Finance Minister in his Union Budget 2013-14 presented today, kept the income-tax structure largely unchanged, only announcing a tax credit and imposing the surcharge on super rich persons. Similarly as compared to Budget 2012-13, which had various changes in the area of indirect taxes like the introduction of the Negative list in service tax, Budget 2013-14 has not seen any major reforms in the tax structure. The basic rates of customs, excise and service tax have been remain unchanged and there has been no significant addition to the tax base.
A quick highlight of the changes in Taxation Structure in Union Budget 2013 is as follows:
Changes in Direct Taxes in Union Budget 2013
- Income tax slabs remains unchanged.
- A tax credit(rebate) of Rs 2,000 to every resident Individual tax payer having income upto Rs 5 lakh per annum.
- Surcharge of 10% on Super Rich people earning above Rs 1 crore.
- 100% tax relief on donation to National Children Fund.
- Deduction under section 80D to extended to health schemes similar to Central & State Govt. health schemes, as notified by the Central Government.
- Additional one-time deduction of Rs.1,00,000 u/s 80EE in respect of interest on housing loan not exceeding Rs.25 lakhs taken from any financial institution in respect of the acquisiton of first house property acquired by an individual, provided the value of the property does not exceed Rs.40 lakhs.
- Income level for Rajiv Gandhi Equity Scheme raised to Rs 12 lacs and Mutual Funds are also included.
- TDS of 1% on immovable property (other than agricultural land) deal above 50 lakh.
- Securities Transaction Tax(STT) has been reduced to 0.001% on equity futures and Mutual Funds & Commodities Transaction Tax(CTT) has been introduced on non-agricultural commodities futures contracts @ 0.01%. CTT to be allowed as deduction while computing business income.
- 5% and 10% surcharge on foreign and domestic companies respectively having income above Rs 10 crore.
- Surcharge on dividend distribution raised to 10%.
- 20% withholding tax on profits distributed by unlisted companies.
- Tax holiday for power plants extended to March 2014.
- Extended 80IA deduction for one more year.
- Financial institutions securitisation trust exempted from tax.
- No income tax on investor protection fund of depositories.
- A manufacturing company to be entitled to investment allowance @15%, in addition to depreciation, of the aggregate amount of actual cost of new assets acquired and installed during the financial years 2013-14 & 2014-15, if the same exceeds Rs.100 crores.
- Stamp duty value on the date of agreement fixing the value of consideration to be adopted as sale consideration even in case of transfer of immovable property, being land or building, held as stock-in-trade.
- Keyman insurance policy assigned to any person during its term, with or without consideration, to continue to be treated as a keyman insurance policy. Hence, maturity proceeds would not be exempt under section 10(10D).
Changes in Indirect Taxes in Union Budget 2013
- No change in basic rates in custom, excise duty and service tax.
- Imposed service tax on all air-conditioned restaurants.
- Reduction in abatement rates for luxury apartments from 75% to 70% in Residential Complex Services.
- Vocational courses run by institutes affiliated to state governments are added to negative list of service tax.
- Exemption of Service Tax on copyright on cinematography limited to films exhibited in cinema halls.
- No service tax on Farm produce testing.
- Voluntary Compliance Encouragement Scheme introduced under which any person may declare his tax dues from 2007 in respect of which no notice or an order of determination has been issued or made before the 1st day of March, 2013.
- Customs duty on leather making machine is reduced to 5%.
- 100% import duty on luxury cars.
- Female and male passengers can bring duty free gold worth Rs 1 lac and Rs 50000 respectively.
- Set Top box import duty raised.
- Cut custom duty on leather footwear machines reduced.
- Import duty on raw silk increased.
- Duty on 800CC motor cycles also raised to 75%.
- Export duty on rice bran oil, oil cakes withdrawn.
- Higher excise duty on cigarettes and SUVs.
- Exempt Coir, jute handmade carpets from excise duty.
- Zero excise duty on cotton.
- Ships, vessels exempted from excise duty.
- Excise duty on marble increased.
Check out how the Union Budget 2013 impacts the ‘aam aadmi’ or common man here.