Spend, Save and Invest Smartly

Highlights/Review of Union Budget 2013

Direct Taxes

  • 5% surcharge on domestic companies whose income exceeds Rs 1 crore
  • 10 % surcharge on domestic companies whose income exceeds Rs 10 crores
  • Surcharge on Dividend Distribution Tax (DDT) increased from 5 % to 10%
  • Securities Transaction Tax (STT) rates cut on equity futures to 0.01% and for Mutual Funds to 0.001 %
  • Commodities transaction tax (CTT) levied on non-agriculture commodities futures contracts at 0.01%
  • Additional Income tax of 20 % for buyback of shares by Unlisted Companies except for buyback of shares on face value
  • Tax on Royalty / Fees for technical for services provided abroad increased from 10% to 25 % subject to Double Taxation Avoidance Agreements
  • Modified GAAR norms to be introduced from April 1, 2016
  • Donations to National Children’s Fund will be eligible for 100% tax deduction
  • Long-term infra bonds also eligible for tax deduction
  • Direct Tax Bill to be placed soon

Customs Duty

  • No change in Peak basic customs duty of 10%
  • Leather and goods duty reduced to 5%
  • Higher duty on imported vehicles

    -> Luxury cars import duty at 100%
    -> Import duty on Yachts duty at 25%
    -> Import duty on motorcycle at 75%
  • Precious, semi-precious duty reduced
  • Exempts imported ships and vessels from duty
  • Duty cut on leather, leather good machines
  • To levy 2% customs, CVD on coal imports
  • Higher customs duty on set top boxes from 5 % to 10 %
  • Customs duty unchanged for non agri products
  • To provide appropriate incentives for semiconductors industry including zero customs duty on plants and machineries.

Excise Duty

  • No change in Excise duty of 12%
  • No countervailing duty on ships and vessels
  • Specific excise duty on cigarettes and cigars raised by 18 per cent
  • Excise duty on SUVs to be increased to 30 per cent from 27 per cent, SUVs registered as taxis exempted
  • Duty on mobiles above Rs 2,000 raised from 1 to 6 %, based on their maximum retail prices

Service Tax

  • No change in Service tax rate of 12%
  • One time voluntary compliance scheme for service tax defaulters to be introduced for unpaid service tax since 1-10-07. Interest and penalties to be waived and payment may be made in 1 or 2 instalments
  • Service tax to be levied on all AC restaurants (whether serving liquor or not)
  • 2 Services added in Negative List

    -> Vocational courses affiliated to Institute of Vocational Studies
    -> Testing for Agriculture products

Personal Taxation (Direct and Indirect)

  • No changes in personal Income Tax slabs
  • Tax credit of Rs 2000 for income upto Rs 5 lakh
  • Additional 10% surcharge would be levied on those whose taxable income is above Rs 1 cr per annum
  • TDS of 1% to be levied on transactions above Rs 50 lakhs on transfer or sale of immovable property; agricultural land exempt
  • Educational Cess to continue at 3 %
  • Additional deduction of interest of Rs. 1 lacs for 1st time Home buyers for loans less than Rs. 25 lacs
  • Duty free limit in personal baggage on gold raised to Rs 50,000 in case of male and Rs 100,000 in case of female
  • Rajiv Gandhi Equity Savings Scheme (RGESS) will be liberalized & the investor will be allowed to invest in mutual funds. The investor will be able to do this for a period of 3 successive years. The limit for investors wanting to invest in RGESS raised from Rs 10 lakh to Rs 12 lakh.

Goods and Services Tax (GST)

  • Draft bill on constitutional amendment and for GST to be placed in 2013
  • 9000 crores compensation package for states for foregoing CST

Capital Markets

  • SEBI to simplify KYC norms governing foreign investors
  • Small and medium companies to be allowed to listed on MSME exchange without making a public offer
  • Investor with stake of 10 per cent or less will be treated as FII; any stake more than 10 per cent will be treated as FDI. Committee to be constituted to proposes amendments in the regulations based on the said principle.
  • FIIs will be allowed to participate in exchange traded currency derivatives
  • Designated Depository Participants free to register different classes of portfolio investors
  • Dedicated Debt segment on Stock Exchanges

SME Segment / Start-ups

  • In order to encourage SMEs a company investing Rs 100 crore or more in plant and machinery in April 1, 2013 to March 31, 2015 will be allowed 15 % investment deduction allowance apart from depreciation
  • SIDBI’s re-financing facility to MSMEs will be doubled to Rs 10,000 crore.
  • Small and medium companies to be allowed to listed on MSME exchange without making a public offer
  • Funds provided by Companies to Technology incubators like Campus in Technology institutions approved by Ministry of Science and Technology to qualify as a valid Corporate Social Responsibility (CSR) expenditure in line with the new Companies Bill.
  • SMEs to enjoy non tax benefits for 3 years after they outgrow category

Infrastructure Sector

  • Infrastructure Debt Funds (IDF) to be encouraged. Four infrastructure debt funds have been registered with SEBI; two more planned
  • Tax free bonds issue to be allowed up to Rs 50,000 crore in 2013-14 strictly on capacity to raise funds from the market
  • Government has decided to constitute a regulatory authority for the road sector

Banking / Finance / Insurance Sector

  • India’s first women’s bank to be set up as a public sector bank by October 2013 with an initial capital of 1000 cr.
  • Banks allowed to act as Insurance Brokers
  • Banks KYC norms sufficient for insurance policies
  • Group Insurance benefits to be extended to several new groups
  • All PSU Banks to have ATMs in one year
  • Post Offices to offer Core Banking Solutions
  • PFRDA and Insurance Laws amendment bills to tabled in the budget session
  • NHB to set up Urban Housing Bank
  • Inflation indexed Bonds and NSCs to be issued

Non-renewable energy Sector

  • Low interest rate funds to be provided from Clean Energy Fund for green projects for a period of five years
  • Generation based incentives to wind energy projects reintroduced
Financial Planning
Tax Planning
Investment Planning