Rates of Taxes. Rates for deduction of Income

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1 CA Mohan S. Phadke Rates of Taxes I. Rates of Income Tax in respect of income liable to tax for the assessment year a) In respect of income of all categories of assessees liable to tax for the assessment year , the rates of income tax have been specified in Part I of the First Schedule to the Bill. These are the same as those laid down in Part III of the First Schedule to the Finance Act, 2012, for the purposes of computation of Advance Tax, deduction of tax at source from Salaries and charging of tax payable in certain cases". b) The surcharge shall be levied in respect of income liable to tax as under: i. In case of domestic company, having total income exceeding 1 crore of such income tax In case of foreign company, having total income exceeding 1 crore of such income tax c) The marginal relief is allowed in appropriate cases where total income exceed 1 crore rupees. d) In case of company, having total income chargeable to tax u/s. 115JB and where such income exceeds 1 crore rupees, II. surcharge is levied and marginal relief is also provided as stated above. Rates for deduction of Income year from certain income other than Salaries. a) The rates for deduction of income tax at source during the financial year from certain income other than Salaries Schedule to the Bill. b) The rates for all the categories of persons Part-II of the First schedule to the Finance Act, 2012 for the purposes of deduction of year c) However in case of certain payments made to non-resident person (other than a company) or a foreign company in nature of income by way of royalty or fees for technical services, the rate shall be 25% of such income. d) The of tax shall be levied in case of payment to Non-Resident person (other than company) in case the income exceeds 1 crore rupees. The 26 SS-V-6

2 Special Story Finance Bill, 2013 of tax shall be levied in case of payment to foreign company if total income exceeds 1 crore but is less than 10 crores of tax in cases where income exceeds 10 crores. e) Education cess and Higher Education cess shall continue to be levied at 2% and 1% respectively of Income Tax including surcharge wherever applicable only in case of Non-Resident person and foreign companies. III. Rates for deduction of Income Tax at source from Salaries, computation of Advance Tax and charging of income in special cases during the A.1) In case of Individual: a) The slab rates and tax savings are as under (Excluding Education Cess). Resident senior citizens (60 years and above but below 80 years) Resident senior citizens (80 years and above) Others Tax rates Savings Tax rates Savings Tax rates Savings 1 Up to 2,00,000 NIL NIL NIL NIL NIL NIL 2 2,00,001 to 2,20,000 NIL NIL NIL NIL 10% Rebate of ` 2000 or tax whichever is less 3 2,20,001 to 2,50,000 NIL NIL NIL NIL 10% Rebate of ` 2, ,50,001 to 5,00,000 10% NIL NIL NIL 10% Rebate of ` 2, ,00,001 to 10,00,000 20% NIL 20% NIL 20% NIL 6 10,00,001 to 1,00,00,000 30% NIL 30% NIL 30% NIL 7 Above 1 core (including surcharge) 33% NIL 33% NIL 33% NIL b) The marginal relief is available in appropriate case in case of individual where income exceeds c) A new section 87A is sought to be introduced providing for Rebate of 10% of tax up to maximum of ` 2,000 for resident individuals having total income up to ` 5 lakhs. This provision is similar to old section 80C for resident women. increased by a surcharge at the rate of 10% of such income tax in case of a person having a total income exceeding one crore rupees. SS-V-7 27

