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TAX PROPOSALS 2013 AT A GLANCE ON DIRECT TAX

TAX PROPOSALS 2013 AT A GLANCE ON DIRECT TAX. INDIVIDUAL (OTHER THAN SENIOR CITIZEN & senior most Citizen) Including WOMAN & HUF, AOP, BOI- TAX SLAB –Same as in PY. Senior Citizen from the age of 60 years to less than 80 years. Senior Citizen of 80 years and above :TAX SLAB.

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TAX PROPOSALS 2013 AT A GLANCE ON DIRECT TAX

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  1. TAX PROPOSALS 2013 AT A GLANCEON DIRECT TAX MANOJ KUMAR MITTAL & CO.

  2. INDIVIDUAL (OTHER THAN SENIOR CITIZEN & senior most Citizen) Including WOMAN & HUF, AOP, BOI- TAX SLAB –Same as in PY MANOJ KUMAR MITTAL & CO.

  3. Senior Citizen from the age of 60 years to less than 80 years Senior Citizen of 80 years and above :TAX SLAB MANOJ KUMAR MITTAL & CO. MANOJ KUMAR MITTAL & CO.

  4. Surcharge • Surcharge of 10% in case of person • (other than company) having total income exceeding 1.00 crores however subject to limit of amount more than 1 crores rupees. MANOJ KUMAR MITTAL & CO.

  5. In the case of domestic companies having total income more than 1 crores but less than Rs. 10.00 crores, surcharge @ 5% in case income exceeds 10.00 crores, surcharge @ 10% subject to marginal relief. MANOJ KUMAR MITTAL & CO.

  6. In the case of companies other than domestic companieshaving total income more than 1 crores but less than Rs. 10.00 crores, surcharge @ 2%, in case income exceeds 10.00 crores, surcharge @ 5%. Marginal relief will be available. MANOJ KUMAR MITTAL & CO.

  7. No change in Education & Secondary Higher Education Cess of 3% MANOJ KUMAR MITTAL & CO.

  8. Commodity Transaction Tax (CTT)-Chapter VII of FA,2013 A new tax called CTT is levied on taxable commodities transaction entered in a recognized association @0.01% payable by seller. Taxable Commodities transaction means a transaction of sale of commodity derivatives in respect of commodity, other than agriculture produce, traded in a recognized association. Procedural requirement relating to collection, filling of return, assessment procedure, chargeability of interest, appeal is also provided. MANOJ KUMAR MITTAL & CO.

  9. Applicable from the date notified Deductible u/s 36 (xvi) if the income arising from such taxable commodity transaction is computable under profit from business or profession. Amendment in Section 36(xvi) w.e.f 01.04.2014. MANOJ KUMAR MITTAL & CO.

  10. Taxation of income by way of royalty or fee for technical service Section 115A- The rate of tax has been increased from 10% to 25% in respect of royalty or FTS paid to non resident for the agreement entered on or after 01.06.2005. W.e.f.01.04.2014 MANOJ KUMAR MITTAL & CO.

  11. Sec 32AC-Investment in P&M If a company invest more than 100 crores in new assets (being P&M) during the F.Y.2013-14 and 2014-15, deduction of 15% of the aggregate amount of actual cost of new assets will be allowed. No transfer of such assets for next five years except for amalgamation or merger. W.e.f.01.04.2014 MANOJ KUMAR MITTAL & CO.

  12. Sec 80IA(4)(iv)- Extension of sun set date to power sector The deduction of profit under this is available to the undertaking engaged in generation or distribution of power or transmission or distribution by laying new lines or substantial renovation or modernization in this area. This benefit is extended for A.Y.2014-15 also MANOJ KUMAR MITTAL & CO.

  13. Section 87A- Rebate An individual resident having total income up to Rs. 5 lakh will be allowed a rebate of Rs. 2000/- from income tax. MANOJ KUMAR MITTAL & CO.

  14. Sec 80EE- deduction in respect of interest on housing loan • If an assessee being individual first times takes a home loan, he will be allowed deduction of Rs. 1.00 lacs on interest on loan taken from financial institution for residential house property for A.Y.2014-15 and if the interest is less than 1.00 lacs then balance will be allowed in A.Y.2015-16. • This deduction is subject to following condition: • 1- The loan is from Financial Institution during 2013-14. • 2-The amount of loan does not exceed Rs. 25.00 lacs. • 3- The value of Residential house not to exceed Rs. 45 lacs • 4- The assessee does not own any other residential house on the date of sanction of loan. • W.e.f. 01.04.2014 MANOJ KUMAR MITTAL & CO.

