analysis of the finance bill - 2013 · lacs for f.y.2013-14 for first time loan takers investment...

Analysis of The Finance Bill - 2013

Significant Proposals in Brief

I

Budget Highlights

Important Proposals

Government to raise Rs.30,000 crore in F.Y 2012-13 from disinvestment of stake in PSUs

Fiscal deficit seen at 4.8 pct of GDP in F.Y. 2013-14

Budget proposes to create opportunities for youth to acquire education and skills for better

job opportunities and self employment

Health and Education Sector given Priority by higher allocations

New and Innovative instruments to be introduced to mobilise funds for Infrastructure Sector

like Infrastructure Debt Fund, Infrastructure tax free bonds etc.

Work on two new Smart Industrial Cities including Dholera in Gujarat to start during

FY 13-14

All branches of Public Sector banks to have ATMs by 31.3.2014

India's First Women's Bank to be set up with Rs.1000 Crores initial Capital

“NIRBHAYA FUND” to be set up for Women Safety and Security

Post Offices to be Modernised and Introduce Core and Real time banking facilities

Inflation indexed Bonds and NSCs to be issued

Special Proposals for Micro, Small and Medium Enterprises

o Benefits and Preferences enjoyed by MSME to continue upto 3 years after they grow

out of the category

o Refinancing Capacity of SIDBI raised from Rs.5000 Crores to Rs.10000 Crores

o Corpus of Rs.500 Crores to be created for Credit Guarantee Fund for Factoring

o 15 additional Tool Rooms and Technology Development Centre to be Set up with the

help of World Bank Assistance

o Funds provided to Corporate to approved technology incubators will qualify as CSR

expenditure tho Technology Up gradation Fund Scheme (TUFS) to continue in 12 Plan

o Working Capital and Term Loan to be given at Concessional Rate of 6% to handloom

Sector

o SMEs to be permitted to list on the SME Exchange without Initial Public Offer.

o Council of Experts to be Set up to analyse the international competitiveness of Indian

Financial Sector

Direct Taxes-Proposals

No Change in the Personal Income Tax Slab and Rate of Income Tax Upto Rs. 100.00

lacs

Tax Credit of Rs.2000 will be offered to assessee falling in the bracket of Rs. 2.00 lacs

to Rs. 5.00 lacs

Increase in Surcharge on Various Income for One Year

o Persons (Other than companies) termed as SUPER RICH having taxable Income

GDP expected to grow at 6.9%

o

o



II

Exceeding Rs.1.00 Crores to Pay Surcharge of 10%.

o Domestic Companies having income exceeding Rs.10.00 Crores to pay 10%

Surcharge instead of 5%

o Foreign Companies having income exceeding Rs.10.00 Crores to pay 5% surcharge

instead of 2%

o Surcharge on Dividend Distribution Tax and tax on distributed Income increased

from 5% to 10%

Permissible Premium rate increased from 10% to 15% of Sum Assured for Life Insurance

Policies for persons having disability and Certain ailments

Contributions made to Health Schemes of Central and State Govt. Eligible for deduction u/s

80D for Mediclaim.

Donation to National Children Fund eligible for 100% deduction.

Gross Total Income limit Increased from Rs.10.00 lacs to Rs.12.00 lacs for claiming Deduction

u/s 80CCF (Investment in Rajiv Gandhi Saving Scheme)

Housing loan interest deduction for Loan upto 25.00 lacs increased from 1.50 lacs to Rs.2.50

lacs for F.Y.2013-14 FOR FIRST TIME LOAN TAKERS

Investment in Plant and Machineries of Rs.100.00 Crores or more by Manufacturing

Companies during FY 13-14 to FY 14-15 eligible for 15% Investment Allowance

Tax Deduction at Source (TDS) at the rate of 1% to be deducted on Transfer of Properties

having consideration exceeding Rs.50.00 lacs. Agriculture Land transactions exempted.

Rate of Tax on Payment of Royalty and Fees for Technical Services to Non-Resident increased

from 10% to 25%

Reduction made in Securities Transaction Tax (STT) of Certain Transactions

Commodity Transaction Tax (CTT) to be introduced in a limited way. Agricultural Commodities

will be exempt. CTT on non-commodities futures at 0.1%

Implementation of modified version of Generally Anti Avoidance Rules (GAAR) postpond

upto 31st March 2016.

Number of Administrative measures to be taken to speed up issue of Refunds, for use of

technology based processing, e-payment through more banks etc.

Tax Administration Reforms Commission to be Set Up to strengthen the system

Indirect Taxes-Proposals

No Change in Normal Rate of 12% for Excise and Service Tax and Custom duty of 10% for

Non-Agricultural Products

Custom Duty on Imported SUVs increased from 27% to 30%

Custom Duty on Mobile phones priced more than Rs. 2000.00 increased to 6%

Service Tax to be levied on All Air-conditioned Restaurants

Rate of Abatement reduced from 75% to 70% in case of Flats admeasuring 2000 Sq.Ft having

value of Rs. 1.00 Crore

A one time “Voluntary Compliance Encouragement Scheme” to be introduced for Service

Tax Defaulters since 1.4.2007

Work on introduction of GST implementation to be taken forward.



III

th

9

INDEX

SUBJECT Pg. No.

