Below are the key highlights of Union Budget 2013. Budget will be applicable from 1st April, 2013.
Here are some of the salient features and highlights of the Budget 2013:
1. Direct Taxes -Budget 2013:
- Income tax Slab and Income tax exemption limit remain unchanged for year 2013-2014.
- 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.
|Income Tax Rates/Slab for Assessment Year 2014-15 (Previous Year 2013-14)||Rates/ %age|
|Up to 2,00,000
Up to 2,00,000 (for women)
Up to 2,50,000 (for resident individual of 60 years till 80 years)
|200,001 – 5,00,000
Up to 500,000 (for resident individual of 80 years and above, Tax is nil)
|5,00,001 – 10,00,000||20%|
No enhanced limit for women. Men and women are treated same. Education Cess remains at 3%
- Surcharge of 10 percent on persons (other than companies) whose taxable income exceed Rs 1 crore to augment revenues.
- Increase surcharge from 5 to 10 percent on domestic companies whose taxable income exceed Rs 10 crore.
- 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.
- In all other cases such as dividend distribution tax or tax on distributed income, current surcharge increased from 5 to 10 percent. Additional surcharges to be in force for only one year.
- 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.
- Contributions made to schemes of Central and State Governments (CGHS) similar to Central Government Health Scheme, eligible for section 80D of the Income tax Act.
- Donations Under Section 80G made to National Children Fund eligible for 100 percent deduction.
- 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 1.4.2013 to 31.3.2015.
- ‘Eligible date’ for projects in the power sector to avail benefit under Section 80- IA extended from 31.3.2013 to 31.3.2014.
- 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.
- 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.
- Investor Protection Fund of depositories exempt from Income-tax in some cases.
- Parity in taxation between IDF-Mutual Fund and IDF-NBFC.
- A Category I AIF set up as Venture capital fund allowed pass through status under Income-tax Act.
- 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.
- A final withholding tax at the rate of 20 percent on profits distributed by unlisted companies to shareholders through buyback of shares.
- 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.
- Reductions made in rates of Securities Transaction Tax in respect of certain transaction.
- Proposal to introduce Commodity Transaction Tax (CTT) in a limited way. Agricultural commodities will be exempted.
- Modified provisions of GAAR will come into effect from 1.4.2016.
2. Indirect Taxes:
- No change in the normal rates of 12 percent for excise duty and service tax.
- No change in the peak rate of basic customs duty of 10 perent for non-agricultural products
- Increase in import duty on set top boxes.
- Excise duty on cigarettes hiked to 18%.
- Excise duty on SUV’s raised from 27% to 30%. Not applicable for SUVs registered as taxies.
- Custom duty on imported motor vehicles hiked.
- Service tax on all AC restaurant will make eating out costlier
- Excise duty on marble increased from `30 per square meter to ` 60 per square meter.
- Proposals to levy 4 percent excise duty on silver manufactured from smelting zinc or lead.
- Duty on mobile phones priced at more than Rs 2000 raised to 6 percent.
Need to incentivise greater savings by household sector in financial instruments.
Following measures proposed:
- Rajiv Gandhi Equity Savings Scheme (RGES) to be liberalised .To enable the first time investor to invest in mutual funds as well as listed shares and she can do so, not in one year alone, but in three successive years. The income limit will be raised from `10,00,000 to `12,00,000. One more important change in RGESS is, you can claim the benefit instead of current one year to three years. It means that you can carry forward the current year investment tax benefit till 3 years.
- Additional deduction of interest upto Rs 1 lakh for a person taking first home loan upto Rs 25 lakh during period 1.4.2013 to 31.3.2014
- In consultation with RBI, instruments protecting savings from inflation to be introduced. These could be Inflation Indexed Bonds or Inflation Indexed National Security Certificates.