ARTICLE. On Finance Bill (Budget) Proposals 2013 Income Tax Act, 1961 By CA. SATISH AGARWAL

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1 ARTICLE On Finance Bill (Budget) Proposals 0 Income Tax Act, 96 By CA. SATISH AGARWAL Mobile : Phone : Office : 9/4, East Patel Nagar, (Near Jaypee Sidharthe Hotel) New Delhi : satishagarwal07@yahoo.com

2 * Finance Bill (Budget) Proposals 0 * Income Tax Act, 96 (A) Amendments in Rates of Income Tax Slab of Rates of Income Tax amount of income exceeding crore on amount of income tax W.e.f Ay 04-5 (b) Education Secondary and (I) For (a) Individual (b) HUF (c) AOP (d) BOI (e) Higher Education both be levied Artificial judicial person except co-operative on amount of income tax surcharge both society (V)(a) For domestic company tax rate be levied S.No Incomes Rate of on incomes a Upto Rs.,00,000 0% (b) Also surcharge be where total b Rs.,00,00 to 5,00,000 0% incomes exceeding crore on amount of c Rs. 5,00,00 to 0,00,000 0% income tax or d Above Rs. 0,00,000 0% (c) Surcharge be where total incomes exceeding 0 crores on amount of (II) For Individual as Resident of India Also above the age 60 years income tax (VI)(a) For foreign company tax rate be a Upto Rs.,50,000 0% (b) Also surcharge be where total b,50,00 to 5,00,000 0% incomes exceeding crore on amount of c 5,00,00 to 0,00,000 0% income tax or d Above Rs 0,00,000 0% (c) Surcharge be where total incomes exceeding 0 crores on amount of (III) For Individual as Resident of India income tax Also above the age 80 years Education Secondary and Higher Education both be levied a Upto Rs. 5,00,000 0% on amount of income tax surcharge both b 5,00,00 to 0,00,000 0% (VII) Concept of marginal relief be available c Above Rs 0,00,000 0% due to levy of surcharge (VIII) Tax 000 or income tax liability (IV)(a) Surcharge be where whichever is lower per assessee be permitted where taxable income not exceeding 5 Lakh (B) Amendments in Definitions Definition of Capital Asset Section (A) (4) - w.e.f Ay thousands but not exceeding lakh Also having population more than (I) Term Capital asset includes property of (b) Where agricultural land located beyond 6 any kind held by assessee whether or Kilometers from local limit of municipality or not connected with his business or profession cantonment board (II) However certain properties have been Also having population more than lakh but excluded from definition of capital asset not exceeding 0 lakhs (III) Moreover certain agricultural land have been excluded from definition of capital asset (a) Where agricultural land located beyond kilometers from local limits of municipality or cantonment board APRIL- 0 (c) where agricultural land located beyond 8 Kilometers from local limit of municipality or cantonment board Also having population more than 0 lakhs

3 APRIL - 0 (C) Amendments in Exempted Incomes Increased the Percentage of Eligible Premium for life Insurance Policies Section 0(0D) W.e.f Ay 04-5 (I) Principal + Bonus be exempted where life insurance policy issued after March, 0 where (II) Premium payable not exceeding 5% of actual sum assured Keyman Insurance Policy Section 0(0D) W.e.f Ay 04-5 (I) Principal + Bonus be exempted where life insurance policy other than the Keyman Insurance Policy (II) Assigned Keyman Insurance Policy during term with or without consideration be treated as Keyman Insurance Policy (III) Henceforth Principal + Bonus not exempted under section 0(0D) Buy Back of Shares Section 0(4A) W.e.f Ay 04-5 (I) Capital gains against shares sold to company under head buy back of shares be exempted (II) Company be required to pay an additional income 0% on distributed incomes (D) Amendments in Incomes from Business and Profession Deduction for Acquisition Installation New Plant or Machinery Section AC W.e.f Ay 04-5 (I) Manufacturing Companies be permitted to avail a 5% against investments exceeding INR 00 crore in new plant or machinery from April 0, 0 to March, 05 (II) New Plant or Machinery Not Includes (a) Already used either in India or outside India (b) Already used in office premise or residential accommodation including guest house (c) Any Office appliance including computer or computer software (d) Any vehicle or ship or aircraft (III)(a) New plant or machinery not permitted to transfer with in 5 years (b) However condition 5 years not required for transfer under amalgamation or demerger Deduction for Bad Debts in Banks Section 6() (VII) (VIIa) W.e.f Ay 04-5 (I) Now banks be permitted to claim the bad debts based on actually written off over and above credit balance available under head provision for bad and doubtful debts (II) Henceforth deduction for bad debts be permitted as actual bad debts minus credit balance available under head provision for bad and doubtful debts (III) This amendment overruling judgement of Supreme Court of India in case of Catholic Syrian Bank Ltd [0] Deduction for CTT Section 6(xvi) W.e.f Ay 04-5 *Assessee be permitted to claim a deduction against Commodities Transaction Tax (CTT) paid relating to taxable commodities transactions entered in incomes under head profit and gains of business or profession 4 Transfer of Immovable Property held as Stock-in-Trade Section 4CA W.e.f Ay 04-5 (I) Section 50C be applicable where transfer of capital asset made below the value fixed for stamp duty purpose (II) Now Section 4CA be applicable where transfer of immovable, property held as stockin-trade made below the value fixed for Stamp duty purpose (III) Value fixed for Stamp duty purpose as on date of agreement for transfer be applied (IV) Henceforth value fixed for Stamp duty purpose as on date of registration for transfer not to be applied