DIRECT TAXES

RATES OF INCOME TAX

PERSONAL TAXATION

CORPORATE TAXATION

AMENDMENTS APPLICABLE TO ALL ASSESSEES

TAX DEDUCTION/COLLECTION AT SOURCE

Wealth Tax

INDIRECT TAXES

SERVICE TAX

CENTRAL EXCISE

CUSTOMS

GUJARAT VAT

CHART ANNEXED

TDS / TCS RATES FOR FINANCIAL YEAR 2013-14

1

4

6

7

10

10

12

15

16

18



IV



1

RATES OF INCOME TAX (F.Y. 2013-14)

Effective Rates

Up to ` 2,00,000

Net TaxableIncome

` `

2,00,001 to2,50,000

Individual, HUF, AOP, BOI, Artificial Juridical Persons

ResidentSenior Citizensof the age of

60 to 79

NIL

NIL

All other ResidentIndividual,

HUF, AOP, BOI, AJP.

NIL

10.30% on

amount in excess of

2,00,000`

ResidentSenior Citizenof the Age of80 & Above

NIL

NIL

NIL

Note : 1. Tax rebate of 2,000/- for individuals having total income upto 5.00 lacs shall be granted.` `

` `

2,50,001 to5,00,000

` `

5,00,001 to10,00,000

` `

10,00,001 to1,00,00,000

Above1,00,00,000 `

of 2,50,000

`

`

5,150 plus 10.30%

on amount in excess

of 5,00,000

`

`

30,900 plus 20.60%

on amount in excess

30.90%

amount in excess

of 10,00,000

`

`

1,33,900 plus

on

33.99%

amount in excess

of 1,00,00,000

`

`

29,14,900 plus

on

10.30%

on Income Above

2,50,000`

of 5,00,000

`

`

25,750 plus 20.60%

on amount in excess

30.90%

amount in excess

of 10,00,000

`

`

1,28,750 plus

on

33.99%

amount in excess

of 1,00,00,000

`

`

29,09,750 plus

on

20.60%

on amount in excess

of 5,50,000`

30.90%

amount in excess

of 10,00,000

`

`

1,03,000 plus

on

33.99%

amount in excess

of 1,00,00,000

`

`

28,84,000 plus

on

Direct Taxes

Co-operative Societies Effective Rates

10.30%Up to ` 10,000

` ` 10,001 to 20,000

` ` 20,001 to 1,00,00,000

Above 1,00,00,000`

` `

1,030 plus 20.60% on amount in excess of10,000

` `

3,090 plus 30.90% on amount in excess of20,000

` `

30,86,910 plus 33.99% on amount in excess of1,00,00,000



2

Firm, Local Authorities, LLP

Upto1,00,00,000`

` ` 1,00,00,001

to 10,00,00,000

Effective Rates

Domestic Company

Foreign Company

Dividend Distribution tax

Domestic Companies

Dividend to Individual & HUF

Dividend to Others

Firms, Local Authorities, Companies & LLP

Minimum Alternate Tax - Domestic Company

16.995%

Mutual Fund

NIL

NIL

Debt Fund

27.50%

33.0%

Liquid Fund

27.50%

33.0%

Persons claiming deduction in respect of certain incomes other than 80P or U/s. 10AA having adjusted total income less then 20,00,000`

Firm/LLP Individual / HUF / AOP / BOI

Alternate Minimum Tax

19.06% NIL

19.06% 19.06%

Above` 10,00,00,000

Securatisation Trust

27.50%

33.0%

Tax on Distributed income forbyback of shares

27.50%

RATES OF INCOME TAX (F.Y. 2013-14)

30.90%

30.90%

41.20%

19.06%

33.99%

32.45%

42.024%

20.00%

33.99%

33.99%

43.26%

20.96%

Persons claiming deduction in respect of certain incomes other than 80P or U/s. 10AA having adjusted total income more then 20,00,000`



3

Particulars

Individuals, HUFs and AOPs Firms & LLP

Effective Rates

NIL

20.60%

On Listed Securities, where STT is paid

On Assets other than Listed securities

On Listed securities where STT is paid


15.45%

As per Slab

Domestic Company

NIL

20.60%





15. 45%

30.90%

Income Upto1,00,00,001`

Foreign Company

NIL

20.60%





15. 45%

41.20%

21.63%

16. 22%

NIL

32.45%

21.01%

15. 76%

NIL

42.024%

Short Term Capital Gain

Long Term Capital Gain





Income

10,00,00,000` ` 1,00,00,001 to

Upto ` 1,00,00,000 Above ` 1,00,00,000

NIL

22.66%

16.995%

Income Above10,00,00,000`

22.66%

NIL

33.99%

21.63%

NIL

43.26%

16.995%

16.22%

CAPITAL GAINS TAX RATES (F.Y. 2013-14)

Note : 1. Effective rate is worked out considering Basic Rate + Surcharge (Wherever applicable) +

Education Cess + Higher Education Cess.

2. In all cases, where surcharge is applicable, marginal relief will be available.



4

Personal Taxation

ü Amendment in definition of Agricultural Land: Section 2(1A) and section 2(14)

Till date, agricultural land was defined as land which was used for agricultural purpose and which

was not situated within the jurisdiction of a municipality or cantontment board having population

of more than 10,000 or within 8 kms from the limits of such municipality or cantontment board. In

view of the rapid urbanization, this definition is proposed to be rationalized. Accordingly, as per

the definition following land shall qualify as agricultural land:

Population of municipality Distance of land

or cantonment board From limit

10,000 to 1 lakh Beyond 2 kms

1 lakh to 10 lakhs Beyond 6 Kms

More than 10 lakhs Beyond 8 Kms

In other words, all other land situated within the above limit will be considered as non-agricultural

land.