  15. Sec 10(10D) and 80C(3A)- Raising the limit of premium In case the person is suffering from disability u/s 80U or from diseases u/s 80DDB, then limit of premium of the capital sum assured including bonus has been increased from 10% to 15%. W.e.f.01.04.2014 MANOJ KUMAR MITTAL & CO.

  16. Sec-80D-Mediclaim The list of contribution to various organization for health of assessee or his family has been extended to various health scheme of the central government or state government as may be notified. W.e.f 01.04.2014 MANOJ KUMAR MITTAL & CO.

  17. 80CCG- Investment in listed equity shares of a company A resident individual who invest in listed equity shares as per scheme notified by the govt is allowed a deduction of 50% of the amount invested subject to limit of allowability of Rs. 25000/-. This deduction is one time deduction. This is available to new retail investors whose gross income does not exceed Rs. 10 lacs.( RGESS) The benefit under this has been extended for three consecutive years beginning from the year in which the investment is made first time by new retail investor and whose income does not exceed Rs. 12 lacs. W.e.f. 01.04.2014 MANOJ KUMAR MITTAL & CO.

  18. 80G-Donation to National Children’s Fund Under Section 80G- A new clause (iiib) has been inserted providing for 100% deduction to contribution to National Children’s fund. W.e.f. 01.04.2014 MANOJ KUMAR MITTAL & CO.

  19. 115BBD- Dividend from specified foreign company The rate of taxation is 15% as provided by the finance Act 2012 and it will continue for A.Y.2014-15. MANOJ KUMAR MITTAL & CO.

  20. 115O-Dividend Distribution Tax-removing of cascading effects Where tax on dividend received by a domestic company from a foreign subsidiary (in which the domestic company holds more than 50% of equity share capital) is payable u/s 115BBD by the holding company, then any dividend distributed by the holding company, in the same year, to the extent of such dividends shall not be subject to DDT U/S 115O. W.e.f.01.06.2013 MANOJ KUMAR MITTAL & CO.

  21. 194LC-Concessional rate of withholding tax-Benefit extended It provides that if an Indian company borrows money in foreign currency from non resident, it will be subject to TDS @5%. It is now provided that where a non resident deposits foreign currency in designated bank account and such money as converted in Indian rupees is utilized for subscription to long term infrastructure bond issue of an Indian company, then borrowing for the purpose of this section shall be deemed to be in foreign currency and interest on that shall be subject to 5% TDS. W.e.f 01.06.2013 MANOJ KUMAR MITTAL & CO.

  22. Taxation of Securitisation trust-Chapter XII-EA, Sec 115TA to 115TD The income of it will be exempt u/s 10(23DA) Additional tax on income distributed to individual or HUF @25% In other case,30% on the income distributed. No addition tax for person if income below taxable limit. In hand of other investors, it shall be tax free. W.e.f 01.06.2013 MANOJ KUMAR MITTAL & CO.

  23. Sec-98 of FA for securities Transaction Tax, w.e.f.01.06.2013 MANOJ KUMAR MITTAL & CO.

  24. 194-IA- TDS on transfer of certain immovable property It is proposed to provide tds @1% by purchaser if the value of property exceeds Rs. 50.00 lacs. W.e.f.01.06.2013 MANOJ KUMAR MITTAL & CO.

  25. Chapter XII-DA-DDT on buy back of unlisted shares of a company Sec-115QA to 115QC If a company buy back its own unlisted shares at a consideration which is more than the amount received by the company at the time of issue of shares, then company will deduct DDT @20% of the distributed income to the shareholders. The income received by the shareholders is exempt from tax in the hand of shareholders. w.e.f.01.06.2013 MANOJ KUMAR MITTAL & CO.

  26. Sec-43CA- Computation of income on transfer of immovable property held as stock in trade Where there is a transfer of an assets(other than capital assets) being land or building held as stock in trade and consideration is less than stamp duty value, then consideration shall be taken as stamp duty value ( 50C brought in case of stock in trade). Where there is a difference between date of transfer of an agreement and date of registration of transfer. The SDV shall be taken of the date of transfer of an agreement where the consideration or part thereof has been received on or before the date of agreement other than in cash. w.e.f 01.04.2014 MANOJ KUMAR MITTAL & CO.

  27. Sec 56(2)(vii)-taxability of immovable property received for inadequate consideration Where an individual or HUF purchases an immovable property for a consideration which is less than SDV, then difference will be assessed as income from other source. Where there is a difference between date of transfer of an agreement and date of registration of transfer. The SDV shall be taken of the date of transfer of an agreement where the consideration or part thereof has been received on or before the date of agreement other than in cash. w.e.f 01.04.2014 MANOJ KUMAR MITTAL & CO.

