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Snapshots - Budget 2013

CA. Bikash Bogi 
on 01 March 2013

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HIGHLIGHTS OF BUDGET 2013

This Snapshot is prepared solely on the basis of Budget Speech of Hon’ble Finance Minister.

A. DIRECT TAXES

INDIVIDUAL / FIRMS

a. No change in income tax slabs.

b. Tax credit of Rs. 2,000/- for income upto Rs. 5 lakh.

c. Super Rich Tax: Surcharge @ 10% for Income of More than 1 crore. This surcharge is only for 1 year i.e. for FY 2013-14. (also apply to HUFs, Firms, similar entities)

d. Rajiv Gandhi Equity saving scheme liberalised. Investments in MFs also covered. Eligible income limit raised from Rs. 10 lakh to Rs 12 lakh.

e. Benefit to First Time home loan takers. Loan amount upto Rs 25 lakh (will taken in FY 2013-14) will be allowed an additional deduction of Rs 1 lakh on account of interest payment. Unabsorbed deduction can be carried forward to next year.

f.  Contributions made to the Central Government Health Scheme are eligible for deduction under section 80D, also extended to contributions made under similar scheme of state governments.

g. Donation made to National children fund will eligible for 100% deduction.

CORPORATES

a. No change in Corporate Tax rate.

b. 10% Surcharge for companies having income of more than Rs. 10 crore.

c. Dividend distribution tax surcharge increased to 10% from 5%.

d. Tax holiday for Power plants (U/S 80-IA) extended to 31st March 2014.

e. 15% tax on dividend from subsidiaries will extended for one year i.e. till 31st March 2014. Companies receiving the dividend will get credit of the dividend received from foreign subsidiary and need not to pay DDT on that portion.

f. Investment linked incentive. Companies investing Rs 100 crore or more in plant and machinery in April 1, 2013 to March 31, 2015 will be allowed 15 per cent investment deduction allowance apart from depreciation.

g. 20% final withholding tax on unlisted companies distributing the profits by way of Buy Back route.

h.  Taxes on royalty and fees for technical services increased from 10% to 25%.

Other Changes in Direct Taxes:

a. TDS at 1% of land deals over Rs. 50 lakh.

b. Reduction in STT on equity futures.

c. Modified provisions under GAAR effective April 1, 2016.

d.  Amended DTC will be placed before parliament.

B. INDIRECT TAXES

1. Service Tax

a. No changes in Service tax rate.

b. Reduction in abatement rate for under construction apartments having carpet area of 2000 sq. feet or more.

c. Two new services in Negative list – Vocational courses, testing services.

d. Benefit of service tax exemption to films exhibited in cinema halls.

e. Levy of service tax on all air conditioned restaurants.

f. Introduction of one-time scheme called ‘Voluntary Compliance Encouragement Scheme” compliance of service tax.

2. EXCISE / CUSTOMS

a. SED on cigarettes hiked by 18%.

b. Custom duty on imported motor vehicles hiked.

c. Import duty on set-top boxes increased to 10% from 5%.

d. Zero excise duty for cotton and manmade sector (spun yarn) at the yarn, fabric and garment stages.

e. Exemption to handmade carpets and textile floor coverings of coir or jute from excise duty.

f. Exemption to ships and vessels from excise duty.

g. Proposed to increase the excise duty on SUVs from 27 percent to 30 percent.

h. 4 percent excise duty imposed on silver manufactured from smelting zinc or lead.

i. Excise Duty @ 6% on mobile phones pricing more than Rs. 2,000/-.

C. ECONOMY / INVESTMENTS / EXPENDITURES / OTHERS:

a. Average economic growth rate in 11th Plan period is 8 per cent, highest ever in any Plan period.

b. Economic space constrains due to high fiscal deficit, lower savings and investment and tight monetary policy.

c. Current account deficit continues to be high due to excessive dependence on oil, coal and gold imports and slowdown in exports

d. To increase allocation for health, family welfare.

e. Allocation of Rs 1106 crore for alternative medicine industry.

f. Rs 37,330 crore allocated for Ministry of Health & Family Welfare. Rs 110 crore to be allocated to the department of disability affairs

g. Additional sum of Rs 200 crore to Women and Child Welfare Ministry to address issues of vulnerable women.

h. Rs 1069 crore allocated to Department of Aryush. Rs 13,215 crore to be provided for mid-day meal scheme.

i. Rs 5,284 crore to various Ministries for scholarships for SC/ST, OBC and minority students.

j. Medical colleges in six more AIIMS-like institutions to start functioning this year; Rs 1650 crore allocated for the purpose.

k. Rs. 65,867 crore allocated to Ministry of HRD.

l. Rs 4,727 crore to be allocated for medical education and research.

m. Rs 15,260 crore to be allocated to Ministry of Drinking Water and Sanitation

n. Rs 80,194 crore allocation for Ministry of Rural Development in 2013-14. About Rs 33,000 crore for MGNREGA,

o. Rs 14,873 crore for JNNURM for urban transportation in 2013-14 against Rs 7,880 crore in the current fiscal

p. Rs 10,000 crore set aside for incremental cost for National Food Security Bill over and above food subsidy

q. Tax free bonds issue to be allowed up to Rs 50,000 crore in 2013-14 strictly on capacity to raise funds from the market

r. Simple norms for FIIs. Less than 10% stake to be seen as FII. 10% or more stake thrash hold to be seen as FDI. FII can trade in Forex Derivatives.

s. Govt to set up India's first women's bank as a public sector bank by October.

t. SIDBI's re-financing facility to MSMEs to be doubled to Rs 10,000 crore.

Prepared by

CA. Bikash Bogi (Partner)

SBR & CO., Chartered Accountants

Mumbai I Surat


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