan Jain S 
on 28 February 2013

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Highlights of Union Budget 2013 – Direct Tax perspective:

Section /Schedule

Head

Amendment/New Provision

Effective date

Part III to Schedule I

Advance taxes & TDS u/s 192

Advance taxes for the FY 2012-13 and TDS u/s 192 from salary shall be made at the following rates:

In case of Individuals, HUF, AOP/BOI & Artificial juridical person:

Slab of Income

Rate of Income tax

Upto Rs. 200,000#

Nil

Rs. 200,001 to Rs. 500,000@  

10%

RS. 500,001 to Rs. 10,00,000

20%

Rs. 10,00,001 & above

30%

Surcharge irrespective of the total income

Nil

# In case of individual being woman resident in India and below the age of 60 years at any time during the PY, the basis exemption limit has been retained at Rs. 200,000 [in par with men assesses].

#In case of individual, being resident in India, who is age of 60 years or more  but less than 80 Years at any time during the PY, the basic exemption limit is same i.e., Rs. 2,50,000.

@ In case of individual, being resident in India, who is age of 80 years or more at any time during the PY, the basic exemption limit is same at Rs. 5,00,000.

In case of Partnership firms [Including LLP], the rate of tax shall be 30%.

In case of companies, the rate of taxes shall be same as specified in the Finance Act 2012. Surcharge shall be levied @ 5% [2% in case of non domestic company] in case of domestic companies if total income exceeds Rupees One Crore but does not exceed Rs 10 Crores. If Total Income exceeds Rupees Ten Crores, surcharge shall be levied @ 10% [5% in case of non domestic company]

Surcharge has been increased to 10% in all cases if total income of the assessee exceeds Rs. One crore subject to marginal relief.

Education cess and SHEC shall be continued to be levied in all cases.

1-4-2013

Commodity Transaction tax

Levied on Taxable Commodity Transactions entered into in a recognised Institution.

Taxable Commodity Transaction is defined to mean sale of commodity derivatives in respect of non agricultural commodities

Rate of Tax is 0.01%

Deduction u/s 36 allowed in respect of CTT paid if income is taxable under chapter IV D [w.e.f AY 2014-15]

Date of Enforcement of Finance Bill 2013

115A

Royalty or Fees of Technical Services

Rate of Tax on Royalty or Fees for technical services received by Non Resident Tax Payer under an agreement entered after 31.03.76 has been increased to 25%

AY 2014-15

32AC

Incentive for New Investment

Deduction allowed to Company which manufactures article or thing

It invests a sum of more than Rs. 100 Crores in New Plant & Machinery during the period from 1.4.2013 to 31.3.2015

Deduction @ 15% of Actual Cost of new assets acquired and installed during 2013-14 shall be allowed for AY 2014-15;

Deduction @ 15% of actual cost of new assets acquired and installed during the period from 1.4.2013 to 31.3.2015 as reduced by deduction already allowed for AY 2014-15 shall be allowed in AY 2015-16

Definition of “New Asset” is same as provided in Section 32(1) – Additional Depreciation

New assets cannot be transferred for 5 Years except pursuant to amalgamation or merger

AY 2014-15

80IA

Deduction to Power Sector

Deduction u/s 80IA to power sector is allowed to undertaking if it generates power or starts transmission or distribution or undertakes substantial renovation or modernisation before 31.3.2014

1-4-2013

87

Rebate

Available to Individual Resident Tax Payers

Total Income should not exceed Rs. 5,00,000

Rebate shall be Rs. 2,000 or actual tax liability whichever is Less

AY 2013-14

80EE

Interest on Housing Loan

a. Available to Individual Resident Tax Payers

b. Deduction is allowed in respect of Interest on Housing Loan taken from Financial Institution

c. Benefit allowed to Buyers in respect of acquisition of House Property

d. The buyer should not own any other residential property as on the date of sanction of loan

e. The loan amount should not exceed Rs. 25 Lakhs

f. The value of residential house property should not exceed Rs. 40 Lakhs

g. Maximum Deduction allowed is Rs. 100,000

h. Deduction is allowed on Interest Payable for the PY 2013-14and if the deduction is less than Rs. 1 Lac the balance can be utilised in next AY

i. Loan is sanctioned during PY 2013-14

AY 2014-15

80C

Life Insurance Premium

Deduction in respect of premium paid shall be allowed to the extent of 15% [earlier 10%] of the actual capital sum assured in the case of persons suffering from disability or severe disability as referred to in Section 80U or suffering from disease or ailment as specified in the rules made u/s 80DDB