4 (E) Amendments in Incomes From Other Sources Immovable Property Received for Inadequate Consideration Section 56() (vii) w.e.f. Ay (I) Existing Provisions *Individuals or HUF be liable to pay tax against immovable property received without consideration as value fixed for stamp duty purpose. against immovable property received inadequate consideration as value fixed for Stamp duty purpose (b) Difference between inadequate consideration and value fixed for stamp duty purpose be taxed under head income from other sources (c) Value fixed for Stamp duty purpose as on date of agreement for transfer be applied (II) Proposed provisions (a) Now Individual or HUF be liable to pay tax (d) Henceforth value fixed for Stamp duty purpose as on date of registration for transfer not to be applied (F) Amendments in Deductions from Gross Total Incomes Increased the Percentage of Eligible Premium for Life Insurance Policies Section 80C - w.e.f Ay *Deduction not permitted where insurance premium against life insurance policies exceeding 5% of actual sum assured Investments Under Equity Saving Scheme Section 80CCG - w.e.f. Ay (I) Existing Provisions (a) Resident individuals as new retail investors be permitted to avail a against maximum investments 50 thousands in listed equity shares under Rajiv Gandhi Equity Saving Scheme (RGESS) (b) Henceforth maximum permitted deduction be 5 thousands (c) Resident individuals should not have gross total incomes exceeding 0 Lakh (d) Deduction be permitted for assessment year (II) Proposed provisions (a) Now investments also be permitted in listed units of equity oriented fund alongwith listed equity shares (II) However total incomes should not exceeds APRIL - 0 (b) Resident individuals should not have gross total incomes exceeding Lakh (c) Deduction be permitted for consecutive assessment years Interest on Loan for Acquiring Residential House Property Section 80EE - w.e.f. Ay 04-5 (I) First home buyers be permitted to avail a deduction against interest on loan taken for purchase of residential house property (II) Loan should be taken from any financial institution (III) Maximum deduction be permitted Lakh (IV) Loan be sanctioned between April 0, 0 and March, 04 (V) Amount of loan not to exceed 5 Lakhs (VI) Value of house not to exceed 40 Lakhs (VII) Assessee should not owned any residential house property as on date of sanction of loan Extension of Deduction for Power Sector Section 80 - IA(4) w.e.f. Ay This deduction be available for Ay (G) Amendments in Rebates Reliefs Rebate for Individuals Section 87A - w.e.f Ay (I) Individual taxpayers be permitted to avail tax rebate maximum INR thousands 4 5 Lakhs (III)(a) Henceforth tax rebate be permitted an amount equal to income tax payable or (b) INR thousands whichever be lower

