Budget 2013 -14: SEBI & Others

1. In order to curb the Insider Trading and malpractices, budget has proposed to amend SEBI Act as to provide sufficient protection to the investors.

2. SEBI to simplify the procedures and prescribe uniform Registration & additional norms for entry for foreign portfolio investors. (FPI is foreign direct investment in capital market).

3. Rule that, where an investor has a stake of 10 per cent or less in a company,it will be treated as FII and, where an investor has a stake of more than 10 per cent, it will be treated as FDI will be laid.

4. FIIs will be permitted to participate in the exchange traded currency derivative segment to the extent of their Indian rupee exposure in India.

5. SEBI to prescribed requirement for angel investor pools by which they can be recognised as Category I AIF venture capital funds.

6. Small and medium enterprises, to be permitted to list on the SME exchange without being required to make an initial public offer (IPO).
Here SME Exchange means a platform of the Exchange is intended for small and medium sized companies with high growth potential. The SME platform of the Exchange shall be open for SMEs whose post issue paid up capital shall be less than or equal to Rs.25 crores. The platform shall allow new, early stage ventures and small quality companies to raise much needed growth capital as they grow, mature and transit to the Exchanges’ main board.

7. Stock exchanges to be allowed to introduce a dedicated debt segment on the exchange.
                                                                    Others

1. Surcharge of 10 percent on persons (other than companies) whose taxable income exceeds 1 crore.

2. Increase surcharge from 5 to 10 percent on domestic companies whose taxable income exceed 10 crore.

3. Tobacco products, SUVs and Mobile Phones to cost more.

4. In case of foreign companies who pay a higher rate of corporate tax, surcharge to increase from 2 to 5 percent, if the taxabale income exceeds 10 crore.

5. In all other cases such as dividend distribution tax or tax on distributed income, current surcharge increased from 5 to 10 percent.

6. Education cess to continue at 3 percent.

7. Contributions made to schemes of Central and State Governments similar to Central Government Health Scheme, eligible for section 80D of the Income tax Act.

8. Donations made to National Children Fund eligible for 100 percent deduction.

9. Proposal to introduce Commodity Transaction Tax (CTT) in a limited way. CTT applicable on the sale of commodities. Agricultural commodities will be exempted. CTT shall be at the rate of 0.01% on the value of transaction and the tax shall be payable by the seller.

10. Modified provisions of GAAR will come into effect from 1.4.2016.

11. No change in the normal rates of 12 percent for excise duty and service tax.

12. No change in the peak rate of basic customs duty of 10 perent for non-agricultural products.

13. Duty on specified machinery for manufacture of leather and leather goods including footwear reduced from 7.5 to 5 percent.

14. Duty on pre-forms precious and semi-precious stones reduced from 10 to 2 percent.

15.Duty on Set Top Boxes increased from 5 to10 percent.

16. Duty on raw silk increased from 5 to 15 percent.

17. Duty on imported luxury goods such as high end motor vehicles, motor cycles, yachts and similar vessels increased.

18. Duty free gold limit increased to 50,000 in case of male passenger and 1,00,000 in case of a female passenger subject to conditions.

19. Excise duty on SUVs increased from 27 to 30 percent. Not applicable for SUVs registered as taxis.

20. Duty on mobile phones priced at more than 2000 raised to 6 percent.

21. Exemption of Service Tax on copyright on cinematography limited to films exhibited in cinema halls.

22. Proposals to levy Service Tax on all air conditioned restaurant.

23. Additional deduction of interest upto 1 lakh for a person taking first home loan upto 25 lakh during period 1.4.2013 to 31.3.2014 (Total 2.5 lacs)

24. Income limit under Rajiv Gandhi Equity Savings Scheme (RGESS) will be raised from Rs. 10 lakh to Rs. 12 lakh.

ON Rajiv gandhi Equity Scheme (http://rgess.com/)

Who can invest in RGESS?

New retail investors with an annual income of less than 10 lakhs.

How much can I invest?

The maximum amount eligible for claiming benefit under RGESS is Rs. 50,000.

Tax Benefit - Deduction u/s 80 CCG, is available on 50% of the amount invested. The benefit is in addition to deduction available u/s Sec 80C.

Lock-in Period - 3 years. Fixed lock-in during first year followed by a flexible lock-in for subsequent two years.

