Service Tax :- Negative List enhanced by two more services in Budget

‘VOLUNTARY COMPLIANCE ENCOURAGEMENT SCHEME’ PROPOSED TO MOTIVATE DEFAULTERS TO FILE SERVICE TAX RETURNS AND PAY DUES TWO MORE SERVICES INCLUDED IN THE NEGATIVE LIST FOR SERVICE TAX 

ALL AIR CONDITIONED RESTAURANTS TO COME UNDER SERVICE TAX NET

To motivate about 10 lakh of those registered assesses of service tax, who are not filing returns and paying tax dues, the Finance Minister has proposed to introduce a one-time scheme called ‘Voluntary Compliance Encouragement Scheme’ in 2013-14 Budget proposals. Under this scheme a defaulter can file a truthful declaration of service tax dues since 1st October, 2007 and make the payment in one or two installments before prescribed dates. In such a case, interest, penalty and other consequences will be waived.

Two more services have been included in the negative list for service tax. These are: Vocational courses offered by institutes affiliated to the State Council of Vocational Training; and, testing activities in relation to agriculture and agricultural produce.

The Finance Minister has also accepted the request of the Film Industry that full exemption of service tax granted on copy right on cinematography be limited to the films exhibited in cinema halls only.

All air conditioned restaurants will be brought under the service tax net. At present service tax does not apply to those air conditioned restaurants which do not serve liquor. But considering this distinction to be artificial, Shri P. Chidambaram has proposed the uniformity of service tax for the two.

The rate of abatement for such homes and Flats which have a carpet area of 2000 sq. ft. or more; or have a value of Rs. 1 crore or more, has been reduced from 75% to 70%. However, low cost housing and single residential units will continue to enjoy existing exemptions from service tax.

Income Tax :-New Section 87A for rebate of Income Tax for 2000

            As a new rebate of Income Tax has been announced in Budget 2013 for Assessment Year 2014-15 worth Rs. 2000/-.  This rebate can be availed under section 87A.   For more clarity it is necessary to read clauses 19 and 20 of the bill as given below :-

Clauses 19 and 20 of the Bill seek to amend section 87 and insert a new section 87A in the Income-tax Act relating to rebate of income-tax in case of certain individuals.

The proposed new section 87A seeks to provide that an assessee, being an individual resident in India, whose total income does not exceed five hundred thousand rupees, shall be entitled to a deduction, from the amount of income-tax (as computed before allowing the deductions under Chapter VIII of the Income-tax Act) on his total income with which he is chargeable for any assessment year, of an amount equal to hundred per cent. of such income-tax or an amount of two thousand rupees, whichever is less.

Consequential amendments have been proposed in section 87, so as to provide reference to proposed new section 87A.

These amendments will take effect from 1st April, 2014 and will, accordingly, apply in relation to the assessment year 2014-15 and subsequent assessment years.

To know Income Tax slab for financial year 2013-14 (click here)

                          To Check Previous Years Income  Tax Slabs (Click Here)

Budget 2013- TDS (Tax Deduction at Source) changes in Budget 2013-14

Rates for deduction of tax at source during the financial year

2013-14 from income other than “Salaries”

        Part II of the First Schedule to the Bill specifies the rates at which income-tax is to be deducted at source during the financial year 2013-14 from income other than “Salaries”. In view of the proposed amendment to section 115A, it is proposed to provide that the income by way of royalty or fees for technical services shall be taxable at a uniform rate of twenty-five per cent; if such income has been received by the non-resident (not being a company) or a foreign company under an agreement entered on or after 1st day of April, 1976. Subject to these modifications, the rates of deduction are the same, as those specified in Part II of the First Schedule to the Finance Act, 2012 for the purposes of deduction of income-tax at source during the financial year 2012- 13.

The amount of tax so deducted shall be increased by a surcharge in the case of—

(i)  every non-resident (other than a company) at the rate of ten per cent. where the income or the aggregate of income paid or likely to be paid and subject to deduction exceeds one crore rupees;

(ii) every company other than a domestic company at the rate of two per cent. where the income or the aggregate of income paid or likely to be paid and subject to deduction exceeds one crore rupees but does not exceed ten crore rupees;

(iii) every company other than a domestic company at the rate of five per cent. where the income or the aggregate of income paid or likely to be paid and subject to deduction exceeds ten crore rupees.

Budget 2013 :- Highlights of Budget 2013-14

•  Little room to give away tax revenues or raise tax rates in a constrained economy.
  
•  No case to revise either the slabs or the rates of Personal Income Tax. Even a moderate increase in the threshold exemption will put hundreds of thousands of Tax Payers outside Tax Net.
  
•  However, relief for Tax Payers in the first bracket of `2 lakhs to ` 5 lakhs. A tax credit of ` 2000 to every person with total income upto `5 lakhs.
  
• Surcharge of 10percent on persons (other than companies) whose taxable income exceed ` 1 crore to augment revenues.
  
•  Increase surcharge from 5 to 10 percent on domestic companies whose taxable income exceed ` 10 crore.
  
  
• 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.
  
• In all other cases such as dividend distribution tax or tax on distributed income, current surcharge increased from 5 to 10 percent.
  
• Additional surcharges to be in force for only one year.
  
  
• Education cess to continue at 3 percent.
  
  
• Permissible premium rate increased from 10 percent to 15 percent of the sum assured by relaxing eligibility conditions of life insurance policies for persons suffering from disability and certain ailments.
  
• Contributions made to schemes of Central and State Governments similar to Central Government Health Scheme, eligible for section 80D of the Income tax Act.
  
• Donations made to National Children Fund eligible for 100 percent deduction.
  
  
• Investment allowance at the rate of 15 percent to manufacturing companies that invest more than ` 100 crore in plant and machinery during the period 1.4.2013 to 31.3.2015.
  
• Eligible date’ for projects in the power sector to avail benefit under Section 80- IA extended from 31.3.2013 to 31.3.2014.
  
• Concessional rate of tax of 15 percent on dividend received by an Indian company from its foreign subsidiary proposed to continue for one more year.
  
• Securitisation Trust to be exempted from Income Tax. Tax to be levied at specified rates only at the time of distribution of income for companies, individual or HUF etc. No further tax on income received by investors from the Trust.
  
•  Investor Protection Fund of depositories exempt from Income-tax in some cases.
  
• Parity in taxation between IDF-Mutual Fund and IDF-NBFC.
  
• A Category I AIF set up as Venture capital fund allowed pass through status under Income-tax Act.
  
• TDS at the rate of 1 percent on the value of the transfer of immovable properties where consideration exceeds ` 50 lakhs. Agricultural land to be exempted.
  
• A final withholding tax at the rate of 20 percent on profits distributed by unlisted companies to shareholders through buyback of shares.
  
  
• Proposal to increase the rate of tax on payments by way of royalty and fees for technical services to non-residents from 10 percent to 25 percent.
  
• Reductions made in rates of Securities Transaction Tax in respect of certain transaction.
  
• Proposal to introduce Commodity Transaction Tax (CTT) in a limited way. Agricultural commodities will be exempted.
  
• Modified provisions of GAAR will come into effect from 1.4.2016.
  
• Rules on Safe Harbour will be issued after examing the reports of the Rangachary Committee appointed to look into tax matters relating to Development Centres & IT Sector and Safe Harbour rules for a number of sectors.
  
• Fifth large tax payer unit to open at Kolkata shortly.
  
• A number of administrative measures such as extension of refund banker system to refund more than ` 50,000, technology based processing, extension of e-payment through more banks and expansion in the scope of annual information returns by Income-tax Department.