Budget at glance for financial year 2013-2014
· Corporate tax rates remain unchanged
· Domestic companies: surcharge 5% where the total income exceeds Rs one crore but does not exceed Rs 10 crores. Surcharge 10% if the total income exceeds Rs. 10 crore.
· Foreign companies: 2% where the total income exceeds one crore but does not exceed Rs. 10 crore. 5% where the total income exceeds Rs 10 crore
· Amendment to agricultural incomes [section 2 (1A)] – Municipality limits has been substituted. 2 kms from the local limits of any municipality or a cantonment board and which has a population of more than 10,000 but not exceeding 1,00,000. 6 kms from local limits of municipality or a cantonment board and which has a population more than 1,00,000 but not exceeding 10,00,000. 8 kms from the local limits of any municipality or cantonment board and which has population more than 10,00,000.
· Insertion of Section 10 (23DA): Any income of securitization trust from the activity of securitization is exempt.
· Insertion of Section 10 (23ED): Any income, by way of contributions received from a depository, of such investor protection fund set up in accordance with the regulations by a depository.
· Commodity transaction tax has been proposed. The rate of tax shall be 0.01% on commodity transaction.
· Investment in new plant and machinery [insertion of new section 32AC]: An assessee being a company, engaged in the business of manufacture or production of any article or thing, acquires and installs new asset after 31st day of March 2013 but before the 1st day of April 2015 and aggregate cost of the new assets exceeds one hundred crores, then there shall be allowed a deduction at the rate of 15% of the actual cost of the new assets. If any new assets acquired and installed by the assessee is sold or otherwise transferred within five year from the date of installation except in connection with amalgamation or demerger, the amount of deduction shall be deemed to be income of the assessee chargeable under income from business or profession. New asset does not include used assets, assets which are installed in office premises and guest houses, and office appliances including computers or computer software and any vehicle.
· Special provision for full value of consideration for transfer of assets other than capital asset in certain cases [insertion of Section 43CA)
· Amendment to Section 115A- tax on dividends, royalty and technical service fees in the case of foreign companies: sub-section (1) in clause (A) and (AA) for royalties, (B) and (BB) fees for technical services has been amended by increasing the tax rate 25% from 10%.
· Amendment to Section 115BBD – Tax on dividend received from foreign companies: the section is applicable w.e.f. 1st day of April 2014.
· Insertion of new chapter XII-DA – Tax on distributed income to shareholders (Section 115QA to 115QC): Special provisions have been made to tax on distributed income of domestic company for buy-back of shares. Any amount of distributed income by the company on buy-back of shares from a shareholder shall be charged to tax and such company shall be liable for additional income tax at the rate of 20% on the distributed income.
· Distributed income mean the consideration paid by the company on buy back of shares and reduced by the amount which was received by the company for issue of such shares.
· The tax shall be paid within 14 days from the date of payment of any consideration to the shareholder on buy – back of shares.
· Amendment to Section 115R – Tax on distributed income to unit holders: The rate of tax has been increased to 25% from 12.5%. inserted a proviso to sub-clause (iii)- provided that any income is distributed under infrastructure debt fund to a non-resident then the mutual fund shall pay additional income tax at the rate of 5% on income so distributed.
· New Chapter X-A -General Anti-Avoidance Rules [GAAR) shall be inserted with effect from the 1st day of April 2016.
· Insertion of new Chapter XII-EA – Tax on distributed income to investor: Special provisions are made relating to tax on distributed income by securitization trusts to its investors shall be chargeable to tax at the rate of –
a. 25% on income distributed to individuals or HUFs
b. 30% on income distributed to any other person
The person making the income shall pay the tax within 14 days from the date of distribution or payment of such income whichever is earlier. Failure to pay the tax to the Govt a simple interest rate one percent per month or part thereof shall be payable.
Other than corporate
· There are no changes in individual income tax slabs.
