Budget 2013 Presentation

8/13/2019 Budget 2013 Presentation

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Surcharge on Persons

other than Companies Now, Surcharge on Persons other than

Companies is applicable as under :

If Net Income is < 1 Crore : NIL

If Net Income is > 1 Crore : 10 %



Surcharge on Domestic CompaniesEarlier, Surcharge onDomestic Companies wasas under :

If net Income is < 1 Crore :NIL

If net Income is > 1 Crore :5 %

Now, Surcharge onDomestic Companies isas under :

If net Income is < 1Crore : NIL

If net Income is > 1 crore but < 10 Crore : 5 %

If net Income is > 10Crore : 10 %



Surcharge on Companies other than

Domestic CompaniesEarlier, Surcharge onForeign companies was

as under :If net Income is < 1Crore : NIL

If net Income is > 1Crore 2 %

Now, Surcharge onForeign companies is as

under :If net Income is < 1Crore : NIL

If net Income is > 1 croreBut < 10 Crore : 2 %

If net Income is > 10Crore : 5 %



Benefit of Rs. 2000 for small taxpayers(SECTION 87A)

Relief for Tax Payers in the first bracket of Rs.2 Lacs to 5 Lacs. A taxcredit of Rs. 2000 to residentindividual with total income up to

Rs. 5 Lacs will be allowed.



Change in Definition of AgriculturalLand (Section 2(14)(iii)

Currently, for the purposes ofdefining ―agricultural income‖ and

―capital asset‖, land is inter-aliaconsidered to be ―agricultural land‖ if:

– it is situated in any area withinthe jurisdiction of a municipality

or cantonment board having population of not less than tenthousand according to the last

preceding census;

or

It is proposed to amend the secondcriteria so as to provide that landwill be considered as an―agricultural land‖ if it is situated inany area within the distance,measured aerially of not beingmore than:

– two kilometers, from the locallimits of any municipality orcantonment board and which has a

population of more than tenthousand but not exceeding oneLac; or



– it is situated in any area withinsuch distance not exceedingeight kilometers from the locallimits of any municipality orcantonment board as notified bythe Central Government.

– six kilometers, from the local limits ofany municipality or cantonment board

and which has a population of morethan one Lacs but not exceeding tenLacs; or

– eight kilometers, from the local limitsof any municipality or cantonment

board and which has a population ofmore than ten Lacs.

It is also proposed to define theterm “population” to meanpopulation according to the lastpreceding census of which therelevant figures have beenpublished before the first day of theprevious year.

This amendment will be applicablefrom AY 2014-15



Amendment in Section 10(10D)(d)(Money Received under a LIP)

It is proposed to insert a new proviso to Section 10(10D)(d) underwhich any payment received under an Life Insurance Policyincluding sum assured allocated by way of Bonus will also beexempt if Insurance is taken on life of any person who is:

a) a person with disability or a person with severe disability as referred toin section 80U; or

b) suffering from disease or ailment as specified in the rules made undersection 80DDB; and

Premium payable does not exceed 15% of the Capital Sum Assured.

This proviso shall apply in respect of policy issued on or after 1 st day of April 2013.



Keyman Insurance Policy

Earlier, Keyman InsurancePolicy, which was assigned tothe keyman employee or

Director, was eligible forexemption under section10(10D).

The Proposed amendment provides that a KeymanInsurance Policy which has been

assigned to a person during histerm with or withoutconsideration shall be continuedto treated as KMIP. Therefore, itssurrender value will not get

exemption under section10(10D).

This amendment will beapplicable from AY 2014-15



Introduction of Commodity

Transaction TaxCTT to be charged @ 0.01 % on sale of commodity derivative.

Taxable commodities transaction will mean a transaction of sale ofcommodity derivatives other than agriculture commodities, traded inrecognized associations.

CTT paid as above will be allowed as deduction under section 36(xvi)of Income Tax Act if income is treated as business income.

This amendment will be applicable from AY 2014-15



Reduction in the rate of SecuritiesTransaction Tax (STT )

Sl.No.