  28. Chapter X-A- Section 144BA GAAR will come effect from 01.04.2016. MANOJ KUMAR MITTAL & CO.

  29. Sec 115R- Rationalization of tax on distributed income by mutual fund, w.e.f.01.06.2013 MANOJ KUMAR MITTAL & CO.

  30. Sec-2(14)-Change in the defination of capital assets The Section 2(14)(iii)(b) has been amended to provide that the land situated in any area within the distance, measured aerially(shortest aerial distance), I) not being more than two kilometers, from the local limits of any municipality or cantonment board referred to in item(a) and which has a population of more then ten thousand but not exceeding one lakh or II) not being more than 6 kilometers from the local limits of any municipality or cantonment board referred to in item a and which has a population of more than 1 lakh but not exceeding 10 lakh or III) not being more than 8 kilometers from the local limits of any municipality or cantonment board referred to in item (a) and which has a population more than 10 lakh Shall form part of capital assets W.e.f 01.04.2014 MANOJ KUMAR MITTAL & CO.

  31. Sec 10(10D)-Taxability of key man insurance policies This section provides that if any amount is received from life insurance policy, it is exempt from tax except key man insurance policy. Generally, the key man insurance policy is assigned to the person before his maturity and he pays certain premium and claims tax exemption on the ground that it is not a key man insurance policy. It is so held by courts also. To club this loopholes, it is provided that a keyman insurance policy which has been assigned to any person during his term with or without consideration, it shall continue to be treated as a Keyman Insurance Policy. W.e.f. 01.04.2014 MANOJ KUMAR MITTAL & CO.

  32. Sec 80GGB and 80GGC-Contribution to political party or electoral trust The contribution made in cash will be disallowed W.e.f. 01.04.2014 MANOJ KUMAR MITTAL & CO.

  33. Sec 179 and 167C- Meaning of Tax Due Tax due means for the purpose of this definition is tax due includes penalty, interest or any other sum payable under the act. w.e.f.01.06.2013 MANOJ KUMAR MITTAL & CO.

  34. 80JJAA- Deduction for additional wages This section provides for deduction of an amount equal to 30% of the additional wages paid to the new regular workman employed in industrial undertaking engaged in production or article or things. Now it is changed that it will be provided to Indian company engaged in manufacture of goods in factory. W.e.f. 01.04.2014 MANOJ KUMAR MITTAL & CO.

  35. Sec 90 & 90A-Tax Residency certificate It is clarifactory in nature providing that submission of tax residency certificate is necessary but not an essential condition for claiming benefits under the DTAA. W.e.f.01.04.2013 MANOJ KUMAR MITTAL & CO.

  36. Sec 132B- Application of seized assets The section provides for adjustment of seized assets under section 132B against existing liability under income tax Act, Wealth tax act and interest tax act etc. The existing liability is clarified to include all outstanding tax/interest/penalty and not advance tax liability only. w.e.f.01.06.2013 MANOJ KUMAR MITTAL & CO.

  37. Sec 139(9)-Extending the scope of defective return The scope of defective return has been enhanced to include the return where tax together with interest is not paid u/s 140A along with return. W.e.f. 01.06.2013 MANOJ KUMAR MITTAL & CO.

  38. Sec 142(2A)-Direction for special audit • The section provides power to AO to give direction of audit having regard to the nature and complexity of accounts and interest of revenue. • The list of causes for audit has been expanded to include • Nature and complexity of accounts • Volume of accounts • Doubts about the correctness of accounts • Multicipility of transaction in accounts • Specialized nature of business activity of assessee • Interest of revenue • W.E.F. 01.06.2013 MANOJ KUMAR MITTAL & CO.

  39. Sec 271FA- Penalty for non filling of Annual information return If a person fails to furnish AIR within the time prescribed under that section then AO may direct the assessee to pay penalty at Rs. 100 per day for the default continues. It is provided further, that if the return is not filed within the period prescribed in notice u/s 285BA(5), then assessee shall pay penalty under section 271FA @ 500 per day from day immediately following the day on which the time specified in such notice for furnishing the return expires. W.e.f 01.04.2014 MANOJ KUMAR MITTAL & CO.

  40. Sec 14A and 14B- Annexure less return under wealth Tax Act The amendments is provided to enable filling e wealth tax return without annexure. W.e.f. 01.04.2013 MANOJ KUMAR MITTAL & CO.

  41. THANKS • From Manoj Kumar Mittal & Co. • Chartered Accountants • 305, Dakha Chamber, 2068/38 • Nai Wala. Karol Bagh, New Delhi-110005 • Ph: 011-28756284, 41557022, 9810764620 MANOJ KUMAR MITTAL & CO.

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