3 1. In the case of co-operative societies, the rates of income tax have been specified in Paragraph B of Part III of the First Schedule to the Bill. These rates will increased by a surcharge at the rate of 10% of such income tax in case of a cooperative society having a total income exceeding one crore rupees. 4. The marginal benefit is available in the appropriate cases where income exceeds C) Firms III of the First Schedule to the Bill. These rates will continue to be the same as those increased by a surcharge at the rate of 10% a total income exceeding one crore rupees. 4. Marginal benefit is available in the appropriate cases where income exceeds D) Local authorities 1. In the case of Local authorities, the rates of income tax have been specified in Paragraph D of Part III of the First Schedule to the Bill. These rates will increased by a surcharge at the rate of 10% of such income tax in case of a Local authority having total income exceeding one crore rupees. 4. Marginal benefit is available in cases where income exceeds ` 1. The rates of income tax in the case of companies are specified in Paragraph E of Part III of the First Schedule to the Bill. These rates will continue to be the Surcharge in case of domestic company i. The existing surcharge of 5% shall continue for taxable income above ` 1 crore but up to ` 10 crore The higher surcharge of 10% shall be leviable in case of taxable income above ` 10 crore. 3. Surcharge in case of foreign company i. The existing surcharge of 2% shall continue for taxable income above ` 1 crore but up to ` 10 crore. The higher surcharge of 5% shall be leviable in case of taxable income above ` 10 crore. 4. Marginal relief is available in all the appropriate cases where income exceeds ` 1 crore or ` 10 crore as the case may be. 5. Consequently effective MAT rate for domestic companies would be % (up to ` 1 crore), % (between 1 and 10 crore) and % (above 10 crores) 28 SS-V-8

4 Special Story Finance Bill, Effective rates * Category of assessee A.Y Existing effective rate * On Domestic companies A.Y Proposed effective rate * Income does not exceed 1 crore 30.90% 30.90% * Income more than 1 crore up to 10 crore % % * Income more than 10 crore % 33.99% * * On foreign companies * Income does not exceed 1 crore 41.20% 41.20% * Income more than 1 crore up to 10 crore % % * Income more than 10 crore % % IV. Education Cess The additional surcharge called education cess and secondary & higher education cess remain unaltered. V. Securities Transaction Tax (STT) vide Finance (No. 2) Act, It is proposed to amend section 98 of the Finance (No. 2) Act, 2004 to reduce STT rates in the taxable securities transactions as indicated hereunder: No. Nature of taxable securities transaction TABLE 1 Delivery based purchase of units of an equity oriented fund entered into in a recognised stock exchange 2 Delivery based sale of units of an equity oriented fund entered into in a recognised stock exchange Payable by Existing rate Purchaser 0.1 NIL Seller Sale of futures in securities Seller Sale of units of any equity oriented fund to the mutual fund Seller The proposed amendment in the rates of transaction tax will be effective from 1st June, 2013 and will accordingly apply to any transaction made on or after that date. SS-V-9 29

5 VI. Commodities Transaction Tax (CTT) 1. A new tax called Commodities Transaction Tax (CTT) is proposed to be levied on taxable commodities transactions entered into in a recognised association. commodity derivatives in respect of commodities, other than agricultural commodities, traded in recognised associations. 3. The tax is proposed to be levied at the rate, given in the Table below, on taxable commodities transactions undertaken by seller as indicated hereunder: Sr. No. Taxable commodities transaction Rate Payable by 1. Sale of commodity derivative 0.01 per cent Seller 4. This tax is proposed to be levied from the date on which Chapter VII of the Finance Bill, 2013 VII. Tax on income distributed by UTI/Mutual Fund under section 115R In order to provide uniform taxation for all types of funds, other than equity oriented fund, it is proposed to increase the rate of tax on distributed income from 12.5% to 25% in all cases where distribution is made to an individual or a HUF. Tax on income distributed by UTI / Mutual Fund shall be charged as follows: 1 Income distribution to a unit-holder of equity oriented funds undertaking to unit-holder 2 Money market mutual fund or liquid fund Income Tax A.Y Income Tax A.Y Unit holder is individual /HUF Unit holder is any other person Income distribution by a fund other than money market mutual fund or a liquid fund - Unit holder is individual /HUF (increased) - Unit holder is any other person VIII. Sections 115JB, 115JC, 115O, 115R, 115TA, 115QA In all above cases surcharge shall be increased to the rate of 10% from existing 5%. NIL NIL IX. Additional surcharge 30 SS-V-10

Budget Presented For: Klaus Vogel Group Presented By: Mr. Kuntal Dave Date: March 8, 2013

Budget Presented For: Klaus Vogel Group Presented By: Mr. Kuntal Dave Date: March 8, 2013 Budget 2013 Presented For: Klaus Vogel Group Presented By: Mr. Kuntal Dave Date: March 8, 2013 Index Direct Tax Proposals Implications of amendments proposed in the Finance Bill, 2013 2 Direct Tax Proposals