This amendment will take effect from FY 2013-14.

ü Taxability of Keyman Insurance Policy : Section 10(10D)

Section 10(10D) exempts all proceeds received from a life insurance policy other than a Keyman

Insurance Policy. In case of a Keyman Insurance Policy, all proceeds received are taxable in the

hands of the business concern, which has taken the Keyman Policy on the life of its director /

employee / partner. In many cases, such Keyman Policies during the life of such policies were

assigned to the Key Man after which the policy was treated as an ordinary policy eligible for

exemption under Section 10(10D). The said section is now proposed to be amended that a policy

which is once characterized as a Keyman Policy shall continue to be characterized as a Keyman

Policy and proceeds received from such Keyman Policy shall not be eligible for exemption under

Section 10(10D).

This will take effect from FY 2013-14.

ü Increase in limit of percentage of eligible premium for Life Insurance Policies for persons

with disability or diseases: Section 10(10D) & Section 80C

Hitherto, in case of Life Insurance Policies, proceeds from such policies were exempted from tax

only if the premium amount did not exceed 10% of the sum assured. This section has now been

amended to provide that in case a life insurance policy is taken for insuring the life of a person

with disability or disease, then in such case such premium amount should not exceed 15% of the

sum assured. Persons, who are eligible for deduction under Section 80U or 80DDB would be

covered by this provision. Consequential amendment is also be made in Section 80C to provide

that such insurance premium shall also be eligible for deduction under Section 80C


amendment

amendment



5

ü

Health Schemes: Section 80D.

Section 80D is proposed to be amended to broaden the type of health schemes, contribution to

whom shall be eligible for deduction. It is now provided that contributions to health schemes of

State Government or Central Government, which will be notified, will also be eligible for

deduction.


ü Amendment to the Rajiv Gandhi Equity Savings Scheme: Section 80CCG

The Rajiv Gandhi Equity Savings Scheme, where first time investors in listed equity shares, having

total income less than 10 lacs were eligible for a deduction of 50% of investment made

(maximum investment 50,000) has now been amended. The limit of total income for investors

has now been increased from 10 lacs to 12 lacs. Further, equity oriented mutual funds shall

also be eligible for investment under this scheme. It is also now provided that such investor would

be eligible to invest and claim deduction for a period of 3 consecutive years.


ü Donation to National Children's Funds : Section 80G

All donations to the National Children's Funds shall now be eligible for deduction @ 100% of the

donation made.


ü Deduction in respect of interest on New Home Loans: Section 80EE

For an individual, who does not own any residential house and is purchasing a new residential

house for a value not exceeding 40 lacs and has availed a housing loan not exceeding 25 lacs,

he would be eligible for a one time deduction of such interest up to a maximum 1 lacs under

Section 88EE, in the year in which such loan is availed. In case such interest is below 1 lac in the

first year, the balance deduction shall be allowed in the subsequent year. It is also noteworthy that st stthe deduction is allowable only in respect of loans sanctioned between 1 April, 2013 and 31

March, 2014 and which is sanctioned by a Bank or a Housing Finance Company. It is also

noteworthy that interest which is claimed as a deduction u/s 88EE shall not be allowed under

Section 24. There is no change in provisions relating to deduction of interest in case of Home stLoans disbursed before 1 April, 2013 or loans which do not qualify under this provision.

This provision will take effect from FY 2013-14.

ü Tax Rebate to Individual having income less than Rs. 5 lacs: Section 87

Individuals having total income below 5 lakhs are now eligible for a flat tax rebate of 2,000 or

the actual amount of tax, whichever is lower.


Deduction in respect of contribution to Health Scheme similar to Central Government

amendment

`

`

` `

amendment

amendment

` `

`

`

` `

amendment



6

Corporate Taxation

ü

Section 10(23FB) grants a pass through tax status to Venture Capital Companies (VCC) and

Venture Capital Funds (VCF). Accordingly, investors of VCC and VCF were taxed in respect of the

income of the VCC and VCF. SEBI in 2012 has replaced the VCF and VCC Regulations with

Alternative Investment Funds (AIF) Regulations. Accordingly, Section 10(23FB) has been amended

to provide a similar tax treatment to Alternative Investment Funds (AIF).

This amendment will take retrospective effect from FY 2012-13

ü Investment Allowance to Companies : Section 32AC

A Company, which is engaged in manufacturing of an article or thing and which invests a sum st stexceeding 100 crores in new plant & machinery between 1 April, 2013 and 31 March, 2015,

shall be eligible to claim a deduction in the nature of investment allowance of 15% on such plant

& machinery acquired and installed in financial years FY 2013-14 and FY 2014-15. This deduction

shall be allowable only in FY 2013-14 and FY 2014-15. Plant & Machinery shall not include second

hand machinery, office equipment, computers, software, vehicles and ships or aircrafts. It is also

provided that plant & machinery on which benefit is availed under this section and if it is

transferred within 5 years of acquisition, then the amount of deduction granted shall be treated as

income in the year of transfer.

