Budget 1.docx

8/14/2019 Budget 1.docx

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Highlights of Budget 2013-14Page 1 of 14An insight into the fine print by INMACS (M: 9811040004 | [email protected])

INMACS MANAGEMENT SERVICES LIMITED Global Business Square, Building No. 32, Sector 44,

Institutional Area, Gurgaon, Haryana, India 909, Chiranjiv Tower, 43, Nehru Place, New Delhi

110019 | Ph: 011-2622 3712, 6933, 8410

DIRECT TAXES

1. Capital Gain on Agricultural Land

Amendment The Definition of Agricultural Land under the definition of Capital Asset has been

modified to exclude

a. Land Situated within a municipality, notified area committee, town area committee, cantonment

board of a population not less than 10,000

b. Any area within a distance measured aerially:-

Distance measured aerially from

any municipality or cantonmentboard

Having Population

Within 2 Kms 10,0011,00,000

Within 6 Kms 1,00,00110,00,000

Within 8 Kms 10,00,001 or More

Impact

a. The agricultural land within aforesaid limits will be subject to Tax on Capital Gains at the time of

transfer.

b. The existing practice of notifying the distance has been dispensed with.

c. The distance is to be measured aerially.

2. Raising the limit of percentage of eligible premium for life insurance policies of persons with

disability or disease

Under the existing provisions contained in clause (10D) of section 10, any sum received under a

life insurance policy, including the sum allocated by way of bonus on such policy, is exempt, subject

to the condition that the premium paid for such policy does not exceed ten per cent of the actual

capital sum assured.

The above Limit of 10% has been raised to 15% in respect of persons with disability of severe

disability (in terms of Section 80DDB).

Similar relief has been provided under Section 80C for the premium paid by such persons on

such policies.

3. Taxation of Securitisation Trusts

Section 161 of the Income-tax Act provides that in case of a trust if its income consists of or

includes profits and gains of business then income of such trust shall be taxed at the maximum

marginal rate in the hands of trust.

In order to facilitate the process of securitization, the following provisions are proposed:-

a. Income of Securitisation trusts regulated by SEBI / RBI will be exempted from taxation.

b. The Income distribution to investors will be taxed:-

i. If the investor is Individual or HUF @ 25%

ii. In any other Case @ 30%

c. Distributed Income will be exempt in the Hands of the Investor


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4. Buy Back of Unlisted Shares : Additional Income Tax

Amendment

a. In terms of proposed Section 115 QA, amount paid by an unlisted company to its shareholders

shall be subjected to a special tax on the amounts so paid as reduced by the amount received by the

company as consideration for the shares.

b. The Tax is payable at the rate of 20% by the company resorting to buy back.

c. No Tax shall be payable in the hands of recipient.

Impact:

a. Additional Income Tax @ 20% payable by unlisted companies on Buy Back of Shares.

b. Capital Gain Tax in the hands of recipient is exempted, under proposed Section 10 (34A).

5. Investment Allowance

The assesse, being a company engaged in the business of manufacture, investing a sum of more

than Rs. 100 Crore in new Plant & Machinery during April 1, 2013 to March 31, 2015, then the

assesse shall be allowed a deduction by way of Investment allowance @ 15%.

The Plant & Machinery excludes computers, vehicles, ships or aircrafts, office appliances &other specified assets and also excludes plant & machinery on which 100% depreciation or

deduction is allowed under the act.

6. Commodities Transaction Tax (CTT)

A new Tax, i.e. Commodities Transaction Tax (CTT) has been introduced on sale of Commodities

Derivative @ 0.01% payable by the seller except where underlying asset is an agricultural

commodity.

7. Securities Transaction Tax (STT)Change in Stock

S. No. Nature of

taxable

securitiestransaction

Payable by Existing Rates

(in per cent)

Proposed Rates

(in per cent)

1.

Delivery based

purchase of

units of an

equity oriented

fund entered

into in a

recognised stock

exchange

Purchaser 0.1 Nil

2.

Delivery based

sale of units ofan equity

oriented fund

entered into in a

recognized stock

exchange

Seller 0.1 0.001

3.

Sale of a futures in

securities

0.017 0.01

4.

Sale of a unit of

an equity

oriented fund tothe mutual fund

Seller 0.25 0.001


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8. Profit on Transfer of Immovable Property held as Stock in Trade (SIT)

Amendment

a. In case of Land and Building held as SIT the sale consideration received or the value as per circle

rate adopted for the purpose of Stamp Duty, whichever is higher will be considered for arriving at

profit from sale of such immovable property.

b. The Circle rate, for this purpose will be considered as the rate applicable at the time of agreement

to sell & not at the time of registration of transfer, provided amount of consideration or part thereof

was paid at the time of such agreement by other than the cost on or before the date of agreement.

Impact

a. Currently the Circle Rate for the purpose of Stamp Duty is considered only for arriving at capital

gain, when land or building, being a capital asset is sold by the assesse, for the purpose of

computation of capital gain tax.

b. In case of Sale of Stock in Trade (SIT) this provision was so far not applicable

9. Taxability of immovable property received for inadequate consideration

When an immovable property has been received by an Individual or HUF for inadequate

consideration, i.e. a consideration less than the circle rate (Stamp Duty Value), the difference

between the Stamp Duty value and Actual Consideration received will be taxable in the hands of

such Individual or HUF.

10. Rajiv Gandhi Equity Saving Scheme

The Deduction of 50% of the amount invested in Equity Shares by a new retail investor was

allowed as a deduction, subject to Maximum of Rs. 25,000.

In terms of the Amendment such deduction will be available to the new investor even for

investment in listed units of an equity oriented mutual funds.

The Investment based deduction will be available for 3 (three) consecutive assessment years. The Maximum limit of Gross Taxable Income of the assesse also has been enhanced from Rs. 10

Lacs to Rs. 15 Lacs.

Documents

Budget 1.docx