Nature of taxable securitiestransaction

Payable by Existing Rate%

ProposedRate

1 Delivery based purchased

of units of an equityoriented fund into anrecognized stock exchange

purchaser 0.10 Nil

2 Delivery based sale of unitsof an equity oriented fundinto an recognized stockexchange

Seller 0.10 0.001

3 Sale of futures in securities Seller 0.017 0.01

4 Sale of a unit of an equityoriented fund to the mutual

fund

Seller 0.25 0.001



Insertion of Section 32ACInvestment Allowance

It provides that where an assessee, being a company is engaged inthe business of manufacture of an article or thing; and Invests asum of more than Rs.100 Crore in new assets (plant or machinery)during the period beginning from 1stApril, 2013 and ending on 31stMarch, 2015, then, the assessee shall be allowed —

For assessment year 2014-15, a deduction of 15% of aggregateamount of actual cost of new assets acquired and installed duringthe financial year 2013-14, if the cost of such assets exceeds Rs.100Crore;

For assessment year 2015-16, a deduction of 15% of aggregateamount of actual cost of new assets, acquired and installed duringthe period beginning on 1stApril, 2013 and ending on 31st March,2015, as reduced by the deduction allowed, if any, for assessmentyear 2014-15.



The phrase ‗new asset ‘ has been defined as new plant or machinery

but does not include —

any plant or machinery which before its installation by the assesseewas used either within or outside India by any other person;any plant or machinery installed in any office premises or anyresidential accommodation, including accommodation in the nature ofa guest house;any office appliances including computers or computer software;any vehicle;ship or aircraft; orany plant or machinery, the whole of the actual cost of which isallowed as deduction (whether by way of depreciation or otherwise)in computing the income chargeable under the head Profits and gains

of business or profession‛ of any previous year.



Commodity derivatives transaction not to

be treated as Speculative transaction

Amendment in Section 43(5) w.e.f. 1 st April2014A commodity derivative transaction carried outin a recognized association shall not be a

speculative transaction i.e. it will form part ofincome from business & Profession.



Insertion of Section 43CASale of Land and Building lying as

Stock in TradeIt is proposed that where the consideration on transferof an asset (other than a capital asset), being land or

building or both, is less than the stamp duty value, thevalue so adopted or assessed or assessable shall bedeemed to be the full value of the consideration for the

purposes of computing income under the head ‚Profits and gains of business of profession. In case where dateof agreement and registration are different then the

stamp value may be taken as on the date of agreement,the same would be applicable only where a part ofconsideration is paid on the date of agreement by modeother than cash.This amendment will be applicable from

AY 2014-15.



Amendment in Section 80C (3A)

Rebate for Premium paid for Personssuffering with Disability

Deduction u/s 80C for persons suffering with disability u/s 80U

& 80DDB will be available if the premium is not more than 15%of Sum assured .

- Cap of 10% extended to 15%

- Similar to amendment in Section 10(10D)- This amendment will be applicable from AY

2014-15



Amendment in Section 80CCG(Rajeev Gandhi Equity Saving Scheme)

PARTICULARS ExistingProvision

Proposed Provision

Deduction available forInvestment in Equity Shares Equity Shares and alsoEquity orientedMutual Fund

Eligible limit of gross

total income

10 Lacs 12 Lacs

Deduction available for Only for one year For Three ConsecutiveYears



Amendment in Section 80D

Currently, deduction upto Rs. 15,000is allowed for premium paid towardsCentral Government Health Schemeor any payment made towards

preventive health check-up of theassessee or his family.

It is proposed to allow thisdeduction in respect of any amount

paid to any other scheme as

notified by the CentralGovernment.



Amendment in Section 80G

Currently, deduction of 50%is allowed for donation madeto National Children‘s Fund.

It is proposed to allow 100%deduction for donation madeto the National Children‘s Fund w.e.f AY 2014-15



Insertion of New Section 80EE

Additional Deduction of Interest onHousing Loan

For first-home buyers, it is proposed to allow an additional deduction of100,000 in respect of interest payable on housing loan sanctioned by a

financial institution during financial year 2013-14 subject to the followingconditions:The loan amount sanctioned does not exceed Rs. 25 Lacs;The value of the residential house property does not exceed Rs. 40Lacs;The owner does not own any other residential house property on thedate of sanction of the loanIn case the interest payable during financial year 2013-14 is less than `100,000, the balance amount not claimed as a deduction may beclaimed in financial year 2014-15.

No deduction of such interest claimed shall be allowed under any other

provisions of the Act.



Amendment in Section

80GGB & 80GGCCurrently donation to Political Parties qualifies for deduction.

From AY 2014-15 CASH donation will not qualify for any deduction.

This amendment will be applicable from AY 2014-15.



Extension of the sunset date under section

80IA for the power sector

It is proposed to extend the time limit of sunset date with a

view to provide further time to the undertakings tocommence the eligible activity referred in clause (iv) ofsubsection (4) of section 80IA to avail the tax incentive bya further period of one year i.e. up to 31stMarch, 2014.