· Rebate of income tax for Individuals [insertion of new section 87A]: In case of an assessee being an individual whose total income does not exceeds Rs. 5,00,000 before giving deduction under chapter VI A an amount equal to hundred percent of such income or an amount of Rs. 2,000 whichever is less.
· Deduction in respect of interest on loan taken for residential house property [inserting new section 80EE]: The deduction under this section shall not exceed Rs. 1,00,000. The amount is one time claimable. However, in case where the interest payable for the year 2013-14 is less than Rs. 1,00,000 then the balance shall be eligible in the financial year 2014-15. To avail the benefit the following conditions must be fulfilled;
a. The loan has been sanctioned during the financial year 2013-2014
b. The amount of loan sanctioned shall not exceed Rs. 25,00,000
c. The assessee does not own any residential house on that day of sanction of the loan.
d. The value of residential property does not exceed Rs. 45,00,000
· Payment on transfer of certain immovable property other than agricultural land [insertion of new section 194IA]: Any person, being a transferee, responsible for paying to a resident transferor any sum by way of consideration for transfer of any immovable property shall, at the time of payment of cash or issue of cheque or by any other mode whichever is earlier, deduct at the rate of one percent as income tax. However, there is no deduction shall be made where the consideration for transfer of an immovable property is less than Rs. 50,00,000
· For Individuals or HUFs or AOP or BOI or Firm or Co-operative society or local authority whose total income exceeds Rs. One crore shall be liable for surcharge at the rate of 10%
No changes in peak rate of Service tax, Excise and customs.
· The effective tax rate remains unchanged.
· Introduction of chapter VI – Service tax voluntary Compliance Encouragement Scheme, 2013
· Two more services are brought under Negative list concept – Vocational training and testing activities for agricultural products
· Penalty Rs. 10,000 who is liable to pay service tax or required to take registration, fails to take registration
· Insertion of the new section 78A – Penalty for offences by directors, manager, etc. Rs. 1,00,000. Where a company has committed any of the following contraventions, namely:
a. Evasion of service tax or
b. Issue of any bill, invoice or, as the case may be, a challan without provision of taxable service.
c. Availment and utilization of credit of taxes or duty without actual receipt of taxable services.
d. Failure to pay any amount collected as service tax beyond a period of six month from the date on which such payment becomes due then any director, manager, secretary or other officer of such company, who at the time of such contravention was in charge shall be liable to a penalty which may extend to Rs. 1,00,000
· Amendments to mega exemption notification No.25/2012 by vide Notification No. 03/2013 by exempting cinematograph films for exhibition in a cinema hall or theater, etc.
· Amendments to abatement Notification No. 26/2012 by vide notification No. 02/2013 – ST, dated 01.03.013. In relation construction of complex, building, civil structure or a part thereof intended for a sale to a buyer ,wholly or partly except where entire consideration is received after issue of completion certificate by competent authority - (a) for residential unit having carpet area upto 2000 sqtfeet or amount charged is less than Rs. One crore the abatement is 75% and for others 70%. Further, the value of land is included in the amount charged from the service receiver. This notification is effective from 01.03.2013
· Introduction of Service tax voluntary Compliance Encouragement Scheme, 2013:
a. any tax dues for the period beginning from 01.10.2007 to 31.12.2012 but not paid as on the 01.03.2013.
b. persons eligible are that any person who has not received any notices or order of demand u/s 72,73 or 73A of the chapter before 01.03.2013
c. Procedure for making declaration – the declaration shall be made on or before 31.12.2013
d. The tax dues shall be paid at least not less than 50% of the tax dues on or before 31.12.2013 and the balance shall be paid on or before 30.06.2014
No change in effective tax rates
· Amendment to Section 9 offences and penalties - the limit has been increased to 50,00,000 from 30,00,00
· Cold rolling machines which fall under chapter 72 or 76 of the CE Tariff have been amended by vide notification No. 05/2013 by amending Notification No. 17/2007 CE. Wherein the assesssee has an option to pay the duty per machine Rs. 40,000 per month.
