- 1. UNION BUDGET 2013-14 -DIRECT TAX
- 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 %.
- 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.
- 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 unit of an Seller 0.25 0.001 equity oriented fund the mutual.
- 5. KEY MAN INSURANCE POLICY “Key man 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 key man insurance policy any more. And thus, the proceeds were tax free. It is now stated that if a key man 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
- 6. PENALTY- U/S 271FASECTION Nature of Authority who can levy Quantum of Penalty Failure/Default penalty Section 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 Amendment Will Take Effect From 1st April,2014.
- 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.
- 8. APPLICABILITY OF SURCHARGE ON TDS PROVISION PARTICULARS PROPOSED RATE (%)Non Resident Other Than Company- 10 Having total income exceeding Rs 1 Cr.Foreign Company-Having total income 2 exceeding Rs 1 Cr but less than 10 Cr.Others-Having total income exceeding Rs 10 5Cr.
- 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.
- 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.
- 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 2,50,000 for resident individuals of the age of 60 years or more INR 5,00,000 for Very Senior Citizens of the age of 80 years or more.
- 12. STAMP DUTY VALUATION FOR COMPUTATION OF INCOME UNER HEAD “ BUSINESS INCOME”-43CAStamp-duty valuation will be considered as full value consideration in cases where agreed consideration is less.It is only applicable were immovable property is a capital asset and not stock-in-trade. The date of an agreement fixing the value of consideration for the transfer of the property and the date of registration of the transfer of the property are not the same.The stamp duty value may be taken as on the date of the agreement for transfer provided the consideration, in a mode other than cash.
- 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.
- 14. AGRICULTURE LAND SEC 2(1)A A land shall not be treated as an agriculture land, if such land is situated within the distance measured aerially which should not be more than: REGARDING DISTANCE BEYOND (KMs) 10,000 – 1,00,000 2 1,00,000 – 10,00,000 6 > 10,00,000 8 Any Would Be Rural CIT v. Lal Muncipality. Agriculture Land. Singh
- 15. LIFE INSURANCE POLICY SEC 10(10D) If the premium payable for any of the years during the term of the policy does not exceed 15% (earlier 10%) of the actual capital sum assured, will be Exempt for the Insurance on the life of any person who 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.
- 16. MEDICAL SCHEME SEC 80D Finace Bill, 2013 proposes to expand the scope of deduction under section 80D by expanding the eligible schemes on which deduction shall be available by amending section 80D with effect 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.’
- 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 extended tax benefits to three successive years.The limit for investors wanting to invest in RGESS has been raised to Rs 12 lakh from Rs 10 lakh earlier.Under the scheme, an individual with an income of less than Rs 12 lakh would get tax 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 to provide tax benefits to first-time investors in stock markets.
- 18. AMENDMENT IN SEC 80-IA(4)Finance Bill 2012 proposes for the words, figures and letters “the 31st day of March, 2012” in section 80-IA(4)(iv) the words, figures and letters “the 31st day of March, 2013” shall be substituted.This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to assessment Analysis/Conclusion-year 2013-14 and subsequent As per the proposed amendment, the assessment 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.
- 19. SPECIAL AUDIT SEC 142(2A)The powers of the AO to direct special audit have been widened. The AO can now order a special audit not only due to the reason of nature and complexity of accounts but he can now order a special audit in the following additional circumstances: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
- 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 of section 140A, has been paid on or before the date of furnishing of the return.
- 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 be limited to the amount by which such bad debts exceeds the credit balance in the provision without any distinction between rural advances and other advances. DCIT v. Karnataka Bank Ltd.
- 22. IMMOVABLE PROPERTY RECEIVED FOR INADEQUATE CONSIDERATION SEC 56(2) (Vii) (b)Where any immovable property is received for a consideration which is less than the stamp duty value of the property by an amount exceeding Rs. 50,000. The stamp duty value of such property as exceeds such consideration, shall be chargeable 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 an individual or HUF without consideration.The stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property would be charged to tax as income from other sources.The existing provision does not cover a situation where the immovable property has been received by an individual or HUF for inadequate consideration.
- 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.
- 24. ROYALTY/ FTS TO NON-RESIDENT SEC 115A Agreement after 1/6/2005=10%.Argument by department- Most of Question arises- We have the DTA the rate is DTAA with 84 countries,more than 10% . but what about other countries????ex- US/UK=15%Now the rate stands increased to 25%.
- 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.
- 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.
- 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
- 28. SEIZED ASSETS ARE NO LONGER AVAILABLE FOR ADJUSTMENT TOWARDS ADVANCE TAX LIABILITY”Existing liability” does not include advance tax payable in accordance 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 from assessee in search proceedings under section 132 can be adjusted against his advance tax liability.