The following are the major Highlights of the Union Budget 2013-14 presented by the Honble Finance Minister Mr. P. Chidambaram in the Parliament on Thursday (i.e. February 28, 2013)
The proposals made in the Finance Bill 2013 (Bill) are as follows.
A. Corporate Direct TAX:
a. No change in the Corporate Income tax rate of 30%.
b. No change in the rate of Minimum Alternative Tax (MAT) on Book profit of 18.50 percent.
c. No change in the rate of Surcharge of 5.00% (for income exceeding Rs.1 Cr), but Surcharge will be 10% in case income exceeds Rs. 10 Crores.
d. No change in the rate of Secondary and Higher Education cess of 3%.
e. The effective Corporate Tax rate of 32.445% and MAT on Book Profit of 20.01 percent remain in case income below Rs. 10 Crores otherwise 33.99% and MAT @ 20.9605%.
f. No change in the rate of tax on Short term capital gains on listed securities subject to Securities Transaction Tax of 15%.
g. No change in the rate of Dividend Distribution Tax (DDT) however, surcharge increased to 10% . Effective rate of DDT is now 16.995%
h. Withholding tax on Royalty payments to non residents increased to 25%.
i. Additional investment allowance @ 15% for acquisition of new plant & Machinery purchased of Rs. 100 Cr. or more after 1.4.2013 and before 31.3.2015.
j. The terminal date for setting up for the generation and distribution of power, laying any network of new transmission or distribution lines, undertaking substantial renovation and modernization of existing network of transmission or distribution lines for availment of deduction under section 80-IA is extended till March 31st 2014 from March 31st 2013 at present.
k. The lower rate of tax @ 15% on dividend received from foreign companies still to continue. Further, there will be no DDT on the dividend paid from the divided received from overseas.
l. Lower rate of TDS @ 5% on income earned from the foreign currency loan taken form infrastructure developments.
m. Modified GAAR effective from April 1, 2016.
n. Keyman Insurance Policy will not change its nature even though assigned to other before the maturity.
o. Deduction of additional wages paid to new workers under section 80JJA now restricted to Manufacture units only.
p. Submission of tax residency certificate is necessary but not sufficient condition to claim DTAA benefits.
B. Personal Tax:
° No Change in Income tax slabs except Rs. 2000/- tax credit in case taxable income exceeds Rs. 5 Lakhs.
° Surcharge is applicable in case income exceeds Rs. 1 Crore.
° Secondary and Higher Education cess of 3% remain unchanged.
° Additional deduction of Rs. 1 Lakh is allowed in case of acquisition of first house property whose value is less than Rs. 40 Lakhs and loan amount is less than Rs. 25 Lakhs. Further, unabsorbed deduction can be carried forward to next year. More clarification will come on this later.
° Benefit of Section 80D extended to CGHS.
° 80CCG limit of income exceeds to Rs. 12 Lakhs from 10 Lakhs and also included Mutual funds.
° National Children fund included in 100% exemption of 80G.
° TDS @1% on purchase of property of more than Rs. 50 Lakhs except agricultural land.
° TDS @ 20% in case of buy back of unlisted share.
° Section 43CA inserted which is similar to section 50C.
° Section 56(2) amended to include inadequate consideration along with no consideration.
C. Service Tax:
° No changes in Service tax rate.
° Reduction in abatement rate to 70% from 75% for under construction apartments having carpet area of 2000 sq feet or more or value exceeds Rs. 1 crore.
° Two new services in Negative list Vocational courses, testing services.
° Benefit of service tax exemption to films exhibited in cinema halls.
° Levy of service tax on all air conditioned restaurants.
° Introduction of one-time scheme called Voluntary Compliance Encouragement Scheme compliance of service tax.
° Changes in criminal proceedings & penalty clauses.
° Following exemptions withdrawn
(i) Renting of property by educational institution
(ii) Public Vehicle Parking
(iii) Repair of aircraft.
D. Others:
° Introduction of Commodity Transaction tax
° Exemption to income of investor protection fund of depositories.
° Exemption to National Financial Holdings Company Limited
° Reduction in STT tax rates.
° Taxation of securitisation of trust.
° Pass through status to certain alternative investment funds.
° Rationalisation of tax on distributed income of mutual funds.
° Electronic filing of wealth tax return.
° Change in the definition of agricultural land.
° No deduction allowed if donation made in cash u/s 80 GGB or 80GGC to political parties.
° Tax due means tax plus interest plus penalty.
° Return of income filed without payment of self assessment tax to be treated as defective return.
° Penalty of Rs. 5000/- under section 271FA for non filing of Annual Information return .
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