The Finance Minister unveiled the Union Budget 2013-14 in Parliament today. While the one hour and forty five minute speech delineating the expenditures and revenues was a behemoth task, we cut through the business argot to bring you ready to use information while you plan your personal budget.
Income Tax slabs have been left untouched this year, as these were introduced only last year. However a surcharge of 10% has been imposed on the super-rich with annual incomes of Rs 1 crore or more per annum. The surcharge will cover individuals, HUFs, firms and all entities with similar tax status and would be valid for 2013-14 alone.
Surcharge on domestic companies earning over Rs 10 crore has also been increased from 5 percent to 10 percent. In the case of foreign companies, which pay higher rate of corporate tax, the surcharge has been increased from 2 % to 5%.
Nevertheless, tax relief in the form of Rs 2000 tax credit has been given to individuals with income between Rs 2 lakh to`5 lakh. About 1.8 crore tax payers are expected to benefit to the value of Rs 3,600 crore because of this announcement.
Education Cess & Tax free bonds
Education cess for all tax payers would continue at 3 percent, but in a positive move, tax-free infra bonds of Rs 50,000 crore would be allowed to be disbursed in 2013-14.
Home Loans & Property Tax
First-time home loan takers have been given an additional deduction of interest to the tune of Rs 1 lakh for loan for amounts not exceeding Rs 25 lakh, with spill over allowed for one year on unconsumed amount. This deduction would be over and above Rs 1,50,000 allowed for self-occupied properties, thus taking the total amount to Rs 2,50,000.
There would be 1% Tax Deduction at Source (TDS) on transfer of immovable property worth over Rs 50 lakhs. However, agricultural land will be exempt.
Securities, MFs and Trading
Securitisation Trust has also been exempted and tax would now only be levied at the time of distribution of income by the Securitisation Trust at the rate of 30% in the case of companies and at the rate of 25 % in the case of an individual or HUF.
Concessional rate of tax of 15 percent on dividend received by an Indian company from its foreign subsidiary has been continued for another year. Further, the Indian company would not be liable to pay Dividend Distribution Tax on the distribution to its shareholders of that portion of the income received from its foreign subsidiary.
Parity in taxation has been proposed between an IDF-Mutual Fund that distributes income and an IDF-NBFC that pays interest, when the payment is made to a non-resident, with common rate of 5 %.
Final withholding tax will be imposed at the rate of 20 percent on profits distributed by unlisted companies to shareholders through buyback of shares. Tax on payments by way of royalty and fees for technical services to non-residents has been increased from 10% to 25%.
Securities Transaction Tax (STT) has been reduced on:
Equity futures: from 0.017 to 0.01 percent
MF/ETF redemptions at fund counters: from 0.25 to 0.001 percent
MF/ETF purchase/sale on exchanges: from 0.1 to 0.001 percent, only on the seller
Commodities Transaction Tax (CTT) has been introduced in a limited way and would apply to non-agricultural commodities futures contracts at 0.01% of the price of the trade. Trading in commodity derivatives will not be considered as a ‘speculative transaction’ and CTT shall be allowed as deduction if the income from such transaction forms part of business income.
Schemes of the Central Government and State Governments similar to Central Government Health Scheme have also been made eligible for deduction under Section 80D of the Income-tax Act.
Eligibility conditions of life insurance policies for persons suffering from disability or certain ailments have been relaxed by increasing the permissible premium rate from 10 percent to 15 percent of the sum assured.
Donations made to the National Children’s Fund have been fully exempted and monies paid to academic institutions and for the purpose of R&D will be eligible for tax deduction.
An investment allowance of 15 percent has been provided to manufacturing companies that invest more than Rs 100 crore in plant and machinery.