This amendment will take effect from FY 2013-14

ü Deduction in respect of donations to Political Parties & Electoral Trusts: Section 80GGB &

80GGC

Section 80GGB and 80GGC grants deduction to Indian Companies in respect of donations made

to Political Parties & Electoral Trusts. These sections have now been amended to provide that

donations made in cash shall not been eligible for deduction.

This will take effect from FY 2013-14

ü Extension of deduction for Power Projects: Section 80IA(4)

Hitherto, the deduction was available in respect of profits derived from Specified Power Projects stsubject to fulfillment of prescribed conditions, which was to expire on 31 March, 2013. The said

stdeduction is now extended by one more year so as to expire on 31 March, 2014.


ü Restriction on deduction for Additional Wages: Section 80JJA

Section 80JJA provides for deduction of 30% on additional wages paid by an Industrial

Undertaking by employment of new workmen, subject to fulfillment of other conditions. The

provision has now been amended to provide that such deduction shall be restricted only to

Companies deriving profits from manufacture of goods in its own factory.


Taxation of Alternative Investment Funds and their investors: Section 10(23FB)

`

amendment

amendment

amendment



7

ü

Foreign Subsidiaries : Section 115BBD

Up to FY 2010-11, dividend received by Indian Companies from their Foreign Subsidiaries is

subject to normal rates of tax applicable to such Companies. Section 115BBD was introduced to

provide that such dividend will be subject to a special rate of tax of 15% plus applicable stsurcharges and cess for upto 31 March, 2013. This concessional treatment has been extended by

a further period of 1 year.


ü Removal of cascading effect of Dividend Distribution Tax : Section 115O

Section 115O provides for levy of dividend distribution tax (DDT). The said provision has been

amended to provide that dividend distributed out of profits which are in the nature of dividend

from foreign subsidiary and which has already been subject to tax under Section 115BD shall not

be liable to dividend distribution tax. The provision has been amended to remove a cascading

effect in case of taxation of dividends.

stThis amendment will take effect from 1 June, 2013.

ü Imposition of Dividend Distribution Tax on Buy-back of shares of unlisted companies:

Section 115QA to 115QC

Consideration received by a shareholder on account of buy-back of shares is normally subject to

capital gains in the hands of the shareholder. However, the Company was not required to pay any

dividend distribution tax on such buy-back. Now, specific provisions have been introduced to levy

dividend distribution tax on buy back of shares of unlisted companies @ 20%. This tax is payable

by Companies, whereas the Shareholder shall continue to be liable for capital gains tax as may be

applicable.


ü Deduction in respect of Commodities Transaction Tax : Section 36(1)(xvi)

A new sub-clause (xvi) to Section 36(1) has been introduced to provide that where income from

purchase and sale of Commodities Derivative Securities is a part of Business Income, then the

Commodities Transaction Tax shall be allowed as a business expenditure.

This provision will take effect from FY 2013-14

ü Deemed Sales Consideration in case of sale of Land and / or building by Real Estate

Developers / Builders: Section 43C

A new provision, Section 43C has been introduced to provide that in case of business concerns,

which are engaged in selling of land and / or buildings as a part of their business (i.e. as stock in

trade), shall be required to consider at least the stamp value of such land / building as their sales

consideration. Thus, in cases where the actual sales consideration is less than the stamp value,

such business concerns would be required to compute their business profits on the basis of the

value of such land / building on which stamp duty is paid. It is further provided that where it is

claimed that the lower value of such transaction was fixed prior to the execution of the transfer

Extension of Concessional Tax Payable by Indian Companies on Dividend received from

amendment

Amendments Applicable To All Assessees



8

agreement, it would be possible to adopt such lower value only if the payments pursuant to such

agreements are made by a mode other than cash prior to the date of agreement.


ü Taxation of immovable property received for inadequate consideration : Section 56(2)(vii)

Till date, under Section 56(2), which deals with taxability of gifts received from non-relatives, in

addition to other than specified items, immovable property received without consideration was

taxable as gift. This provision is now amended to include immovable property received for

inadequate consideration. In such cases, to the extent the consideration paid is lower than the

value adopted for the stamp duty, the difference amount shall be treated as gift income in the

hands of the purchaser.


ü Validity of Tax Residency Certificate: Section 90A

In FY 2011-12, Section 90A was amended to provide that in order to access the benefits of a

double taxation avoidance treaty, it would be necessary for a Non-Resident to provide a tax

residency certificate from his home country. The provisions of Section 90A are now being

amended to clarify that tax residency certificate shall be a necessary condition for taking benefit

of a double taxation avoidance treaty but shall not be the only condition. Other conditions if any

imposed by the DTAA or the Act would also be required to be fulfilled.

This amendment will take effect from FY 2013-14.

ü Deferment in Implementation of GAAR Provisions: Chapter X-A

Provisions of the General Anti Avoidance Rules, which had generated so much dread last year

have now been deferred and shall now be apply from FY 2015-16. Further, many terminologies

and procedural aspects have been amended to incorporate a large number of suggestions made

by the Expert Committee constituted by the Finance Ministry.

ü Definition of the term “Existing Liability” for the purpose of application of seized assets:

Section 132B

Section 132B empowers the Income Tax Department to adjust existing liability of a tax payer

against assets seized during a Search Proceeding. Recently, judicial decisions have interpreted the

term “existing liability” to include advance tax liability of the assessee. The section has now been

amended to clarify that the term “existing liability” shall not include advance tax liability. This

would enable the Department to ensure that seized assets continue to be available for

adjustment against future taxes assessed.