5 APRIL - 0 (H) Amendments in Avoidance of Double Taxation Tax Residency Certificate (TRC) Section 90 90A - w.e.f Ay 0-4 (I) Submission of tax residency certificate be necessary (I) Amendments in Special Tax Rates Taxation on Royalty or Fees for Technical Services (FTS) Section 5A w.e.f Ay 04-5 *Income 5% be levied on gross incomes of non resident in India under head FTS where agreement entered after March, 976 Taxation on Dividends as Received from Foreign Companies Section 5 BBD w.e.f Ay 04-5 (I) Income 5% be levied on gross dividends as received by Indian companies from specified foreign companies subject to satisfaction of certain terms conditions (II) Concessional rate of income tax i.e 5% be extended upto Ay 04-5 (III) Definition of Specified Foreign Companies *Where domestic company holding minimum 6% share holding Dividend Distribution Tax (DDT) Section 5 -O w.e.f June 0, 0 (I) Domestic company not required to pay the DDT against dividends distributed out of dividend received from foreign subsidiary company where section 5BBD applicable i.e income 5% (II) Definition of Foreign Subsidiary Company 4 but (II) not sufficient condition for claiming benefits under agreement as referred to section 90 or 90A *Where domestic company holding minimum 50% share holding Taxation on Distributed Incomes under Buy Back of Unlisted Shares - Chapter XII-DA Section 5QA to 5QC w.e.f. June 0, 0 (I) Income 0% be levied on distributed incomes under buy back of unlisted shares (II) Henceforth no income tax be levied in hands of shareholders (III) This amendment be treated similar to DDT provisions Taxation on Distributed Incomes by Mutual Funds Section 5R w.e.f. June 0, 0 (I) Income 5% be levied against distributed incomes by mutual funds to Individuals or HUFs on other than equity oriented fund (II) Income 0% be levied against distributed incomes by mutual funds to other than Individuals or HUFs (III) (a) Income 5% be levied against distributed incomes by infrastructure debt fund (IDF) as set up by Non Banking Finance Company (NBFc) Commonly known as IDF- NBFC or (b) As Set-up by Mutual fund (MF) Commonly Known as IDF - MF to non resident investors (J) Amendments in Search Seizure Provisions Application of Seized Assets (II) Existing liability Includes Section B w.e.f. June 0, 0 (I)(a) Seized assets be adjusted against existing liability (b) Also against future liability as to be determined on completion of assessment in pursuant to search 4 5 *Outstanding tax + Interest + Penalty as on date (III) Future Liability Includes To be determined on completion of assessment in pursuant to Search i.e Tax + Interest + Penalty

6 APRIL - 0 (K) Amendments in Filing of Returns Assessments Filing of Return of Incomes without Payment of Self Assessment Tax Section 9 (9) w.e.f. June 0, 0 *Filing of return of incomes be treated as defective where self assessment + interest, if any i.e under Section 4A 4B 4C not paid alongwith return of incomes Direction for Special Audit Section 4 (A) w.e.f. June 0, 0 (I) Assessing officer be permitted to direct the assessee to get a special audit of his accounts in certain circumstances (II) Certain Circumstance Include (a) Nature Complexity of accounts (b) Volume of accounts (c) Doubts on correctness of accounts (d) Multiplicity of transactions in accounts (e) specialized nature of business activities of assessee (f) In interest of Revenue (III) Assessing officer be required to obtain an 5 approval from chief Commissioner of Income Tax or Commissioner of Income Tax as case may be Limitation for Completion of Assessments or Reassessments Section 5 5B w.e.f. June 0, 0 (I)(a) Period Commencing from date as directed by Assessing officer to get a special audit under Section 4(A) (b) Last date as fixed for completing the special audit be excluded for computation of limitation for completion of assessment or reassessment (II)(a) Period Commencing from date for exchange of information as required by competent authority under section 90 or 90A (b) Date of information as received by commissioner or year whichever lower be excluded for computation of limitation for completion of assessments or reassessments (L) Amendments in Collection Recovery of Tax Clarifications for Term Tax Due for Recovery of Tax Section 67C 69 w.e.f. June 0, 0 (I) Term tax due be included the tax + Penalty + Interest + Any other sum payable under the Income tax Act, 96 (M) Amendments in TDS Provisions TDS on Transfer of Immovable Properties Section 94- IA w.e.f. June 0, 0 (I) Transferee of immovable property be required to deduct % at time of payment or credit whichever is earlier where consideration exceeding INR 50 Lakhs (II) However transferee of agricultural land not required to deduct any TDS (III) Transferee of immovable property not required to deduct TDS where consideration not exceeding INR 50 Lakhs TDS against Interest on Long Term Infrastructure Bonds Section 94 LC w.e.f. June 0, 0 (II) Directors be jointly severally liable to pay tax due in case of non recovery from company (III) However directors not liable where able to prove not gross neglect or misfeasance or breach of duty on their part (I) Existing Provisions 5% be deducted on payment of interest to non resident in India against issue of long term infrastructure bonds in foreign currency (II) Proposed Provisions, (a) 5% be deducted on payment of interest to non resident in India against issue of rupee denominated long term infrastructure bond (b) However non resident in India be required to deposit foreign currency in designated bank account to be converted in rupee to utilize for subscription to long term infrastructure bond to be issued by domestic company (c) Henceforth this borrowing be deemed to be made in foreign currency

