This presentation takes one through all the changes as seen in the tax laws - both direct and indirect in budget 2013. It summarises the changes made in several tax provisions.
2. SURCHARGE
A surcharge of 10 % on persons whose taxable
income exceeded 1 cr Rs.
Applicable to individuals, HUFs , firms and entities.
Increase of the surcharge from 5 % to 10 % on the
domestic companies,whose taxable income
exceeded 10 cr Rs.
In case of the foreign companies, there would be an
increase of surcharge from 2 % to 5 %.
Prepared By- Arvind Rathi (Article
Assistant),Sandesh Mundra &
Associates.
3. RELIEF & WELFARE MEASURES
Rebate of Rs 2000 for individuals having total
income up to Rs 5 lakh.
Raising the limit of percentage of eligible
premium for life insurance policies of person
with disability or disease.
Deduction for contribution to health schemes
similar to CGHS.
One hundred percent deduction for donation to
National Children’s Fund.
Prepared By- Arvind Rathi
(Article Assistant),Sandesh
Mundra & Associates.
4. SECURITIES TRANSACTION TAX
S.NO NATURE OF PAYABLE BY EXISTING PROPOSED
TAXABLE ST RATES(IN %) RATES(IN %)
1. Delivery based Purchaser 0.1 Nil
purchase of units of
an equity oriented
fund entered into
in a recognised
stock exchange.
2. Delivery based sale Seller 0.1 0.001
of units of an
equity oriented
fund entered into
in a recognised
stock exchange.
3. Sale of a futures in Seller 0.017 0.01
securities.
4. Sale of a unitof an Seller 0.25 0.001
equity oriented
fund the mutual Prepared By- Arvind Rathi
fund. (Article Assistant),Sandesh
Mundra & Associates.
5. KEY MAN INSURANCE POLICY
“Keyman insurance”, - insurance against the death of a key person of the
company.
During the term, the company “assigns” the policy to the employee
Collects the “surrender value” from the key employee.
Employee pays subsequent premiums, and gets proceeds at maturity.
Normally, proceeds are taxable in the hands of whoever gets it.
Employee argues that it was not a keyman insurance policy any more. And
thus, the proceeds were tax free.
It is now stated that if a keyman insurance policy is assigned, proceeds will
be fully taxed.
The change works for any assignment done or proceeds received after
April 1, 2013.
The lesson to learn is: Don’t screw with the Income Tax Dept.
Delhi Hc-
Rajan Nanda
Prepared By- Arvind Rathi
(Article Assistant),Sandesh
Mundra & Associates.
6. PENALTY- U/S 271FA
SECTION Nature of Authority who can levy Quantum of Penalty
Failure/Default penalty
Section 271FA Failure to furnish Prescribed Income Tax Rs. 100/- for every day
annual information authority. during which failure
return required u/s. continues.
285BA or failure to
furnish such return
within the time
prescribed.
This Amendment
Will Take
Effect From
1st April,2014.
Prepared By- Arvind Rathi
(Article Assistant),Sandesh
Mundra & Associates.
7. GENERAL ANTI AVOIDANCE RULES
(GAAR)
The GAAR objective was to "counter aggressive tax avoidance
schemes."
It empowers officials to deny the tax benefits on transactions or
arrangements.
The GAAR proceedings has to be approved by a pannel.
The directions issued by the Approving Panel shall be binding on the
taxpayer as well as the income-tax authorities.
No appeal can be made against such directions.
The Assessing Officer can send a reference to the GAAR panel for
one or more assessment years.
Prepared By- Arvind Rathi (Article
Assistant),Sandesh Mundra &
Associates.
8. APPLICABILITY OF SURCHARGE
ON TDS PROVISION
PARTICULARS PROPOSED RATE (%)
Non Resident Other Than Company- 10
Having total income exceeding Rs 1 Cr.
Foreign Company-Having total income 2
exceeding Rs 1 Cr but less than 10 Cr.
Others-Having total income exceeding Rs 10 5
Cr. Prepared By- Arvind Rathi (Article
Assistant),Sandesh Mundra &
Associates.