ü Return filed without payment of Self Assessment Tax to be treated as defective return:

Section 139

Till date, Income Tax Returns filed without payment of Self Assessment Tax were being accepted

by the Income Tax Department. An explanation to Section 140A has now been inserted to provide

that a return filed without payment of Self Assessment Tax will be treated as a defective return.




9

ü

Section 142(2A) empowered the Assessing Officer to order a special audit of the assessee during

the course of assessment proceedings, with the prior approval of the Chief Commissioner or

Commissioner. The Assessing Officer could order such audit after considering the nature and

complexity of the accounts. Certain judicial decisions have interpreted the term “nature and

complexity of the accounts” narrowly and have invalidated such special audits where they feel

that the reasons do not meet the criteria prescribed in the Act. Hence, the provisions have now

been amended to include additional criterion such as volume of accounts, doubts about the

correctness of the accounts, multiplicity of transactions in the accounts or specialized nature of

business activity or the interest of the revenue based on which such special audit can be ordered.


ü Exclusions for computing period of limitations for completion of assessment / reassessment

proceeding : Section 153

Section 153 currently provides that time taken for the purpose of obtaining a special audit report

u/s 142(2A) shall be excluded for the purpose of computing the period for determining the

period of limitation for completing assessment / reassessment proceeding pursuant to a search.

The provision is now amended to further provide that time elapsed on account of a court

proceeding where such special audit is challenged or where such order for special order is set

aside shall be excluded. Similarly, time taken for obtaining information from a foreign tax

jurisdiction or a period of one year from the date on which such information is first sought,

whichever is lower shall also be excluded.


ü Definition of the term “Tax Due” for the purpose of recovery proceedings: Section 167C &

179

Certain judicial decisions have recently interpreted that the term “tax due”, which is used in

provisions relating to tax recovery proceedings does not include penalties and interest. These

provisions are now amended to clarified to state that the term “tax due” shall include penalties

and interest.

stThis provision will take effect from 1 June, 2013.

ü Additional Penalty for non-filing of Annual Information Return: Section 271FA

Certain entities are mandated by Section 285BA to file Annual Information Return in respect of

specified transactions entered into by the Customers of such entities with it. Till date, if any entity

failed to file an Annual Information Return, a penalty of ̀ Rs. 100 per day for the delay was to be

imposed. This provision have now been amended to provide for an additional penalty of 500

per day, if after a notice issued by the Assessing Officer for filing of such Annual Information

Return and there is no compliance or delayed compliance.


Special Audit during Assessment Proceedings : Section 142(2A)

`



10

Amendments to Provisions for Tax Deduction/Collection at Source

ü

115A

In case of payments to Non-Residents, which are in the nature of Royalty or Fees for Technical

Services, tax was earlier to be deducted at source @ 10%. This rate has now been increased to

25%. However, such payments to residents of countries where India has a double taxation

avoidance treaty can continue to take benefit of the rate prescribed in such treaty, if such rate is

lower than the rate prescribed under this section.

This amedment will take effect from FY 2013-14

ü Tax Deduction at Source on consideration paid on transfer of immovable properties: Section

194IA

A new provision has been introduced to provide that in case of transfer of an immovable property

of a value above ` 50 lacs, the transferee shall deduct tax at source @ 1% to the account of the

transferor at the time of payment or credit whichever is earlier. This provision shall apply to all

sellers of immovable property including builders and real estate concerns. This provision shall

however not apply to transfer of agricultural land.

stThis will take effect from 1 June, 2013.

ü Tax Deduction at Source on Interest on Rupee denominated Long Term Infrastructure Bonds

issued to Non-Residents: Section 194LC

Interest paid to a Non-Resident, who is a holder of specified rupee denominated long term

infrastructure bonds shall be subject to tax deduction at source @ 5%. This concessional rate was

earlier available only to approved External Commercial Borrowings.


ü Amendment to the definition of “Urban Land”: Section 2(ea)

Till date, urban land was defined as land which was situated within the jurisdiction of a

municipality or cantontment board having population of more than 10,000 or within 8 kms from

the limits of such municipality or cantontment board. In view of the rapid urbanization, this

definition is proposed to be rationalized. Accordingly, as per the definition following land shall

qualify as urban land:

Population of municipality Distance of land

or cantonment board From limit

10,000 to 1 lakh Beyond 2 kms

1 lakh to 10 lakhs Beyond 6 Kms

More than 10 lakhs Beyond 8 Kms

Tax Deduction at Source on Royalty or Fees for Technical Services to Non-Residents: Section

amedment

Wealth Tax



11

Urban Land shall however not include a land on which construction is not permissible or a land on

which a building has been constructed or any unused land held for industrial purposes for a

period of two years from the date of its acquisition or a land held as stock in trade for a period of

10 years from the date of acquisition.

This provision will take effect from FY 2013-14.

ü

Enabling provisions for filing of wealth tax returns in electronic mode have now been introduced.

It shall be possible to e-file wealth tax returns from FY 2013-14.

These provisions will take effect from FY 2013-14.

ü Introduction of Commodities Transaction Tax

Purchase and Sale of Commodities Derivative Products other than derivative products for

agricultural items through a recognized commodity exchange shall now be subject to a

Commodities Transaction Tax (CTT) of 0.01% of the value of transaction. Such CTT shall be payable

by the Seller. Further provisions relating to filing of returns and other administrative procedures

have also been introduced.

