union budget 2013-14 FINAL

Report
Discipline : DIRECT TAXATION
Presentation by: Govind Rai Garg
Procedure for budget speech
• Firstly, Finance Minister visits Finance Ministry to carry budget papers
• Then he moves to Rashtrapati Bhawan and submits them to cabinet for their
acceptance
• After this, budget speech is given by Finance Minister in two parts-A & B at
exactly 11a.m.
• TAX PROPOSALS are contained in part `B` of his speech
• In 2001, the time of speech was 5p.m. which is London standard of budget
speech but NDA after 54 years of independence changed it to 11 a.m.
• P. Chidambaram presented union budget for the 8th time
Theme of Chidambaram’s proposal
“Clarity in tax laws, a stable tax
regime, a non-adversarial tax
administration, a fair mechanism for
dispute resolution, and an
independent judiciary will provide
great assurance”
Perception of P Chidambaram
•
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•
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There will be no less money for security of nation
Agricultural needs more investment
Appreciation of FDI is necessary
Many states are developing but few section of people like women
and SC ST are lacking behind
Only China and Indonesia are better than India in present scenario
but as per forecasters, only China will remain
In order to finance Current Account Deficit, India needs 75 billion USD
Personal savings have declined constantly
Indian share market is the most regulated share market in the whole
world
What are Direct Taxes?
• Direct tax generally means tax paid directly to
the government by the persons on whom it is
imposed
• A direct tax is one which cannot be shifted by
the taxpayer to someone else
• Direct taxes are progressive in nature i.e. richer
the assessee; higher is the tax
• Example- Income Tax, Wealth Tax etc.
Relief to Tax Payers
• Rates of personal income tax survived 4 Finance Ministers & 4
governments
• Current slabs introduced only last year
• No case to revise either rates or slabs
• Moderate increase in level of threshold exemption will mean hundreds
of thousands of taxpayers going out of tax net
• Some relief to tax payers in first bracket of 2L to 5L i.e. tax credit of 2,000section 87A.
• 1.8 crore tax payers expected to benefit to value of 3,600 crores
How much you`ll shell out
Income Slab
Tax Rate
Upto Rs2 lakh
NIL
Rs2 Lakh to 5 Lakh
10% minus Rs2,000*
Rs5 Lakh to 10 Lakh
20.60%
Rs10Lakh to 1 cr
30.90%
Rs 1cr and above
33.99%
*With additional surcharge of 2% of tax liability as education cess and 1%
as SHE cess
Surcharge on Super Rich
• Fiscal consolidation cannot be effected only by cutting
expenditure
• Wherever possible, revenues must be augmented
• Source: Those well placed in society
• Only 42,800 people having taxable income exceeding 1 crore
per year
• Surcharge of 10% imposed on such persons
• Persons include individuals, HUFs, firms & entities with similar
status
Shockwaves on the RICHter scale
Income
Upto 2 lakh
Old Tax Liability
New Tax Liablity
Gain/(Loss)
-
-
-
2,060
-
2,060
3 lakh
10,300
8,240
2,060
5 lakh
30,900
28,840
2,060
10 lakh
133,900
133,900
0
50 lakh
1,369,900
1,369,900
0
1 crore
2,914,900
2,914,900
0
1.5 crores
4,459,900
4,905,890
(445,990)
2 crores
6,004,900
6,605,390
(600,490)
5 crores
15,274,900
16,802,390
(1,527,490)
2.2 lakh
CROREPATIS
clubbed
10% surcharge
blow;
Tax credit
for
those in
CROREPATIS clubbed
with with
a 10%asurcharge
blow; Tax credit
for those
in LOWER
SLAB
REPATISSLAB
clubbed with a 10% surcharge blow; Tax credit for those in LOWER SLAB
LOWER
Changes in surcharge
• Increase from 5% to 10% on domestic companies having taxable income
exceeding 10 crores per year
• Increase from 2% to 5% on foreign companies paying higher rate of
corporate tax
• Increase from 5% to 10% in case of dividend distribution tax
• Additional surcharges will be in force only for 1 year
• “I believe there is a little bit of the spirit of Mr. Azim Premji in every affluent
tax payer. I am confident that when I ask the relatively prosperous to bear
a small burden for one year, just one year, they will do so cheerfully”
YOUR TAX BURDEN OVER THE YEARS
YEAR
MIN. INCOME FOR
TAX
TAX RATE(%)
Income at which highest tax rate
starts
Highest tax
rate
Income which attracts
surcharge
Surcharge
rate(%)
Highest tax rate
including surcharge &
edu. cess
2001-02
50,000
10
1,50,000
30
60,000
2
30.6
2002-03
50,000