9. INVESTMENT IN NEW PLANT OR
MACHINERY (SEC-32AC)
o Section 32AC shall be effective from the 1st April 2013.
o A manufacturer or producer of any article acquires or installs a new asset
between April 1, 2013 to March 31, 2015 & the aggregate cost of the assets
exceeds INR 100 cr, then deduction shall be allowed as under,
A.Y. 2014-15 – 15% of the actual cost of new asset where,asset acquired &
installed between April 1,2013 to March 31,2014 & the aggregate cost of the new
assets exceeds INR 100 cr.
A.Y. 2015-16 – 15% of the actual cost of new asset where,asset acquired &
installed between April 1,2013 to March 31,2015 after subtracting the amount
deducted in AY 2014-15.
Prepared By- Arvind Rathi
(Article Assistant),Sandesh
Mundra & Associates.
10. TAXABILITY ON BUY BACK OF
SHARES
• When a company purchase its own shares in accordance with the
provisions of Sec 77A of the Companies Act, 1956.
• In relation to buy-back of shares of an unlisted company.Such
additional income-tax is payable at the rate of 20% on the
distributed income.
• The tax paid by the company on distribution of income in
accordance with the buy-back of shares will be the final tax
• No credit of taxes shall be available either to the company or to the
shareholder
In Armstrong World
Industries
Mauritius
Prepared By- Arvind Rathi Multiconsult Ltd.
(Article Assistant),Sandesh
Mundra & Associates.
11. INCOME TAX RATES
• No Changes In The Slab Rates.
• Slab Rate,For Individuals, Hindu Undivided Families,
Association of Persons and Body of Individuals
INCOME (INR)* RATE (%)^@
0-2,00,000 Nil
2,00,001-5,00,000 10
5,00,001-10,00,000 20
10,00,000 & Above 30
@ Surcharge of 10% is levied if the total income exceeds INR 1 crore.
^ Education cess of 2% and Secondary Education cess of 1%
is leviable on the amount of income-tax.
*The exemption limits are as follow- INR 2,50,000
for resident individuals of the age of 60 years
or more INR 5,00,000 for Very Senior Citizens
of the age of 80 years or more.
Prepared By- Arvind Rathi
(Article Assistant),Sandesh
Mundra & Associates.
12. STAMP DUTY VALUATION FOR
COMPUTATION OF INCOME UNER HEAD “
BUSINESS INCOME”-43CA
Stamp-duty valuation will be considered as full value consideration in cases
where agreed consideration is less.
It is only applicable were immovable property is a capital asset and not
stock-in-trade.
The date of an agreement fixing the value of consideration for the transfer
of the property and the date of registration of the transfer of the property are
not the same.
The stamp duty value may be taken as on the date of the agreement for
transfer provided the consideration, in a mode other than cash.
Prepared By- Arvind Rathi
(Article Assistant),Sandesh
Mundra & Associates.
13. TDS ON TRANSFER OF
IMMOVABALE PROPERTY
Section 194-IA has been introduced to provide that in
case of transfer of immoveable property,other than
agricultural land, by a resident.
The transferee shall deduct tax at the rate of 1% thereof.
No deduction is required to be made in case the
consideration for transfer of immoveable property is less
than fifty lakhs rupees.
Allahbad
KAN
construction
Prepared By- Arvind Rathi
(Article Assistant),Sandesh
Mundra & Associates.
14. AGRICULTURE LAND SEC 2(1)A
A land shall not be treated as an agriculture land, if such
land is situated within the distance measured aerially which
should not be more than:
REGARDING DISTANCE BEYOND (KMs)
10,000 – 1,00,000 2
1,00,000 – 10,00,000 6
> 10,00,000 8
Any Would Be Rural CIT v. Lal
Muncipality. Agriculture Land. Singh
Prepared By- Arvind Rathi
(Article Assistant),Sandesh
Mundra & Associates.
