BUDGET 2013-14: KEY HIGHLIGHTS IN DIRECT TAXES
Ø Little room to give away tax revenues or raise tax rates in a constrained economy.
Ø No case to revise either the slabs or the rates of Personal Income Tax. Even a moderate increase in the threshold exemption will put hundreds of thousands of Tax Payers outside Tax Net.However, relief for Tax Payers in the first bracket of Rs.2 lakhs to Rs.5 lakhs. A tax credit of Rs. 2000 to every person with total income upto Rs. 5 lakhs.
Ø Surcharge of 10 percent on persons (other than companies) whose taxable income exceed Rs. 1 crore to augment revenues.
Ø Increase surcharge from 5 to 10 percent on domestic companies whose taxable income exceed Rs. 10 crore.
Ø In case of foreign companies who pay a higher rate of corporate tax, surcharge to increase from 2 to 5 percent, if the taxabale income exceeds Rs. 10 crore.
Ø In all other cases such as dividend distribution tax or tax on distributed income,current surcharge increased from 5 to 10 percent.
Ø Additional surcharges to be in force for only one year.
Ø Education cess to continue at 3 percent.
Ø Permissible premium rate increased from 10 percent to 15 percent of the sum assured by relaxing eligibility conditions of life insurance policies for persons suffering from disability and certain ailments.
Ø Contributions made to schemes of Central and State Governments similar to Central Government Health Scheme, eligible for section 80D of the Income tax Act.
Ø Donations made to National Children Fund eligible for 100 percent deduction.
Ø Investment allowance at the rate of 15 percent to manufacturing companies that invest more than Rs. 100 crore in plant and machinery during the period 1.4.2013to 31.3.2015.
Ø ‘Eligible date’ for projects in the power sector to avail benefit under Section 80-IA extended from 31.3.2013 to 31.3.2014.
Ø Concessional rate of tax of 15 percent on dividend received by an Indian company from its foreign subsidiary proposed to continue for one more year.
Ø Securitisation Trust to be exempted from Income Tax. Tax to be levied at specified rates only at the time of distribution of income for companies, individual or HUF etc. No further tax on income received by investors from the Trust.
Ø Investor Protection Fund of depositories exempt from Income-tax in some cases.
Ø Parity in taxation between IDF-Mutual Fund and IDF-NBFC.
Ø A Category I AIF set up as Venture capital fund allowed pass through status under Income-tax Act.
Ø TDS at the rate of 1 percent on the value of the transfer of immovable properties where consideration exceeds Rs. 50 lakhs. Agricultural land to be exempted.
Ø A final withholding tax at the rate of 20 percent on profits distributed by unlisted companies to shareholders through buyback of shares.
Ø Proposal to increase the rate of tax on payments by way of royalty and fees for technical services to non-residents from 10 percent to 25 percent.
Ø Reductions made in rates of Securities Transaction Tax in respect of certain transaction.
Ø Proposal to introduce Commodity Transaction Tax (CTT) in a limited way. Agricultural commodities will be exempted.
Ø Modified provisions of GAAR will come into effect from 1.4.2016.
Ø Rules on Safe Harbour will be issued after examing the reports of the Rangachary Committee appointed to look into tax matters relating to Development Centres & IT Sector and Safe Harbour rules for a number of sectors.
Ø Fifth large tax payer unit to open at Kolkata shortly.
Ø A number of administrative measures such as extension of refund banker system to refund more than Rs. 50,000, technology based processing, extension of e-payment through more banks and expansion in the scope of annual information returns by Income-tax Department.