These provisions will take effect from FY 2013-14.

ü Decrease in Securities Transaction Tax

Securities Transaction Tax has been reduced on various categories as under:

Nature of taxable securities transaction Payable by Existing Proposed

Rates Rates

Delivery based purchase of Purchaser units of Purchaser 0.1% Nil

an equity oriented fund entered into in a

recognized stock exchange

Delivery based sale of units of an equity oriented

fund entered into in a recognized stock exchange Seller 0.1% 0.001%

Sale of Futures in Securities Seller 0.017% 0.01%

Sale of a unit of an equity oriented fund to the Seller 0.25% 0.001%

mutual fund

E-filing of Wealth Tax Return: Section 14A and 14B

Commodities Transaction Tax & Securities Transaction Tax



12

INDIRECT TAXES

SERVICE TAX

ü No Change in Threshold limit and Rate of Service Tax

— Current threshold exemption limit of ̀ 10.00 Lacs is continued

— Current Rate of Service Tax is continued at 12.36%

ü Exemptions Granted:

— Negative list has been expanded to include two new services:

1. State Council of Vocational Training (SCVT) under approved vocational education course

and designated trades offered by Industrial Training Institute or Industrial Training

Center affiliated to State Council of Vocational Training.

2. Testing activities directly related to production of any agricultural produce like soil

testing, animal feed testing, testing of samples from plants or animals, for pests and

disease causing microbes.

— Exemption granted to following services:

1. Process amounting to manufacture or production of goods as per the Medicinal and

Toilet Preparations (Excise Duties) Act,1955.

2. Retrospective exemption has been extended to Indian Railways on the service tax stleviable on various taxable serviced provided by them during the period prior to the 1

thday of July 2012 to the extent show cause notices have been issued up to 28 February,

2013.

stThe above amendments will take effect from 1 day of March, 2013.

ü Changes in Abatement:

1. Currently in case of Construction Service, where value of land is included in the amount

charged from the buyer, the taxable portion for service tax purpose is prescribed at 25%.

Now, in case of the construction of residential units, where the carpet area of residential

unit is more than 2,000 sq. ft. or the amount charged is more than Rs. 1 crore, the taxable

portion for service tax purpose is prescribed at 30%. Taxable portion for service tax

purpose in all other cases shall remain at 25%.


ü Reductions in Exemptions:

1. In case of Charitable organization providing services towards any other object for

general public utility, there was an exemption up to a turnover of ` 25 lacs. This

exemption has now been reduced to 10 lacs.

2. Currently restaurants having air-conditioning and a license to serve liquor were liable for

service tax. Now, all restaurants with air-conditioning or central air heating in any part of

the establishment at any time during the year shall be liable to Service Tax.


`



13

ü Withdrawal of Exemptions:

1. Services provided by an educational institution by way of renting of immovable property.

2. Exemption of Service Tax on copyright on cinematography limited to films exhibited in

cinema halls.

3. Services by way of vehicle parking to general public.

4. Services provided to Government, a local authority or a governmental authority, by way

of repair or maintenance of aircraft.


ü Amendment to Penal Provisions:

1. In case of a Company, which has committed any of the following contraventions,

namely:-

a. Evasion of Service Tax or

b. Issue of any bills or invoice without providing service tax;

c. Availment and utilization of credit of taxes or duty without actual receipt of taxable

service of excisable goods either fully or partially;

d. Failure to pay any amount collected as service tax to the credit of the Central

Government beyond a period of six months from the date on which such payment

become due;

the director, manager, secretary or other officer of such Company, who at the time of

such contravention was in charge of and was responsible to the Company for the

conduct of business of such Company and was knowingly concerned with such

contravention, shall be liable to a penalty which may extend to one lakh rupees.

2. A Person who is liable to pay service tax or required to take registration and when such

person fails to take registration, such person shall be liable to a penalty which may

extend upto ten thousand rupees.

3. In case of offences specified in clauses (a), (b) or (c) of Section 89, where the amount

exceeds fifty lakh rupees, a punishment of imprisonment up to three years but not less

than six months may be imposed.

4. In case of offences specified in clause (d) of Section 89, where the amount of service tax

collected but not deposited to the credit of the Central Government exceeds fifty lakh

rupees, a punishment of imprisonment for a term which may extend to seven years but

not less than six months may be imposed.

5. In case of any other offences, such offence may be punishable with imprisonment which

may extend to one year.

6. Service Tax Officers of the rank of Superintendent may be authorized by Commissioners

to arrest a person for specified offence particularly offence relating to non-payment of

collected service tax.



14

7. A separate section has now been introduced to specify as to what shall constitute a

cognizable offence and what shall constitute a non-cognizable and bailable offence.

The above amendments will take effect from the date on which finance bill will be enacted.

ü Voluntary Compliance Encouragement Scheme, 2013

— A one time scheme called 'Voluntary Compliance Encouragement Scheme, 2013' is

proposed to be introduced. A person, who is liable to pay service tax but has failed to

pay such service tax, may avail of the scheme on the condition that he files a truthful

declaration of his Service Tax dues since 1st October, 2007. A person who has filed his

Service Tax Return but has not paid the service tax is not eligible to take advantage of

this scheme. Similarly, a person against whom a notice or an order of determination has

already been issued, such person shall not be eligible to take advantage of this scheme

in respect of the dues for which such notice or order is issued.