10
1,50,000
30
60,000
5
31.5
2003-04
50,000
10
1,50,000
30
8,50,000
10
33.0
2004-05
50,000
10
1,50,000
30
8,50,000
10
33.6
2007-08
1,10,000
10
2,50,000
30
1,000,000
10
33.9
2009-10
1,60,000
10
5,00,000
30
1,000,000
10
33.9
2010-11
1,60,000
10
5,00,000
30
No surcharge
-
30.9
2011-12
1,80,000
10
8,00,000
30
No surcharge
-
30.9
2012-13
2,00,000
10
1,000,000
30
No surcharge
-
30.9
2013-14
2,20,000
10*
1,000,000
30
10,000,000
10
33.99
*For income higher than Rs5L, Exemption limit is Rs 2L
Shelter for Aam Admi
• Tax benefit to first home buyer who takes loan for an amount
not exceeding 25,00,000
• Additional deduction of 1,00,000 allowed to such home buyers
• If limit not exhausted, balance may be claimed in AY 2015-16
• This deduction over & above deduction of 1,50,000 allowed for
self occupied houses allowed under section 24 of the Incometax Act
PROPOSED SECTIONS IN INCOME
TAX ACT, 1961
SECTION 194IA (earlier proposed as 194LAA)
APPLIES TO ALL BUYERS OF IMMOVABLE PROPOERTY OF VALUE
MORE THAN 50 LAKH
BUYER HAS TO DO DEDUCT TAX AT SOURCE @ 1% OF ACTUAL
TRANSACTION VALUE AT THE TIME OF PAYMENT OR CREDIT;
WHICHEVER IS EARLIER
PROVISIONS OF SECTION 206AA ALSO APPLICABLE ON THIS
SECTION
SECTION 32AC-INVESTMENT ALLOWANCE
15% INVESTMENT ALLOWANCE ON FRESH P&M OTHER THAN
AIRCRAFTS
VALUE SHOULD BE MRE THAN 100 CR
ALLOWED ONLY TO MANUFACTURING SECTOR
INVESTMENT VALID BETWEEN 1-4-2013 TO 31-3-15
SECTION 90(4)
 INDIAN REVENUE AUTHORITY WILL NOT BE BOUND BY TAX
RESIDENCE CERTIFICATE WHILE DOING ASSESSMENT OF NON
RESIDENTS
SECTION 40
 ANY FEES GIVEN TO STATE GOVERNMENT BY PUBLIC SECTOR
UNDERTAKING WILL NOT BE ALLOWED AS AN EXPENSE WHILE
COMPUTING PROFIT & GAINS OF BUSSINESS & PROFESSION
SECTION 10(10D)
 AMOUNT RECEIVED ON MATURITY OF KEYMAN INSURANCE
POLICY WILL BE TAXABLE IN HIS HANDS ALSO
OTHER PROVISIONS
SPECIAL AUDIT CAN BE ORDERED BY ASSESSING OFFICER
 VOLUME OF TRANSACTIONS IS LARGE
MULTIPLICITY OF TRANSACTIONS
DOUBT ON CORRECTNESS OF ACCOUNTING ENTRIES
INTERPRETATION OF ACCOUNTS IS COMPLEX
IF:
FILLING OF RETURN WITHOUT PAYMENT OF SELF ASSESSMENT TAX WILL LEAD
TO A DEFECTIVE RETURN U/S 139(9) OF INCOME TAX ACT, 1961
GAAR ARE POSTPONED TO ASSESSMENT YEAR 2016-17
FOR CLASSIFYING A LAND AS URBAN
OR RURAL
 OLD PROVISION: LAND IS URBAN IF IT FALLS IN
8KM FROM THE URBAN MUNICIPALITY BY ROAD
 NEW PROVISION:IT DEPENDS ON THE POPULATION OF THE AREA DURING
LAST PREVIOUS YEAR` CENSUS AND THE DISTANCE WILL BE MEASURED
ARIALLY
POPULATION AS PER RECENT CENSUS OF LAST
PREVIOUS YEAR
DISTANCE TO BE TAKEN INTO CONSIDERATION
LESS THAN ONE LAKH
TWO KMS
ONE LAKH OR MORE THAN ONE LAKH BUT LESS
THAN TEN LAKH
SIX KMS
TEN LAKH OR MORE THAN TEN LAKH
EIGHT KMS
Budget impact on certain
deductions
• Eligibility conditions for Life insurance policies relaxed
• Increase in permissible premium rate from 10% to 15% of sum assured
• Contributionn made to Central Government Health Scheme eligible for deduction
under Section 80D
• Same benefit extended to similar schemes of Central & State Governments
• Donations made to National Children’s Fund now eligible for 100% deduction
• Investment allowance of 15 % to manufacturing companies investing more than 100
cr in plant and machinery during 1-4-13 to 31-3-15
• Eligibility date to avail benefit u/s 80-IA extended from 31-3-13 to 31-3-14
Long term infrastructure bonds
• To attract investment in long term infrastructure bonds in foreign
currency, the rate of tax on interest paid to non-resident investors
reduced from 20% to 5 % last year
• Same benefit extended to investment made through designated bank
account in a rupee denominated long term infrastructure bond
• 50,000 crores long term infrastructure bonds to be issued in FY 2013-14%
Direct Tax Code
• Direct tax code is work in progress
• It is not intended to be amended version of Income Tax
Act, 1961 but a new code based on best international
practices that will be compatible with needs of fast
developing nation
• Standing committee has submitted its report on
introduction of direct taxes
Conclusion
• Budget might be favourable keeping in
mind the political attempt to win the
ensuing elections
• The provisions within the scope of my
knowledge have been explained
THANK YOU SIR
I would like to thank CA Gaurav Garg Sir for
giving me this opportunity to understand the
union budget 2013-14 and present it

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