· Mobile handsets including cellular phones exemption has been withdrawn i.e. Notification No. 20/2011 CE has been rescinded by vide Notification No. 06/2013 CE
· Exemption from whole of excise duty or additional duty of excise, as the case may be, leviable thereon by notification No. 49/2003 in the Sate of Uttranchal or Himachal Pradesh for 10 years. In this budget by notification No. 07/2013 CE exempt from the duty if the same goods are captively consumed. And also 50/2003 CE notification
·Textile material Notification 07/2012 CE – rate is 6% amended by vide notification No. 08/2013 CE for removing doubts.
· Amendment to Notification No. 01/2011 CE - Carpet and other textile floor coverings (chapter 57 of CE Tariff) and ships, boats and floating structures (chapter 89 of CE Tariff) exemption has been w/d by vide notification No. 09/2013 CE. Thus these goods are now subject to duty.
·Amendment to Notification No. 02/2011 CE – chapter 57 has been omitted by vide notification No. 10/2013 CE
· However the chapter 57 has been included in exemption list in Notification No. 12/2013 CE by amending the Notification No. 12/2012 CE.
· Amendment to Notification No. 30/2004 CE (i.e. Articles of apparel and clothing accessories-chapter 61,62 and 63 of CE Tariff) exemption of excise duty provided no CENVAT availed) by vide notification No. 11/2013 CE. In the said notification (i.e. 30/2004 CE), in the table, serial number 16 column (3),the entry All goods shall be substituted.
· Amendment to Notification No. 12/2012 by vide Notification No. 12/2013 – Bringing excise duty on mobile handset at the rate of 6%. Motor vehicles, Sports utility vehicles. Motor vehicles having engine capacity not exceeding 1500cc at the rate of 24%. Exceeding 1500cc 27%. Engine capacity exceeding 1500cc Sports Utility Vehicles (popularly known as SUV) 30%.
· Pharmaceutical products are brought under retail sale price (Section 4A) by amending Notification No. 49/2008 CE – (N.T) with vide Notification No. 01/2013 CE- (N.T.)
· Amendment of CE Rules 2002 – Rule 7 – Provisional assessment – sub rule (5) where the assessee is entitled to a refund consequent to final assessment order along with interest under section 11BBB of the Act - by vide Notification No. 02/2013 CE- (N.T.).
· Amendment to CENVAT credit Rules by vide Notification No. 03/2013 CE – (N.T.)
An explanation is added to Rule 3 (5), (5A) and (5B) for which Rule 14 shall be applicable i.e. recovery of CENVAT credit wrongly taken or erroneously refunded. When inputs or Capital goods, on which CENVAT credit has been taken, are removed as such from the factory or premises of the provider of output service, the assessee shall pay equal to the CENVAT credit availed under Rule 3(5) for capital goods Rule 3 (5A).
· No change in pick rate of duty of custom
· Baggage rules have been amended by vide Notification No. 25/2013 Customs (N.T.)
a. Appendix –D i.e. Indian passenger who has been residing over one year -Free of duty for Jewellery upto an aggregate value of Rs. 50,000 (earlier it was Rs. 10,000 only) by a gentleman passenger or upto Rs. 1,00,000 (earlier it was only Rs. 20,000) for lady passenger. Ref. Rule 6 of Baggage Rules 1998
b. A person who transferring residence – Fee of duty for jewellery upto an aggregate value of Rs. 50,000 by a gentleman passenger or upto Rs. 1,00,000 for lady passenger. Ref.Rule 8 of Baggage Rules 1998
· Amendment of Notification No. 69/2004 Customs (which exempt the education cess on certain products) by vide notification No. 09/2013 Customs
· Amendment to Notification No. 75/2005 Customs -Exemption of basic customs duty on Chemical and allied products from Singapore by vide Notification No. 10/2013 Customs.
· Notification No. 11/2013 amendment to Notification No. 09/2012 for re-import of cut & polished diamond.