Public Provident Fund Scheme, 1968 (PPF, 1968) and Senior Citizens Savings Scheme, 2004 (SCSS, 2004) – Revision of interest rates

Referring to the circular RBI/2011-12/359 dated January 20, 2012 regarding interest rates on small savings schemes, the Government of India have vide their Office Memorandum (OM) No. 6-1/2011-NS.II (Pt.) dated March 26, 2012, advised the rate of interest on various small savings schemes for the financial year 2012-13. 

Accordingly, the rates of interest on PPF, 1968 and SCSS, 2004 for the financial year 2012-13 effective from April 01, 2012, on the basis of the interest compounding/payment built-in in the schemes, will be as under:

Scheme	Rate of interest w.e.f. 01.12.2011	Rate of interest w.e.f. 01.04.2012
5 year SCSS, 2004	9.0% p.a	9.3% p.a
PPF, 1968	8.6% p.a	8.8% p.a

This will result in good amount of saving in PPFs and SCSS.

Basic Concepts of Income tax

The Income Tax Act - Basic Concepts have been explained lucidly and can be read under Google Docs.

Capital Vs Revenue Expenditure - In the Case of Airport Authorities India

Section 37(1) of Income Tax Act defines Capital Expenditure Vs Revenue Expenditure through a 

Case Law - Re: In the Airport Authority of India. Read More
 

S.72 Set off and Carry Forward of Losses - In the Case of Nandi Steels

Section 72: Set Off and Carry Forward of Losses Explained

Gains on Fixed Assets Vs. Set Off of Business Loss u/s 72

M/S. Nandi Steels Limited, Bangalore

Vs

Asstt. Commissioner of Income Tax, Bangalore

Section 72: Gains arising from “business assets” not eligible for set-off against brought forward business loss

The assessee sold land & building used for business purposes. Though the gain was offered as capital gains, the assessee claimed, relying on Cocanada Radhaswami Bank Ltd 57 ITR 306 (SC) and other judgements, that as the assets were “business assets”, the gains arising from such business assets were eligible for set-off against the brought forward business loss u/s 72.

The issue was referred to a Special Bench. HELD by the Special Bench against the assessee:

 S. 72 (1) defines that the business loss brought forward shall be set-off against the “profits & gains of any business or profession” of the subsequent year. The expression “profits & gains of business” means income earned from the business carried on by the assessee and not the income connected to the business or profession carried/practiced by the assessee. The land & building were fixed & capital assets used or the business purposes. Therein the gains arising are assessable as capital gains and were not eligible for set-off against the brought forward business loss u/s 72. For detailed Judgement - click here

(Cases Followed: Express Newspapers 53 ITR 250 (SC); Cocanada Radhaswami Bank 55 ITR 17(SC) distinguished; Steelcon Industries reversed)

Attention Students

The June 2011 Exam for CS Executive would follow Finance Act 2010 for Tax Laws

The Amendments are available under this link. Please visit the link for the amendments in Detail.

Income Tax Amendments For CS Executive June 2011 Exam

New Tax Slab with inputs as per People

New tax slabs after receiving inputs from people, says Pranab

Finance Minister Pranab Mukherjee on Friday  said the government will take a view on new tax slabs after receiving inputs from different stakeholders on the revised draft of the Direct Taxes Code (DTC). 

"The government will take a final view (on tax slabs) after receiving all the inputs," he said when asked whether the government was likely to retain the tax slabs suggested in the original DTC draft.

The first DTC draft, released in August, had proposed 10 per cent tax on the income of Rs 1.6 lakh-Rs 10 lakh, 20 per cent on Rs 10 lakh-Rs 25 lakh and 30 per cent beyond Rs 25 lakh in a year.

 

At present, 10 per cent is levied on income between Rs 1.6 lakh-5 lakh, 20 per cent on Rs 5 lakh-8 lakh and 30 per cent over Rs 8 lakh.

The revised draft, on which the Finance Ministry has invited comments from the public till 30th June, is silent on tax slabs.

 

However, it did mention that tax slab and rates proposed in the first draft would be revised.

"The proposal in this Revised Discussion Paper would lead to a reduction in the tax base proposed in the DTC. The indicative tax slabs and tax rates and monetary limits for exemptions and deductions proposed in the DTC will, therefore, be calibrated accordingly while finalising the legislation," the revised draft had said.

Mukherjee declined to give any clear indication about the new tax slabs saying "these are only discussion papers. How will I comment..."

The Minister said the tax structure would be revealed in the legislation to be introduced in Parliament.