15. LIFE INSURANCE POLICY
SEC 10(10D)
If the premium payable for any of the years during the term of the
policy does not exceed 15% (earlier 10%) of the actual capital sum
assured, will be Exempt for the Insurance on the life of any person
who is-
I. A a person with disability or a person with severe disability as
referred to in section 80U.
II. Suffering from disease or ailment as specified in the rules made
under section 80DDB.
Prepared By- Arvind Rathi
(Article Assistant),Sandesh
Mundra & Associates.
16. MEDICAL SCHEME SEC 80D
Finace Bill, 2013 proposes to expand the scope of deduction under
section 80D by expanding the eligible schemes on
which deduction shall be available by amending section 80D with
effect from 1.04.2014 which provides as under:
In section 80D of the Income-tax Act, in sub-section (2), in clause (a), after the
words “Central Government Health Scheme”, the words “or such other scheme as
may be notified by the Central Government in this behalf” shall be inserted with
effect from the 1st day of April, 2014.’
Prepared By- Arvind Rathi
(Article Assistant),Sandesh
Mundra & Associates.
17. RAJIV GANDHI EQUITY SCHEME
Continued because of prestige behind the name.
To enable first time investors to park funds in MFs and listed shares and extended
tax benefits to three successive years.
The limit for investors wanting to invest in RGESS has been raised to Rs 12 lakh from
Rs 10 lakh earlier.
Under the scheme, an individual with an income of less than Rs 12 lakh would get
tax incentives for investing up to Rs 50,000 in the stock market.
The RGESS, which was originally announced in the Budget for 2012-13, seeks to
provide tax benefits to first-time investors in stock markets.
Prepared By- Arvind Rathi
(Article Assistant),Sandesh
Mundra & Associates.
18. AMENDMENT IN
SEC 80-IA(4)
Finance Bill 2012 proposes for the words, figures and letters "the 31st day of
March, 2012" in section 80-IA(4)(iv) the words, figures and letters "the 31st
day of March, 2013" shall be substituted.
This amendment will take
effect from 1st April, 2013
and will, accordingly, apply
in relation to assessment Analysis/Conclusion-
year 2013-14 and subsequent As per the proposed amendment, the
assessment years.
eligibility cut-off for carrying out the
aforesaid activities has been extended by
a period of one year i.e., up to 31 March
2013.
Prepared By- Arvind Rathi
(Article Assistant),Sandesh
Mundra & Associates.
19. SPECIAL AUDIT SEC 142(2A)
The powers of the AO to direct special audit have been
widened. The AO can now order a special audit not only due to
the reason of nature and complexity of accounts but he can
now order a special audit in the following additional
circumstances:
a) The volume of the accounts;
b) Doubts about the correctness of accounts;
c) Multiplicity of transactions in the accounts;
d) Specialized nature of business activity of assessee.
Delhi
Development
Authority v.
Union of
India
Prepared By- Arvind Rathi (Article
Assistant),Sandesh Mundra &
Associates.
20. DEFECTIVE RETURN SEC 139(9)
Filling return without paying self assessment tax,
Now it will be treated as Defective return.
If AO gives notice-
Rectify in 15 days
otherwise,
return would be invalid.
Note- The tax together with interest, if any,
payable in accordance with the provisions of
section 140A, has been paid on or before the
date of furnishing of the return. Prepared By- Arvind Rathi
(Article Assistant),Sandesh
Mundra & Associates.
21. BAD DEBTS SEC 36(1)(Vii)
In case of Banks and Financial Institutions.
The amount of deduction in respect of the bad debts.
Actually written off under section 36(1)(vii) shall be
limited to the amount by which such bad debts exceeds the
credit balance in the provision without any distinction
between rural advances and other advances.
DCIT v.
Karnataka
Bank Ltd
Prepared By- Arvind Rathi
(Article Assistant),Sandesh
Mundra & Associates.
22. IMMOVABLE PROPERTY
RECEIVED FOR INADEQUATE
CONSIDERATION SEC 56(2) (Vii) (b)
Where any immovable property is received for a consideration which is less than the
stamp duty value of the property by an amount exceeding Rs. 50,000.