7 (N) Amendments in Penalty Provisions Penalty for Non Filling of Annual Information Return (AIR) Section 7FA w.e.f. Ay 04-5 (I) Assessing officer be permitted to direct to pay a 00 for every day of failure continues after due date (II) Assessing officer be permitted to direct to pay a 500 for every day of failure continues after time specified in notice issued under section 85 BA (5) (O) Amendments in Miscellaneous Matters Commodities Transaction Tax (CTT) Securities Transaction Tax (STT) (I) CTT be 0.0% on sale of commodity derivatives other than agricultural commodities traded in recognized associations (II) Provisions for collection recovery of CTT Furnishing of return assessment procedure power of assessing officer chargeability of interest levy of penalty be prescribed (III) CTT paid by assessee be allowed as expenditure under Section 6 against taxable commodities transactions Wealth Tax Return Wealth tax return be submitted by certain class of income tax assessee in annexure - less electronic mode APRIL *STT on Transactions Nature of Taxable Securities Transaction Delivery based purchase of Units of equity oriented fund Delivery based purchase of Units of equity oriented fund Sale of Future in Securities Sale of units of equity oriented funds to Mutual Fund Payable By Purchaser Seller Seller Seller Proposed STT % Nil

8 (I) (II) (III) (IV) (V) (VI) Auditing/Certification under the US GAAP (Regd. with USA S PCAOB) International Taxation () Development of long-term strategy () Preparation of documents for Transfer Pricing () Study of Transfer Pricing (4) Audit of Transfer Pricing (5) Assessment of Transfer Pricing (6) Strategy for tax structure by availing tax incentives, tax holidays and tax benefits (7) Strategy for optimisation of tax liability by networking of DTATs (8) Taxation and tax planning for non-residents entities expatriates (9) Guidance and Representation for Advance Rulings Opinions and Consultations Accounting Conversions () From INDIAN GAAP To US GAAP () From INDIAN GAAP To IFRS () From US GAAP To INDIAN GAAP (4) From IFRS To INDIAN GAAP SATISH S AGARWAL CO. Chartered Accountants 9/4, East Patel Nagar (Near Jaypee Siddhartha Hotel) New Delhi-0008 Tel (off) (Multiple Lines) Mob : satishagarwal07@yahoo.com (Regd No N) *Expertises Specialisations* Regulatory Approvals Registrations other matters () ROC (Registrar of companies) (6) SEZs (Special Economic Zones) () RBI (Reserve Bank of India) (7) 00% EOUs (Export Oriented units) () STPI (Software Technology park of India) (8) CBEC (Central Board of Excise and Customs) (4) FIPB (Foreign Investment promotion board) (9) DOT (Department of Telecommunication) (5) SIA (Secretariat of Industrial approvals) (0) CST (Central Sales Tax) Audit Assignments () SOX Audit () Excise Audit () Statutory Audit () Cost reduction analysis Audit () Internal Audit (4) Working capital management Audit (4) Tax Audit (5) Budget analysis Audit (5) Compliance Audit (6) Financial disbursement Audit (6) Management Audit (7) Revenue and capital expenditures Audit (7) Verification Audit (8) System Audit (8) Stock Audit (9) Manpower planning Audit (9) Capital structuring Audit (0) Raw material planning Audit (0) Fund flows Audit () Resource planning Audit () TDS Audit () Borrowing planning Audit (VII) Incorporation of Companies outside India

FB.COM/SUPERWHIZZ4U Income Tax Amendment for the Assessment

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