1-4-2013

80CCG

Deduction for Investment

a. Presently, Deduction allowed to resident individuals to the extent of 50% of amount invested or Rs. 25,000, WEH

b. Rajiv Gandhi Equity Scheme was notified

c. Deduction extended to investment in listed units of Equity Oriented Fund as specified in 10(38).

d. Deduction allowed for three consecutive AYs

The Gross total income of investor not to exceed Rs. 12 lakhs during the first year of investment.

1-4-2013

80G

Deduction

100% deduction allowed in respect of donation to National Children Fund

1-4-2013

115BBd

Dividend from Foreign Associate

Dividend received from Foreign Company [in which shareholding is 26% or more] is taxed @ 15% if such dividend is included in the total income.

1-4-2013

98

STT

a. STT on purchase of delivery based units of EOF in RSE is reduced to NIL

b. STT on Sale of delivery based units of EOF in RSE is reduced to 0.001%

c. STT on Sale of Futures in Securities in RSE is reduced to 0.01%

d. STT on Sale of Units of EOF to Mutual Fund is reduced to 0.001%

1-6-2013

194IA

TDS on Immovable Properties

a. TDS to be deducted on transfer of immovable property other than agricultural land

b. Transferree is required to deduct TDS @ 1% at the time of making payment or crediting consideration

c. TDS not applicable if total consideration ius less than Rs. 50 Lakhs

1-6-2013

XII DA

Additional Income Tax on Buy Back

a. Applicable to Unlisted Companies

b. Taxability arises when the company buy back its own unlisted shares at a value more than original Issue price.

c. Additional Income Tax @ 20% of such surplus to be paid by the company

d.Such Income shall be exempt in the hands of recipient shareholder

1-6-2013

43CA

Stamp Value of Immovable property

If Land or Buildings or both are held as stock in trade and the same are transferred at a value lesser than the value adopted for payment of stamp duty, the stamp duty value shall be deemed to be the full  value of consideration for computing income under PGBP

1-4-2013

56(2)(vii)

Gift of Immovable Property

a. Transfer of Immovable property for Inadequate Consideration

b. Gift received by Individual or HUF

c. Consideration is less than stamp duty value by an amount exceeding Rs. 50,000

d. Stamp Duty value as in excess of consideration shall be taxable in the hands of recipient

1-4-2013

46

Annexure Less Return of Wealth tax

Return of Wealth tax can be filed online without any annexures

1-6-2013

2(14)

Definition of Capital Asset

Sub Clause (iii) of sub section (14) of Section 2has been amended to provide that an agricultural land shall be an capital asset if:

a. It is situated in any area within the jurisdiction of a municipality or cantonment board having a population of not less than 10,000 according to last preceding census; or

b. If the land is situated in any area

Shortest Aerial Distance from local limits of ......

Population of the area

Not more than 2 Kms

More than 10,000 but not exceeding 1,00,000

Both Conditions to be satisfied

Not more than 6 Kms

More than 100,000 but not exceeding 10,00,000

Both Conditions to be satisfied

Not more than 8 Kms

More than 10,00,000

Both Conditions to be satisfied

1-4-2013

10(10D)

Exemption to sum received on maturity of Insurance

  • Keymen Insurance Policy assigned to any person during its term shall be continued to be treated as keymen insurance policy and maturity amount shall not be exempt

1-4-2013

80GGB and 80GGC

Contribution to Political parties

Deduction to be allowed only if donation is paid otherwise than by way of cash

1-4-2013

179

Tax Due from Private Company

If tax due cannot be recovered from private company, then it can be recovered from all its directors jointly and severally.

Clarification is issued that the tax due shall include interest and penalties

1-6-2013

Expl to 139(9)

Defective Return

Return of Income shall be treated as defective if the tax payable along with interest in accordance with Section 140A has not been paid on or before the due date of furnishing the return

1-6-2013




Category Income Tax
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