The stamp duty value of such property as exceeds such consideration, shall be
chargeable to tax in the hands of the individual or HUF as income from other sources.
The existing provisions provide that where any immovable property is received by an
individual or HUF without consideration.
The stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of
such property would be charged to tax as income from other sources.
The existing provision does not cover a situation where the immovable property has
been received by an individual or HUF for inadequate consideration.
Prepared By- Arvind Rathi In CIT v.
Khoobsurat Resorts
(Article Assistant),Sandesh (P.) Ltd
Mundra & Associates.
23. COMMODITIES TRANSACTION TAX
S.NO TAXABLE RATE PAYABLE BY
COMMODITIES
TRANSACTION
1. Sale Of Commodity 0.01 Percent Seller
Derivative
The Tax is proposed
to be levied at the rate,
given in the table above.
Prepared By- Arvind Rathi
(Article Assistant),
Prepared By- Arvind Rathi (Article
Assistant),Sandesh MundraAssociates.
Sandesh Mundra & & Associates.
24. ROYALTY/ FTS TO NON-RESIDENT
SEC 115A
Agreement after
1/6/2005=10%.
Argument by
department- Most of Question arises- We have
the DTA the rate is DTAA with 84 countries,
more than 10% . but what about other
countries????
ex- US/UK=15%
Now the rate stands
increased to 25%. Prepared By- Arvind Rathi
(Article Assistant),Sandesh
Mundra & Associates.
25. CASE LAW- GUJARAT HC V.
MAGANBHAI PATEL
167C/179
1. Director liable for tax due if Company has not paid as well
as Partners of LLP.
2.Unless He proves fault not breach of trust.
3.The word tax due has changed- even the Penalty &
Interest will also calculated.
Prepared By- Arvind Rathi
(Article Assistant),Sandesh
Mundra & Associates.
26. TAX RESIDENCY CETIFICATE (TRC)
TRC containing prescribed particulars was a necessary but not sufficient
condition for availing benefits of DTAA.
This provision was for those coming from jurisdictions other than
Mauritius, depending on provisions of treaties with those nations.
This provision was in the explanatory memorandum to the Finance Act,
2012. In this Budget, however, the provision was added to the Finance Bill
itself.
The ministry clarified that TRC would be taken as a proof of residence for
these jurisdictions. For beneficial ownership, however may check other
documents as well.
Prepared By- Arvind Rathi
(Article Assistant),Sandesh
Mundra & Associates.
27. APPROVAL FROM JOINT
CIT IS NOT MANDATORY IF APPROVAL FROM
CIT IS OBTAINED FOR ASSESSMENT IN SEARCH
CASES.
A. With a view to remove the procedural ambiguity, the proposed proviso
makes it clear that section 153D shall not apply requiring approval by Joint
CIT.
B. where the assessment / reassessment order is passed by the Assessing
Officer with the prior approval of the Commissioner under sub-section (12) of
section 144BA.
C. It is because an order passed under Section 144BA(12) is with the approval of
an authority higher than the JCIT.
Akil
Gulamali
Somji v. ITO
Prepared By- Arvind Rathi
(Article Assistant),Sandesh
Mundra & Associates.
28. SEIZED ASSETS ARE NO LONGER
AVAILABLE FOR ADJUSTMENT TOWARDS
ADVANCE TAX LIABILITY
"Existing liability" does not include advance tax payable in
accordance with the provisions of the Act.
Various Courts have taken a view that the term "existing liability"
includes advance tax liability of the assessee.
In some of the cases, it was held that amount of cash seized from
assessee in search proceedings under section 132 can be adjusted
against his advance tax liability.
Prepared By- Arvind Rathi
(Article Assistant),Sandesh
Mundra & Associates.
30. CENTRAL EXCISE
Offences cognizable and non bailable:
Offences relating to excisable goods,involving evasion of duty or contravention of
provisions pertaining to utilization of Credit.
where the duty leviable thereon under the CE Act exceeds Rs. 50 lakhs, shall be
cognizable & non-bailable.
