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Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
Budget 2013
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Budget 2013

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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.

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.

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  • 1. UNION BUDGET 2013-14 -DIRECT TAX Prepared By- Arvind Rathi (Article Assistant) Sandesh Mundra & Associates.
  • 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 TAXS.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 271FASECTION Nature of Authority who can levy Quantum of Penalty Failure/Default penaltySection 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 AmendmentWill TakeEffect From1st 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 PROVISIONPARTICULARS PROPOSED RATE (%)Non Resident Other Than Company- 10Having total income exceeding Rs 1 Cr.Foreign Company-Having total income 2exceeding Rs 1 Cr but less than 10 Cr.Others-Having total income exceeding Rs 10 5Cr. 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 2,50,000for resident individuals of the age of 60 yearsor 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 FORCOMPUTATION OF INCOME UNER HEAD “ BUSINESS INCOME”-43CAStamp-duty valuation will be considered as full value consideration in caseswhere agreed consideration is less.It is only applicable were immovable property is a capital asset and notstock-in-trade. The date of an agreement fixing the value of consideration for the transferof the property and the date of registration of the transfer of the property arenot the same.The stamp duty value may be taken as on the date of the agreement fortransfer 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 suchland is situated within the distance measured aerially whichshould not be more than: REGARDING DISTANCE BEYOND (KMs) 10,000 – 1,00,000 2 1,00,000 – 10,00,000 6 > 10,00,000 8Any Would Be Rural CIT v. LalMuncipality. 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 thepolicy does not exceed 15% (earlier 10%) of the actual capital sumassured, will be Exempt for the Insurance on the life of any personwho 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 80DFinace Bill, 2013 proposes to expand the scope of deduction undersection 80D by expanding the eligible schemes onwhich deduction shall be available by amending section 80D witheffect 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 extendedtax benefits to three successive years.The limit for investors wanting to invest in RGESS has been raised to Rs 12 lakh fromRs 10 lakh earlier.Under the scheme, an individual with an income of less than Rs 12 lakh would gettax 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 toprovide 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 ofMarch, 2012" in section 80-IA(4)(iv) the words, figures and letters "the 31stday of March, 2013" shall be substituted.This amendment will takeeffect from 1st April, 2013and will, accordingly, applyin relation to assessment Analysis/Conclusion-year 2013-14 and subsequent As per the proposed amendment, theassessment 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 beenwidened. The AO can now order a special audit not only due tothe reason of nature and complexity of accounts but he cannow order a special audit in the following additionalcircumstances: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 ofsection 140A, has been paid on or before thedate 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 belimited to the amount by which such bad debts exceeds thecredit balance in the provision without any distinctionbetween rural advances and other advances. DCIT v. Karnataka Bank Ltd Prepared By- Arvind Rathi (Article Assistant),Sandesh Mundra & Associates.
  • 22. IMMOVABLE PROPERTY RECEIVED FOR INADEQUATECONSIDERATION SEC 56(2) (Vii) (b)Where any immovable property is received for a consideration which is less than thestamp duty value of the property by an amount exceeding Rs. 50,000. The stamp duty value of such property as exceeds such consideration, shall bechargeable 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 anindividual or HUF without consideration.The stamp duty value of which exceeds fifty thousand rupees, the stamp duty value ofsuch property would be charged to tax as income from other sources.The existing provision does not cover a situation where the immovable property hasbeen 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 TAXS.NO TAXABLE RATE PAYABLE BY COMMODITIES TRANSACTION1. 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 115AAgreement after1/6/2005=10%.Argument bydepartment- Most of Question arises- We havethe DTA the rate is DTAA with 84 countries,more than 10% . but what about other countries????ex- US/UK=15%Now the rate standsincreased to 25%. Prepared By- Arvind Rathi (Article Assistant),Sandesh Mundra & Associates.
  • 25. CASE LAW- GUJARAT HC V. MAGANBHAI PATEL 167C/1791. 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 LONGERAVAILABLE FOR ADJUSTMENT TOWARDS ADVANCE TAX LIABILITY"Existing liability" does not include advance tax payable inaccordance 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 fromassessee in search proceedings under section 132 can be adjustedagainst his advance tax liability. Prepared By- Arvind Rathi (Article Assistant),Sandesh Mundra & Associates.
  • 29. UNION BUDGET 2013-14 -INDIRECT TAX Prepared By- Arvind Rathi (Article Assistant),Sandesh Mundra & Associates.
  • 30. CENTRAL EXCISEOffences cognizable and non bailable:Offences relating to excisable goods,involving evasion of duty or contravention ofprovisions pertaining to utilization of Credit.where the duty leviable thereon under the CE Act exceeds Rs. 50 lakhs, shall becognizable & 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 GOODSNo change in the basic rate of excise duty- 12%.Readymade garments- Sold under a “brand name”,are subjectto 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 pricemore 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 GOODSExcise duty on SUVs- Including utility vehicles is being increasedfrom 27% to 30%, with immediate effect, the duty increase does notaffect SUVs used as taxis.Branded Ayurvedic Medicaments- They are being broughtunder MRP based assessment with an abatement of 35% from theMRP.Marble slabs- Excise Duty is being increased on marble slabs and tilesfrom 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.
  • 35. SERVICE TAX Prepared By- Arvind Rathi (ArticleAssistant),Sandesh Mundra & Associates.
  • 36. SERVICE TAX VOLUNTARY COMPLIANCE ENCOURAGEMENT SCHEME, 20131) 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 underany circumstances. Prepared By- Arvind Rathi (Article Assistant),Sandesh Mundra & Associates.
  • 37. DEFAULTS SECTION 89- Term of imprisonment for failure to deposit servicetax collected but not paid within 6 months increased from 3 years to 7years. Further, the offence is made cognizable. DEFAULT IN PAYMENT OF SERVICE TAX- To hold officers ofcompanies responsible for conduct of business, liable for contraventionof the provisions of the Act.Maximum penalty is Rs.1,00,000. SERVICE TAX REGISTRATION CAPPED- To cap penaltyfor 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 RATIONALIZEDS.NO TAXABALE SERVICE EXISTING AMENDMENTS NOTIFICATION1. 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 LISTA. 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 WITHDRAWNI. 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 isnot sustainable.Because the charges of fraud, suppression, wilful misstatement are notsustainable, the Department can determine the Service Tax liability for thenormal 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, thesame 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 limitedcompanies. A notification is being issued for this purpose,undersection 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 /9426024975Email us at –sandesh@knowledgecloud.ininfo@consultconstruction.cominfo@aarnasoft.netCheck our new software on consolidation of accounts atwww.consolidationofaccounts.com Prepared By- Arvind Rathi (Article Assistant),Sandesh Mundra & Associates.

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