— The Scheme shall be applicable for service tax due from 01.10.2007 to 31.12.2012 which

remains unpaid on 01.03.2013.

— Declaration shall be made for tax dues for which no notice is issued on or before

01.03.2013.

— Declaration can be made on or before 31.12.2013

— Minimum 50% of Tax Due should be paid on or before 31.12.2013 and balance to be paid

on or before 30.06.2014

— Tax paid under this scheme shall enjoy immunity from penalty, interest and other

proceedings under the chapter.

— No tax refund of amount paid under the scheme.

— Where the declarant fails to pay the tax dues, either fully or in part, as declared by him,

such dues along with interest thereon shall be payable and penal consequences shall

become applicable.

The above scheme will take effect from the date on which it will be notified.



15

CENTRAL EXCISE

Description Existing Rate Revised Rate

of Duty of Duty

AUTOMOBILES :

On SUV's 27% 30%

ELECTRTONICS :

Mobile Phones of retail price exceeding 2000` 1% 6%

stAll changes to be effective from 01 March, 2013 unless otherwise specified

METALS :

Silver manufactured from Zinx/Lead smelting NIL 4%

Compounded levy on stainless steel "Patta Patti" ` 30000/- per

machine per month

` 40000/- per

machine per month

Marble tiles & slabs ` 30/- per Sq. Mtr. ` 60/- per Sq. Mtr.

Excise duty on Cigarettes NIL 18%

INCREASE IN EXCISE DUTY RATES

REDUCTION IN EXCISE DUTY RATES

Item

Truck Chasis 14% 13%

Existing Rate Revised Rate

of Duty of Duty

ITEMS ON WHICH FULL EXEMPTION GRANTED

AGRICULTURE/AGRO PROCESSING/PLANTATION

Tapioca Sago (Sabudana)

Tapioca Starch

Henna Powder or Paste not mixed with any other ingredient

AIRCRAFTS & SHIPS

Ships and other vessels. (Further no CVD shall be imposed in this case)

TEXTILES:

Hand made carpets and other textile floor coverings of coir or jute, whether or not handmade.

Branded Readymade garments and made ups cotton yarn up to Fiber stage

OTHERS

Intermediate goods manufactured and consumed captively by exempted units under Area

Based exemption scheme in Himachal Pradesh and Uttarakhand.



16

CUSTOM DUTY

stAll changes to be effective from 01 March, 2013 unless otherwise specified

AMENDMENT IN BAGGAGE RULES

—

residing abroad for over one year or transferring his residence to India is raised from

` 10,000 to 50,000 and for a female passenger the limit is raised from 20,000 to

1,00,000

— Duty Free allowance for crew member of vessel/aircraft has been increased from 600 to

1,500

EXEMPTION ALLOWED

— Full Exemption of Basic and additional custom given to trophies imported by National Sports

Federations in connection with any International tournament held in India.

— Full exemption from export duty on galvanized steel sheets falling under certain sub-stheading retrospectively w.e.f. 1 March, 2011.

— Exemption is extended to parts and testing equipments for maintenance, repairs and

overhaul of aircrafts and parts thereof

— Exemption is provided to lithium ion automobile battery for manufacture of lithium ion

battery packs for supply to the manufacture of hybrid and electric vehicles.

— Exemption for specified parts of electric and hybrid vehicle is extended by 2 more years upto

31.3.2015

EXEMPTION WITHDRAWN

— Exemption of education cess and Secondary and higher secondary cess on aircraft and

aircraft parts,soyabeen oil and olive etc stands withdrawn

— Export Duty of 10% on De-oiled rice bran oil cake is withdrawn.

MISCELLNEOUS

— Time limit for consumption of imported goods by ship repair units is being increased from 3

months to 1 year

— Time limit for consumption/installation of parts and testing equipments imported for

maintainance, repairs and overhaul of aircrafts extended from 3 to 1 year.

Duty Free allowance in respect of jewellery for an Indian male passenger who has been

` `

`

`

`


of Duty in % of Duty in %

METAL

Unprocessed Ilmenite 0 10

Ilmenite 0 5

Bauxite 0 10

% %

% %

% %



17


of Duty of Duty

AGRICULTURE SECTOR

Dehulle Oat Grain 30% 15

Hazel Nuts 30 15

AUTOMOBILE

New Passenger cars and other motor vehicles with CIF Value of 75 100

more than $ 40,000 and Engine Capacity Exceeding 3,000 CC

and 2,500 CC for Petrol and Diesel respectively

Motor Cycle with Engine Capacity of 800 CC or more 60 75

METAL

Unprocessed Ilmenite 0 10

Ilmenite 0 5

Bauxite 0 10

Stainless steel wire cloth stripe 10 5

Wash coat used in the manufacturing of catalytic convertors

and their parts 7.50 5

PRECIOUS METAL

Pre-forms of precious and semi precious stones 10 2

CAPITAL GOODS AND INFRASTRUCTURE

Steam Coal 0 2

CVD on Steam Coal 1 2

Bituminous Coal 5 2

Bituminous Coal CVD 6 2

20 Specified machinery for use in leather and footwear industry 7.5 5

AIRCRAFTS & SHIPS

Yachts and motor boats 10 25

TEXTILES

Raw silk (not thrown) of all grades 5 15

Textile Machineries and Parts 7.5 5

ELECTRONICS/HARDWARE

Set top Boxes for TV 5 10

%

% %

% %

% %

% %

% %

% %

% %

% %

% %

% %

% %

% %

% %

% %

% %

% %

% %

% %

CHANGES IN THE RATES OF CUSTOM DUTY

CHANGE IN THE RATES OF EXPORT DUTY



18

GUJARAT VALUE ADDED TAX

ü

The option to pay lump sum tax is available to the dealers having total annual turnover up to ̀ 50