Expansion in the scope of Advance Ruling proceedings:
1. Any new business of production or manufacture proposed to be undertaken by an existing
producer or manufacturer.
2. Advance ruling can be sought, is proposed to be amended to cover the question of
admissibility of credit of service.
3. Resident public limited companies has been notified as a person eligible for seeking
Advance Ruling.
Prepared By- Arvind Rathi (Article
Assistant),Sandesh Mundra & Associates.
31. DUTY IMPACT ON CERTAIN GOODS
No change in the basic rate of excise duty- 12%.
Readymade garments- Sold under a “brand name”,are subject
to Excise Duty at the rate of 12.36% from 10.30%,
w.e.f. April 1, 2012.
Mobile handsets- Including cellular phones having retail sale price
more than Rs. 2000/- is being increased from 1% to 6%.
Cigarettes-Excise Duty on cigarettes and other products of CETH 2402,
has been increased,to about 18%.
Prepared By- Arvind Rathi (Article
Assistant),Sandesh Mundra & Associates.
32. DUTY IMPACT ON CERTAIN GOODS
Excise duty on SUVs- Including utility vehicles is being increased
from 27% to 30%, with immediate effect, the duty increase does not
affect SUVs used as taxis.
Branded Ayurvedic Medicaments- They are being brought
under MRP based assessment with an abatement of 35% from the
MRP.
Marble slabs- Excise Duty is being increased on marble slabs and tiles
from Rs 30 per square meter to Rs 60 per square meter.
Prepared By- Arvind Rathi (Article
Assistant),Sandesh Mundra & Associates.
33. FULL EXEMPTION FROM CENTRAL
EXCISE DUTY
Tapioca starch manufactured and consumed captively in the
manufacture of tapioca sago.
All goods for the manufacture of fertilizers.
Henna powder or paste, not mixed with any other ingredient.
All handmade carpets and carpets and other textile floor coverings
of coir and jute,whether or not handmade.
Prepared By- Arvind Rathi (Article
Assistant),Sandesh Mundra & Associates.
34. CENVAT CREDIT RULES,2004
An explanation has been inserted after Rule 3(5B) stating
that non-payment of duty payable On removal of inputs
or capital goods, would be recoverable in terms of Rule
14.
It is applicable in respect of cases falling under sub-rules
(5), (5A) and (5B) of Rule 3, i.e. duty payment on removal
of inputs or capital goods as such or after being used, and
on write off of any value of the inputs or capital goods
fully or partially in the books of accounts.
Alpump Pvt. Ltd. vs.
Commissioner of
Central Excise, Chennai
Prepared By- Arvind Rathi (Article
Assistant),Sandesh Mundra & Associates.
36. SERVICE TAX VOLUNTARY
COMPLIANCE ENCOURAGEMENT
SCHEME, 2013
1) To encourage voluntary compliance of filing returns and payment of tax dues, by making
truthful declaration of the tax dues.
2) The declarant shall be granted immunity from penalty, interest or any other proceedings on
payment of the tax dues.
3) The eligibility criteria of the scheme are set out below:
a) The scheme is applicable for the tax dues.
b) The declaration to be made on or before December 31, 2013.
c) Declaration cannot be filed by a person who has furnished return .
4) The timeliness for making payment of declared tax dues are as follows:
a) At least 50% of the tax dues to be paid on or before December 31, 2013.
b) Balance tax dues to be paid on or before June 30, 2014.
5) The tax dues so paid shall not be refundable under
any circumstances.
Prepared By- Arvind Rathi (Article
Assistant),Sandesh Mundra & Associates.
37. DEFAULTS
SECTION 89- Term of imprisonment for failure to deposit service
tax collected but not paid within 6 months increased from 3 years to 7
years. Further, the offence is made cognizable.
DEFAULT IN PAYMENT OF SERVICE TAX- To hold officers of
companies responsible for conduct of business, liable for contravention
of the provisions of the Act.Maximum penalty is Rs.1,00,000.
