Transcript Document

Income Tax Budget Analysis
CA Vidhan Surana, CA Omkar Maloo
CA Sunil Maloo
Marginal Increase in Exemption Limit
Category of Assessee
Basic Exemption Limit
For Individual
(Including HUF & women
except Senior Citizens)
2,00,000
(Earlier Rs.1,80,000)
For Resident Senior Citizens
(60-80 Years)
2,50,000(NO Change)
For Resident Senior Citizens
(Above 80 Years)
5,00,000 (NO Change)
Income Tax Rate: Slabs
Range of Income
Income Tax Rate
Upto Basic Exemption Limit
Nil
From Basic Exemption Limit to Rs.
5,00,000
10%
Rs. 5,00,000 to Rs. 10,00,000
(Earlier 5-8 lacs)
20%
Income Above Rs. 10,00,000
30%
Tax rate of unexplained money, credits,
investments, expenditures etc. (i.e.
addition made u/s 68, 69,69A, 69B, 69C
& 69D), irrespective of the slab of
income.
30%
(Sec.115BBE of the Act)
Corporate Taxation
• No changes in the existing corporate tax rates
• Rate are same as under:– Income Tax Rate
: 30%
– MAT Rate
: 18.5%
– Cess (Both)
: 3%
– Surcharge
: 5%
(if the total income exceeds Rs. 1 Crore)
Relaxation to Senior Citizens (60 years)
from Payment of Advance Tax
If following conditions fulfilled: Not having any business income
 Exempted from payment of Advance Tax
 Effect:– No interest u/s 234B and 234C.
– Relief from procedural compliance of advance tax payment.
Budget benefit to Assessee
• Only Saving Bank interest upto Rs.10,000/- reduced from taxable income.
• The deduction up to Rs.5000/- is available with respect to the amount
actually incurred for Preventive Health Check up. (This benefit is over and
above the existing benefits as well as ceiling available to the assessee u/s
80D (Medi-claim Rs.15000) of the Act.)
Benefit to Power Sector
• 80IA extended for 1 more year
• Proposal to extend the sunset date for setting up power
sector undertakings by one year (i.e. 31/03/2013) for
claiming 100 per cent deduction of profits for 10 years.
(Refer section 80IA(4) (iv) of the I.T.Act)
• Now, additional Depreciation u/s 32(1)(iia) of the Act at the
rate of 20%
Corporate Taxation
Dividend Distribution Tax
• Removal of the cascading effect of Dividend
Distribution Tax (DDT)
•
With a view to remove the cascading effect of DDT in multi-tier
corporate structure, Section 115O amended to provide that in case
any company receives, during the year, any dividend from any
subsidiary and such subsidiary has paid DDT as payable on such
dividend, then, dividend distributed by the holding company in the
same year, to that extent, shall not be subject to Dividend
Distribution Tax under section 115-O of the Act
• This amendment will take effect from 1st July, 2012.
Increase in Threshold Limit for
TAX AUDIT
• Turnover limit for compulsory tax audit (Sec. 44AB) of account and
presumptive taxation (sec. 44AD) to be
– raised from 60 lakhs to 1 crore for business.
– raised from 15 lakhs to 25 lakhs for Profession.
Presumptive taxation not to
apply to specified Assessee
• Section 44AD amended to clarify that this presumptive
scheme is not applicable to
(i) a person carrying on profession as referred to in subsection (1) of section 44AA;
(ii) persons earning income in the nature of commission or
brokerage income; or
(iii) a or a person carrying on any agency business.
Relief from long-term capital gains tax on transfer of
residential property if invested in a manufacturing
small or medium enterprise
•
The Government had announced National Manufacturing Policy (NMP) in 2011,
one of the goals of which is to incentivise investment in the Small and Medium
Enterprises (SME) in the manufacturing sector.
•
New section 54GB has been inserted so as to provide rollover relief from long
term capital gains tax to an individual or an HUF on sale of a residential property
(house or plot of land) in case of re-investment of sale consideration in the equity
of a new start-up SME company in the manufacturing sector which is utilized by
the
company
for
the
purchase
of
new
plant
and
machinery.
“MAT” for Companies,
now
“AMT” for other than Companies
• In order to moderate the outgo on profit linked deductions
(Sec. 115JC) the levy of Alternate Minimum Tax (AMT)
extended on all persons other than companies, claiming profit
linked deductions.
• Earlier applicable to LLPs, now all for other than corporate.
• MAT & AMT tax rate: 18.5% + Surcharge (Where applicable)
Measures to detect the unaccounted
money
• Increasing the onus of proof on closely held companies for funds received
from shareholders as well as taxing share premium in excess of fair
market value. (Sec. 68, F.Y.2012-13). Supreme Court judgment in the case
of Lovely Export etc. have no relevance now.