lacs subject to certain conditions under Section 14 of the Gujarat Value Added Tax Act, 2003. In

order to make available the benefits of this scheme to more dealers of the State, it is proposed to

increase the total turnover limit of ̀ 50 lacs to ̀ 75 lacs

The dealer can pay lump sum tax quarterly at the rate of 0.5% on the taxable turnover instead of

calculating the tax on each sale under the provision. Such dealer is required to furnish simplified

quarterly return.

ü Micro irrigation system equipments

In order to encourage the use of micro irrigation system equipments in agriculture, it is proposed

to fully exempt micro irrigation system equipments from current rate of tax 5% including

additional tax.

ü Educational items for study of the students

Pencils of all types, foot rules, slide rules, mathematical instruments and its box, school color box,

rubber erasers and pencil sharpeners are now fully exempt these items from current rate of tax of

5% including additional tax.

ü Newar made of plastic

Newar made of plastic is now proposed to be fully exempt from current rate of tax 5% including

additional tax.

ü Agarbatti dust

It is proposed to fully exempt agarbatti dust also.

ü Carbon credit

Till date sales transaction of carbon credit were being taxed under residuary entry at the rate of

15% including additional tax. In order to encourage the use of carbon credit, it is proposed to

include the carbon credit in entry 41 of Schedule II as an intangible or incorporeal goods and

make it taxable at the rate of 5% including additional tax.

ü Cigarette Smoking

It is proposed to increase the rate of tax on cigarette made from tobacco from the present rate of

tax of 25% including additional tax to 30% including additional tax.

ü Second hand (used) two wheelers and second hand (used) commercial vehicles

At present, there is a provision to tax the sale of used or second hand motor car at the rate of 1%

(subject to maximum ̀ 2000). By adding similar provision, it is proposed to make taxable the sale

of second hand (used) two wheelers at the rate of 1% (subject to maximum ` 500) and sale of

second hand (used) medium and heavy duty commercial vehicles at the rate of 1% (subject to

maximum ̀ 5000) made by a registered dealer.

Lump sum Tax:



19

ü Lump sum Entertainment tax for video houses

Owners of video houses are provided an option for lump sum payment of entertainment tax

under the provisions of the Gujarat Entertainment Tax Act, 1977.

It is now proposed that the option of lump sum tax would be available to only those video houses

which fulfill the following conditions:

(1) The rate of entry into the place of entertainment shall not be more than ` 30/- per person.

(2) Entertainment (showing of films) can be provided using any kind of technology.

(3) The maximum number of seats in the entertainment place shall not be more than 125.

(4) There shall not be more than one screen in the premises.

ü Professional Tax

Currently the salary and wage earners having monthly salaries or wages less than ` 3000 are

exempted from payment of profession tax under the provisions of the Gujarat State Tax on

Professions, Trades, Callings and Employments Act, 1976. Whereas the salary and wage earners,

whose monthly salaries and wages are ` 3000 or more but less than ` 6000 are liable to pay

profession tax at the rate of ` 20 per month. It is now proposed to fully exempt the salary and

wage earners having salaries or wages ̀ 3000 or more but less than ̀ 6000 per month. There is no

change in any other rates.

ü Revised rates of professional Tax for Salaried Employees/Wage earners

Salary/Wages Rate

` 6000 to 8999 ` 80/-

` 9000 to 11999 ̀ 150/-

Above ̀ 12000 ̀ 200/-

ü For others

Minimum Rate of tax will be as under

District Panchayat ` 500 P.A.

Nagar Palika ` 1000 P.A.

Mahanagar Palika ` 1250 P.A.

ü For Businessmen / Professionals

Turnover Rate

<= 250000 ` 0

>250000 <= 500000 ` 500

>500000 <=1000000 ` 1250

>1000000 ` 2400



17

TDS Rates for Financial Year 2013-14 (A.Y. 2014-2015)

Sec-194IA Payment ofTransfer of

Immovable Propertyother than

agriculturel land

Considerationexceeds

Rs. 50,00,000

Befor registering the documentswith the registrar

1.00 1.00 1.00 1.00

Within One Month from the end of themonth in which deduction is made.














Interest on loanpaid to

non-residentindividual for

or to a foreigncompany approved

by CentralGovernment by

a specifiedCompany and

subscribinglong term

infrastructurebond



25.0025.00

30.00

20.00

25.00

20.00 20.00

25.00 25.00 25.00















Note :1) Rate of deduction in case of non-domestic companies having income more than Rs. 1 Crore will be increased by surcharge @ 2% and 5% having income more than Rs. 10 Crores.2) Rate of deduction in case of all NRIs including nondomestic companies will be increased by education cess @3%

analysis of the finance bill - 2013 · lacs for f.y.2013-14 for first time loan takers investment...

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