BUDGET 2013-14

India Snapshot

DIRECT TAX AT A GLANCE

Individual Taxation
Introduction of surcharge for only 1 year @ 10% on a person (other than a company) having total income in excess of Rs 1 crore Introduction of rebate of Rs 2,000 to individual tax payers falling in the tax bracket of Rs 2,00,000 to Rs 5,00,000 Additional interest deduction of Rs 1,00,000 on housing loan upto Rs 25 lacs taken by first-home buyers during the year 1 April 2013 to 31 March 2014. The value of such house should not exceed Rs 40 lacs. Extending the benefit of deduction under section 80D to subscribers of other health schemes as may be notified by the Central Government The benefit of deduction under section 80CCG has been extended to investments made in listed units of equity oriented fund. Further, the period for which the deduction will be available has been increased to three years from the existing one-time deduction and for investors whose gross total income does not exceed Rs 12 lacs as compared to existing Rs 10 lacs

Corporate Taxation

Concessional rate of tax @15% applicable to dividends received from foreign subsidiaries has been extended to one more year Removal of cascading effect of DDT in case of a domestic company receiving dividend from its foreign subsidiaries, if the former declares dividend in the same year in which it receives the dividend from the latter (w.e.f 1 June 2013) Manufacturing companies will now be eligible for an investment allowance @ nd 15% for 2 years (for 2 year on net of allowance claimed in 1st year) on investment of more than Rs 100 crore in new plant or machinery during the period from 1 April 2013 to 31 March 2015

Corporate Taxation
Surcharge on domestic companies having total income in excess of Rs 10 crore has been increased to 10% from the existing 5% for one year Surcharge on foreign companies having total income in excess of Rs 10 crore has been increased to 5% from the existing 2% for one year

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International tax
The rate for TDS on payments in the nature of Royalty/ Fees for technical services to non-residents has been increased from 10% to 25% The Bill has clarified that submission of TRC is a necessary condition and not a sufficient conditions for availing benefits of DTAA

Others
New section 194-IA is proposed to be inserted providing for TDS @ 1% by a transferee on the sales consideration for transfer of immovable property (w.e.f. 1 June 2013), if the sales consideration is exceeding Rs 50 lacs Modified provisions of GAAR will come into effect from 1 April 2016 Return of income filed without payment of self-assessment tax will be treated as defective return (w.e.f. 1 June 2013) Rules on Safe Harbour for number of sectors will be issued after examining reports of the Rangachary Committee Benefit of tax pass through status (i.e. income is taxable in the hands of investors instead of Venture Capital Fund / Venture Capital Undertaking) has been provided to Category I Alternative Investment Fund New sections 14A and 14B is proposed to be inserted in WT Act to enable e-filing of Wealth tax return (w.e.f. 1 June 2013)

Widening of tax base

In case of buy-back of shares by unlisted companies, an additional income-tax @ 20% on the distributed income (consideration paid in excess of the sum received by the company at the time of issue of such shares) (w.e.f. 1 June 2013) shall be payable Income arising from the said buy-back of shares of unlisted company where the company is liable to pay additional tax, will be exempt in the hands of shareholders

Others
Introduction of commodities transaction tax @ 0.01% on commodity derivatives other than agricultural commodities Reduction in rates of Securities transaction tax For transfer of asset (other than capital asset) being land and building held as stock-in-trade, it is proposed to insert new section 43CA for considering stamp duty value as deemed value of consideration, in case actual consideration is lower than the stamp duty value

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INDIRECT TAX AT A GLANCE

Service Tax
Service tax rate remains unchanged Scope of negative list proposed to be enlarged to cover: Vocational courses offered by institutions of the State Council of Vocational Training Testing activities in relation to production of agricultural produce Exemption on copyright on cinematographic films restricted to films exhibited in cinema halls (Effective 1 April 2013) All air-conditioned restaurants to charge service tax. Condition of Liquor license done away with. (effective 1 April 2013) Abatement in respect of Services involving Construction of a complex/building/civil structure intended for sale except where entire consideration is received after Issuance of completion certificate reduced from 75% to 70% except for residential units having carpet area upto 2000 square feet or where the amount charged is less than Rs 1,00,00,000 (One Crore ) (with effect from
1 March 2013). Effectively, the rate of Service

Service Tax
Following service tax exemptions have been withdrawn (effective 1 April 2013): Renting of immovable property byeducational institutions Parking of Vehicle for general public Repair or maintenance or aircraft Services to Government, local/ Govt. authority Transportation of Household effects, Petroleum and Petroleum Products and Postal Mail/Mail Bags by rail or vessel within India Exemption on Goods Transport Agency Services extended to all agricultural produce, specified food stuff (excluding alcoholic beverages), chemical fertilizers and oil cakes

Tax has increased from 3.09% to 3.708% Exemption limit for charitable organizations providing service of general public utility reduced from 25 lakhs to 10 lakhs (with effect from 1 April 2013)

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INDIRECT TAX AT A GLANCE

Service Tax
Advance Ruling provisions extended to Resident Public Limited companies. Maximum penalty on non registration under service tax restricted to Rs 10,000. Service tax amnesty scheme introduced. Interest and penalty waived on filing of truthful declaration of service tax dues since 1 October 2007.

Central Excise
Advance Ruling provisions extended: To Resident Public Limited Companies; For manufacture/processing of new products Admissibility of credit of tax on Input services

Customs
Peak Rate of customs duty remains unchanged Baggage Rules amended to raise duty free import of Jewellery for Indian male passenger from Rs 10,000 to Rs 50,000 for Indian female passengers from Rs 20,000 to Rs 1,00,000. Period of import duty concession in respect of specified parts of electric and hybrid vehicles extended upto 2015. Customs duty increased in respect of: High-end luxury cars Motor cycles exceeding 800 CC Set top boxes Raw silk Steam Coal Customs duty reduced in respect of certain goods like Specified agricultural goods Pre-forms of precious and semi-precious stones Bituminous coal Specified machinery used in leather and footwear industry Textile machinery and parts

Central Excise
Peak Rate of excise duty remains unchanged Exemptions from Central Excise Duty on: Cotton at fibre stage Ships and vessels with corresponding benefit of CVD on imports for ship building industry Excise duty increased on SUVs (1500 CC and above) from 27% to 30% Mobile phones valuing more than Rs 2,000 from 1% to 6%. Cigarettes by 18%; similar increase on cigars, cheroots and cigarillos Marble slabs and tiles from Rs 30 to Rs 60 per square metre Excise duty to be imposed on silver recovered during smelting of Zinc or Lead Excise duty on MRP of Branded medicines of Ayurveda, Unani, Siddha, Homeopathy and bio-chemic.

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Customs Customs Export duties imposed on certain specified

metals and withdrawn on specified agroproducts Certain concessions extended to Aircraft Maintenance, Repair and Overhaul industry Powers given to Tribunals to extend stay orders beyond 180 days on an application filed by assessee. However, total period of stay restricted to 365 days. Time limit of 30 days for storage of imported goods pending clearance Penal provisions including imprisonment provisions made stringent

Goods & Services Tax

Draft GST constitutional amendment bill and GST law at advanced discussion stage Rs 9,000 crores provided towards first instalment of CST compensation

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