• Taxation of unexplained money, credits, investments, expenditures etc.,
at the highest rate of 30 per cent irrespective of the slab of income for all
the assessee.
• Introduction of compulsory reporting requirement in case of assets held
abroad.
• Allowing for reopening of assessment upto 16 years in relation to assets
held abroad. (Sec. 149 (1)(c) of the Act)
No cash payment of Donation
exceeding Rs.10000
•
Currently, there is no provision in either of the aforesaid sections specifying the
mode of payment of money. Sections 80G and 80GGA is amended so as specify
therein that any payment exceeding a sum of ten thousand rupees shall only be
allowed as a deduction if such sum is paid by any mode other than cash.
•
•
These amendments will take effect from 1st April, 2013 and will, accordingly,
apply in relation to assessment year 2013-14 and subsequent assessment years.
TDS & TCS Amendments
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Tax deduction at source @ 1% on transfer of IMMOVABLE PROPERTY (other than agricultural land) above
a specified threshold. (Sec. 194LAA of the Act, w.e.f 01/10/2012)
(a) fifty lakh rupees in case such property is situated in a specified urban agglomeration; or
(b) twenty lakh rupees in case such property is situated in any other area.
Registration of property by Registrar only after submission of proof of TDS deducted & paid.
Separate specific Challan for payment of TDS by mentioning only PAN of both parties. (No TAN)
TDS on remuneration to a director
Under the existing provisions of the Income-tax Act, a company, being an employer, is required to deduct
tax at the time of payment of salary to its employees including Managing director/whole time director.
However, there is no specific provision for deduction of tax on the remuneration paid to a director which
is not in the nature of salary.
It is proposed to amend section 194J to provide that tax is required to be deducted on the remuneration
paid to a director, which is not in the nature of salary, at the rate of 10% of such remuneration.
This amendment will take effect from 1st July, 2012.
Tax incentive for funding of certain Infrastructure Sectors
TDS @ 5% u/s 194LC to provide interest by infrastructure based company (Sec. 115A) to non-resident
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TCS Amendment
Tax collection at source @ 1% on purchase in cash of bullion or jewellary in excess of 2 lakh. (Sec.
206C(1D) of the Act, w.e.f 01/07/2012)
Tax collection at source @ 1% on trading in coal, lignite and iron ore. (Sec. 206C(1) of the Act, w.e.f
01/07/2012)
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VODAFONE - Verdict
Nullified by Retrospective Amendment
Amendment in Section 2(14) and section 9 w.e.f. 01/04/1962.
Property definition widened to include any rights in or in relation to an Indian
company, including rights of management or control or any other rights
whatsoever.
Now doubt removed by clarifying that an asset or a capital asset being any share
or interest in a company or entity registered or incorporated outside India shall be
deemed to be and shall always be deemed to have been situated in India, if the
share or interest derives, directly or indirectly, its value substantially from the
assets located in India.
Amendment in section 40(a)(ia)
of the Act
•
In order to rationalize the provisions of disallowance on account of non-deduction of tax
from the payments made to a resident payee, section 40(a)(ia) amended by way of insertion
of new proviso below in Clause (a) in sub-section (ia) after the proviso and before the
Explanation.
•
It is provided that where an assessee makes payment of the nature specified in the said
section to a resident payee without deduction of tax and is not deemed to be an assessee in
default under section 201(1) on account of payment of taxes by the payee, then, for the
purpose of allowing deduction of such sum, it shall be deemed that the assessee has
deducted and paid the tax on such sum on the date of furnishing of return of income by the
resident payee.
•
These beneficial provisions are proposed to be applicable only in the case of resident payee.
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These amendments will take effect from 1st April, 2013 and will, accordingly, apply in
relation to the assessment year 2013- 14 and subsequent assessment years
Beneficial Amendment in 40(a)(ia)
Share premium in excess of the fair
market value to be treated as income
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Section 56(2) amended to include following income under the head “Income from other sources”.
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A new clause in section 56(2) inserted, it will apply where a company, not being a company in
which the public are substantially interested, receives, in any previous year, from any person being
a resident, any consideration for issue of shares. In such a case if the consideration received for
issue of shares exceeds the face value of such shares, the aggregate consideration received for
such shares as exceeds the fair market value of the shares shall be chargeable to income- tax under
the head “Income from other sources.
•
This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the
assessment year 2013- 14 and subsequent assessment years.
Reduction in rate of STT
 Security Transaction Tax (STT) reduced to 0.1% from the
existing level of 0.125%.
 Above amendment is in relation to the delivery based
Transaction of securities.
Disclaimer
This analysis has been
Prepared keeping in mind
the general interest of readers.
Full care have been taken
While doing the analysis,
however we disclaim any
liability if any arise.