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PROVISIONS RELATING TO DIRECT TAXES-

1. No Change in slab rates & Super Rich Tax postponed -a

There no change in slabs, but the Individual & HUF whose income is upto 5 Lacs get a Tax credit of Rs.2,000/-. Effectively slab is increased for these assesses from 2 Lacs to 2.2 Lacs. The govt has made their intentions very clear that they want revenue from Rich assessees although Super Rich Tax is deferred.

2. Surcharge now applicable for all assessees-

Surcharge @10% is now applicable to all assesses whose income exceeds Rs.1 Cr except Company. In case of a Domestic Company Surcharge @ 10% is applicable if income exceeds Rs.10 Cr. Old provision of Surcharge @ 5% on Domestic Company & 2% on Foreign Company is already in force if income of company exceeds Rs.1Cr. This is also in line with the govt’s policy to collect revenue from Rich assessees.

3. Commodities Transaction Tax (CTT) is proposed to be introduced-

A new tax called CTT is to be levied on taxable commodities transactions entered into on a Recognised Stock Exchange (RSE) @ 0.01%. Taxable commodities transactions to mean a transaction of sale of commodity derivatives in respect of commodities other than agricultural commodities traded on RSE.

4. Rate Securities Transaction Tax (STT) amended-

       Nature of Transaction

Existing Rate %

*Proposed Rate %

Delivery Based Purchase of Units of Equity Oriented Mutual Fund on RSE

0.1

NIL

Delivery Based Sale of Units of Equity Oriented Mutual Fund on RSE

0.1

0.001

Sale of Futures in Securities

0.017

0.01

Sale of unit of an Equity Oriented fund to Mutual Fund

0.25

0.001

* The rates proposed to be effective from 01/06/2013.

As rates of STT are reduced investors can expect higher returns from Mutual Funds.

5. Deduction in respect of Housing Loans sanctioned during FY 2013-14 U/s 80 EE-

Earlier deduction in respect of repayment of interest on Housing Loan on self occupied House Property is allowed U/s 24 to maximum of Rs.1.5 Lacs. Now Sec 80 EE is introduced which will provide deduction of Interest upto Rs. 1 Lacs extra if loan is taken for acquiring a Residential House Property (HP) by an assessee being an Individual. This deduction is subject to following conditions – (i) Loan is Sactioned during the period 01/04/13 to 31/03/14 (ii) Amount of Loan does not exceed Rs.25 Lacs (iii) Value of Residential Property does not exceed Rs.40 Lacs (iv) The assessee does not own any HP on the date of sanction of the loan.

6. Raising of Limit of Percentage of eligible premium for Life Insurance Policy (LIP) –

Any sum received under LIP including a sum allocated by way of bonus is exempt from tax U/s 10(10D) if premium payable on policy does not exceed 10% of sum insured. This rate of 10% is increased to 15%  w.e.f. 01/04/14 for any person who is – (i) A person with disability U/s 80U (ii) Suffering any disease U/s 80DDB.   

7. Deduction for contribution to Health Schemes similar to Central Govt Health Scheme (CGHS)-

Sec- 80D proposed to be amended to provide deduction of other health schemes of Central & State Govt (CG & SG) similar to CGHS.

8. Scope of Deduction U/s 80CCG expanded-

Under the existing provisions who acquired listed equity shares in accordance with the scheme notified by the CG, allowed a 50% deduction of the amount invested subject to condition that deduction should not exceed Rs.25,000/-this is one time deduction & available to new retail investor whose  income does not exceed  Rs.10 Lacs.  Rajiv Gandhi Equity Saving Scheme notified under this section. The amended provisions of Sec 80 CCG provide that ‘Equity Oriented Fund shall have the meaning assigned to it in Sec 10(38) it is further proposed to provide that the deduction under this section shall be allowed for 3 consecutive A.Y. relevant to the P.Y. in which such shares were acquired by the new retail investor whose income does not exceed Rs.12 Lacs.

9. 100 % Deduction for Donation to National Children’s Fund U/s 80G.

10. Cascading effect of DDT is now removed-

It is proposed to amend Sec 115 O to remove cascading effect in respect of Dividend received by a Domestic company from similarly placed Foreign Co. as Sec 115 BBD provides taxation of Gross Dividends received by an India Co. from specified Foreign Co. This amendment will take effect w.e.f. 1st June 2013.

11. Lower Tax Rate on Dividend Received from Foreign Companies-

Sec 115 BBD provides taxation of Gross Dividends received by an Indian Co. from specified Foreign Co. @ 15% this tax incentive is proposed to be continued for 1 more year

12.Return of Income (ROI) filled without payment of Self Assessment (SA) Tax to be treated as Defective Return U/s 139(9)-

It is found that large number of assessees files their ROI without payment of SA Tax. It is therefore proposed to amend through this explanation that ROI shall be regarded as defective unless the tax together with interest, if any payable in accordance with Sec-140A. This amendment will take effect from 1st June 2013.

13. No Deduction allowed U/s 80 GGB & 80 GGC in respect of any sum contributed by way of cash to any Political Party or Electoral Trust.

14. Exemption to income of Investor Protection Fund of Depositories-

As per provisions of SEBI (Depositories & Participants) regulations, 1996 as amended in 2012 the depositories are mandatorily required to set up an investor protection fund.

15. Incentive for acquisition & installation of new plant & machinery by manufacturing company-

A new Sec 32AC to provide that assessee being a company engaged in manufacturing invests a sum more than Rs 100 Cr. in new plant & machinery the whole of such cost allowed as deduction under the head Profits & Gains from Business & Profession

16. Extension of sunset date U/s 80IAfor Power Sector by 1 more year.

17. TDS on transfer of certain immovable properties (other than agricultural land)-

TDS @ 1% to be deducted by seller U/s 194-IA at the time of transfer of immovable property. This amendment will take effect from 1st June 2013.

18. Clarification of the phrase ‘Tax Due’ –

U/s 179 Directors of Private Co. are jointly & severally liable for payment of Tax Dues unless proves non recovery can’t be attributable to negligence on the part of Directors. It is proposed to clarify that Tax Due includes Interest, Penalty or any other sum payable under this Act.

19. Tax Residency Certificate (TRC) –

It is proposed to amend Sec 90 & 90A in order to provide that TRC is necessary but not a sufficient condition for claiming the benefits under DTAA. This amendment will take effect retrospectively from 1st April 2013.

By: CA. Vikas R. Rai  

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