TAX HIGHTLIGHTS OF BUDGET 2013-2014

DIRECT TAXES

·   A tax credit of Rs. 2000 to every person with total income up to Rs.5 lakhs will be provided.

·  Surcharge of 10 % on persons (other than companies) whose taxable income exceeds Rs. 1 crore.

·  Increase surcharge from 5% to 10 % on domestic companies whose taxable income exceed Rs.10 crore.

·  In case of foreign companies if the taxable income exceeds Rs.10 crore then surcharge increase from 2% to 5 %,. 

·   In all other cases such as dividend distribution tax or tax on distributed income, current surcharge increased from 5% to 10 %.

·   Additional surcharges to be in force for only one year.

·   Education cess to continue at 3 %.

·  Permissible premium rate increased from 10 % to 15 % of the sum assured by relaxing eligibility conditions of life insurance policies for persons suffering from disability and certain ailments.

·   Contributions made to schemes of Central and State Governments similar to Central Government Health Scheme, eligible for section 80D of the Income tax Act.

·   Donations made to National Children Fund eligible for 100% deduction u/s 80G.

·  Investment allowance at the rate of 15% to manufacturing companies that invest more than Rs.100 crore in plant and machinery during the period 1.4.2013 to 31.3.2015.

·   Eligible date’ for projects in the power sector to avail benefit under Section 80- IA extended from 31.3.2013 to 31.3.2014.

·  Concessional rate of tax of 15% on dividend received by an Indian company from its foreign subsidiary proposed to continue for one more year.

·   Securitization Trust to be exempted from Income Tax. Tax to be levied at specified rates only at the time of distribution of income for companies, individual or HUF etc. No further tax on income received by investors from the Trust.

·    Investor Protection Fund of depositories exempt from Income-tax in some cases.

·    Parity in taxation between IDF-Mutual Fund and IDF-NBFC.

·    A Category-I AIF set up as Venture capital fund allowed pass through status under Income-tax Act.

·   TDS at the rate of 1% on the value of the transfer of immovable properties where consideration exceeds Rs.50 lakhs. Agricultural land to be exempted.

·  A final withholding tax at the rate of 20% on profits distributed by unlisted companies to shareholders through buyback of shares.

·    Reductions made in rates of Securities Transaction Tax in respect of certain transaction.

·    Modified provisions of GAAR will come into effect from 1.4.2016.

·  Rules on Safe Harbour will be issued after examing the reports of the Rangachary Committee appointed to look into tax matters relating to Development Centers & IT Sector and Safe Harbour rules for a number of sectors.

·   A number of administrative measures 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.

·   Income limit for RGESS raised to 12 lakh from Rs 10 lakh.

·   Fifth large tax payer unit to open at Kolkata shortly.

·   Proposal to introduce Commodity Transaction Tax (CTT) in a limited way. Agricultural commodities will be exempted.

·   Proposal to increase the rate of tax on payments by way of royalty and fees for technical services to non-residents from 10% to 25%.

INDIRECT TAXES

Customs

·   No change in the peak rate of basic customs duty of 10% for non-agricultural products.

·  Period of concession available for specified part of electric and hybrid vehicles extended up to 31 March 2015.

·  Duty on specified machinery for manufacture of leather and leather goods including footwear reduced from 7.5% to 5%.

·   Duty on pre-forms precious and semi-precious stones reduced from 10 to 2%.

·   Export duty on de-oiled rice bran oil cake withdrawn.

·   Duty of 10% on export of unprocessed ilmenite and 5% on export of ungraded ilmenite.

·   Concessions to air craft maintenance, repair and overhaul (MRO) industry.

·   Duty on Set Top Boxes increased from 5% to10%.

·   Duty on raw silk increased from 5% to 15%.

·   Duties on Steam Coal and Bituminous Coal equalized and 2% custom duty and 2% CVD levied on both kinds of coal.

·   Duty on imported luxury goods such as high end motor vehicles, motor cycles, yachts and similar vessels increased.

·   Duty free gold limit increased to Rs.50,000 in case of male passenger and Rs.1,00,000 in case of a female passenger subject to conditions.

EXCISE DUTY

·   There is no change in excise duty.

·  Relief to readymade garment industry. In case of cotton, zero excise duty at fiber stage also. In case of spun yarn made of manmade fiber, duty of 12% at the fiber stage.

·   Handmade carpets and textile floor coverings of coir and jute totally exempted from excise duty.

·   To provide relief to ship building industry, ships and vessels exempted from excise duty. No CVD on imported ships and vessels.

·  Specific excise duty on cigarettes increased by about 18 %. Similar increase on cigars, cheroots and cigarillos.

·    Excise duty on SUVs increased from 27% to 30%. Not applicable for SUVs registered as taxies.

·    Excise duty on marble increased from Rs.30 per square meter to Rs. 60 per square meter.

·    Proposals to levy 4% excise duty on silver manufactured from smelting zinc or lead.

·    Duty on mobile phones priced at more than Rs. 2000 raised to 6 %.

·  MRP based assessment in respect of branded medicaments of Ayurveda, Unani, Siddha, Homeopathy and bio-chemic systems of medicine to reduce valuation disputes.

SERVICE TAX

·    There is no change in service tax rate.

·    2 items are added in negative list:-

      i.   Vocational courses offered by institutes affiliated to the State Council of Vocational Training

      ii.   Testing activities in relation to agricultural produce

·   Exemption of Service Tax on copyright on cinematography limited to films exhibited in cinema halls.

·   For homes and flats with a carpet area of 2,000 sq.ft. or more or of a value of Rs.1 crore or more, which are high-end constructions, where the component of services is greater, rate of abatement reduced from 75 to 70 %.

·  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.

·    Tax proposals on Direct Taxes side estimated to yield to Rs.13, 300 crore and on the Indirect Tax side Rs.4, 700 crore.

·    Proposals to levy Service Tax on all air conditioned restaurant.

GOODS AND SERVICE TAX

·   For GST need to be pass by Constitutional Amendment. To present Draft Bill on GST in parliament in next few months.

Regards

CA. Mona Singhal

Partner

Arpit Gupta & Associates

Chartered Accountants

701, Nirmal Tower,

26, Barakhamba Road,

Connaught Place, 

Delhi-110001

Mobile No. +91-9873082769

Website: www.caaga.co.in