SERVICE TAX REGISTRATION CAPPED- To cap penalty
for failure to obtain registration,maximum of Rs.10,000.
Prepared By- Arvind Rathi (Article
Assistant),Sandesh Mundra & Associates.
38. RATIONALIZATION OF ABATEMENT
S.NO SERVICE TAX BASE ON CONDITION
WHICH TAX TO BE
CALCULATED,POST
ABATEMENT(%)
1. The servic provided 25 For residential unit
by way of having a carpet
construction of area up to 2000 sq.
complex, buildings, ft. or where the
civil structure amount charged is
intended for sale less then Rs. 1 Cr.
prior to issuance of 30 For Other Than
completion Above.
certificate.
Prepared By- Arvind Rathi (Article
Assistant),Sandesh Mundra & Associates.
39. EXEMPTIONS
RATIONALIZED
S.NO TAXABALE SERVICE EXISTING AMENDMENTS
NOTIFICATION
1. Educational Institution Services provided to or The words ‘provided to
by an educational or by’ has been replaced
institution in respect of with ‘provided to’.
education exempted
from Service Tax.
2. Restaurant Services Services provided in The condition that the
relation to serving of restaurant should have a
food or beverages by a license to serve alcoholic
restaurant, eating joint beverage has been
or a mess. deleted.
Prepared By- Arvind Rathi (Article
Assistant),Sandesh Mundra & Associates.
40. NEGATIVE LIST
A. Certain Educational Services forms part of Negative List of Services.
B. The scope of the entry has been enlarged by including ‘State Council of Vocational
Training’ as an approved vocational education course.
C. The scope of the Negative List has been curtailed, and a course run by an institute
affiliated to the National Skill Development Corporation set up by the Government
of India has been removed.
D. Any process amounting to manufacture or production of goods on which duties of
excise is leviable under the CE Act or under a State Excise Act on the manufacture
of alcoholic.
Prepared By- Arvind Rathi (Article
Assistant),Sandesh Mundra & Associates.
41. EXEMPTIONS
WITHDRAWN
I. Service provided by an educational institution by way of
renting of immovable property.
II. Temporary transfer or permitting the use or enjoyment of a
copyright relating to cinematographic films was fully exempt so
far, this exemption will be restricted to exhibition of
cinematograph films in a cinema hall or a cinema theater.
III. Services by way of vehicle parking to general public.
IV. Services provided to government, a local authority, by way of
repair or maintenance of aircraft.
Prepared By- Arvind Rathi (Article
Assistant),Sandesh Mundra & Associates.
42. WRONGFUL INVOCATION OF
EXTENDED PERIOD OF
LIMITATION
where a demand has been raised invoking the larger period of limitation,
i.e. 5 years, and the Court finds that the demand for the larger period is
not sustainable.
Because the charges of fraud, suppression, wilful misstatement are not
sustainable, the Department can determine the Service Tax liability for the
normal period and raise a demand accordingly.
It seeks to clarify that in cases where the demand for the normal period
(18 months) is sustainable but a Notice has been issued for 5 years, the
same can be severed and the entire demand need not be set aside.
Prepared By- Arvind Rathi (Article
Assistant),Sandesh Mundra & Associates.
43. ADVANCE RULLING
It is being extended to cover resident public limited
companies.
A notification is being issued for this purpose,under
section 96A(b)(iii) of the Finance act,1994.
Prepared By- Arvind Rathi (Article
Assistant),Sandesh Mundra & Associates.
44. Participate in our next event ….
Prepared By- Arvind Rathi (Article
Assistant),Sandesh Mundra & Associates.
45. Will This Budget Help Us?????
For any information contact us at 079 40032950 /
9426024975
Email us at –
sandesh@knowledgecloud.in
info@consultconstruction.com
info@aarnasoft.net
Check our new software on consolidation of accounts at
www.consolidationofaccounts.com
Prepared By- Arvind Rathi (Article
Assistant),Sandesh Mundra & Associates.