Insertion a new Chapter XII-EATaxation of Securitisation Trusts :

A new Chapter is proposed to be introduced whereby a securitization trust will be required to pay additional income tax on income distributed to its investors,at the rate of 25% in case of the investor being an individual or HUF, and at therate of 30% in case of any other investor. However, no additional income tax

will be payable if the income distributed by the securitization trust is received by a person who is not chargeable to tax under the Act.

Further, it is proposed that income from securitization activities of asecuritization trust which is regulated by SEBI / RBI will be exempt from tax.

It is also proposed that distributed income received by the investor will beexempt from tax.

The above proposal will be effective from 1 June 2013.



Typical Securitisation Structure



Cascading Effect of DDT is now reduced

(Sec 115-O)• Dividends from specified foreign company

• Beneficial tax rate of 15% on dividend income from specifiedforeign company extended by 1 year till 31 March 2014 [ section115BBD]

• Dividend distribution tax not payable on dividends payable out ofdividends received from a specified foreign company being asubsidiary [ section 115-O]

• This amendment will take effect from 1st June, 2013 .



Amendment in Sec 139 (9)Clause (aa) has been added toExplanation which stipulates that Returnwill be treated as defective if taxtogether with interest u/s 140A notpaid before furnishing the return ofincome.

This amendment will take effect from 1 st June 2013.



Direction for special audit undersub-section (2A) of section 142

The existing provisions containedin sub-section (2A) of section 142of the Income-tax Act, inter alia,

provide that if at any stage of the proceeding, the Assessing Officerhaving regard to the nature andcomplexity of the accounts of theassessee and the interests of therevenue, is of the opinion that it isnecessary so to do, he may, with

the approval of the ChiefCommissioner or Commissioner,direct the assessee to get hisaccounts audited by an accountantand to furnish a report of suchaudit.

The expression ‚nature and complexity ofthe accounts‛ has been interpreted in avery restrictive manner by various courts.It is, therefore, proposed to amend theaforesaid sub-section so as to provide thatif at any stage of the proceedings beforethe Assessing Officer, having regard to thenature and complexity of the accounts,volume of the accounts, doubts aboutthe correctness of the accounts,multiplicity of transactions in theaccounts or specialized nature ofbusiness activity of the assessee foundthen he may with the previous approval ofthe Chief Commissioner or theCommissioner, direct the assessee to gethis accounts audited by an accountant andto furnish a report of such audit. This

amendment will take effect from 1st June,2013.



Insertion of new Chapter XII-DA

(Tax on Buy Back of Shares)It is provided that the consideration paid by the company for

purchase of its own unlisted shares which is in excess of the sumreceived by the company at the time of issue of such shares

(distributed income) will be charged to tax and the company would be liable to pay additional Income-tax @ 20% of the distributedincome paid to the shareholder. The additional income-tax payable

by the company shall be the final tax on similar lines as dividenddistribution tax. The income arising to the shareholders in respect ofsuch buy back by the company would be exempt where the companyis liable to pay the additional income-tax on the buy-back of shares.

This amendment will take effect from 1 st June 2013.



Insertion of new section 194-IA

This section has been inserted to cover transfer of certainimmovable property (other than agricultural land) in therealm of TDS. Provision is as follows:

Provisions of TDS has now been made applicable totransfer of certain immoveable properties other thanagricultural land if the total amount of consideration Rs.Fifty lacs or more . Transferee at the time of making the

payment or crediting any sum as consideration for transferof immoveable property other than agricultural land toresident transferor shall deduct tax @ 1% of such sum.

This amendment will be applicable from 1st June, 2013



GENERAL ANTI-AVOIDANCE RULE(GAAR)

Tax Avoidance is an area of concern across the world. Therules are framed in different countries to minimize suchavoidance of tax. Such rules in simple terms are known as‗General Anti Avoidance Rules‘ or GAAR. The GeneralAnti – Avoidance Rule were introduced by Finance Act2012, a few amendments have been made and date ofenforcement has been extended from April, 1 2014 to April,1 2016.



Amendment in Sec 271FAEarlier amount of penalty fornot filing Annual InformationReturn (AIR) under section285BA was limited to Rs. 100

per day.

Now Penalty Provisions have beenenhanced as under :

A). Penalty of Rs. 100 per day would belevied for the period from due date offiling of annual information return to

date of filing of the such return.

B). Penalty of Rs. 500 per day would belevied for the period from the expiry ofsixty days of the notice issue by the

income tax authority to the date of filingof the annual information return

This amendment will be applicablefrom AY 2014-15.



THANK YOU

Budget 2013 Presentation

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