Union Budget 2013-14: Tax Proposals at a Glance

The Union Finance Minister announced tax proposals while tabling the Union Budget 2013-14 in the Lok Sabha on 28 February 2013. The tax proposals as announced by the Union Finance Minister are as follows:

Relief for taxpayers in the bracket of 2 lakh Rupees to 5 lakh Rupees tax credit of 2000 Rupees to every person with total income up to 5 lakh Rupees

The Union Budget 2013-14 proposed a relief of 2000 Rupees to every person with a total income up to 5 lakh Rupees in the financial year. He announced that the income slabs which were introduced in 2012-13 financial year were same and that there was no provision of revising the slabs or the rates, apart from some relief to the taxpayers in the first bracket of 2 lakh Rupees to 5 lakh Rupees.

INCOME In RUPEES	WORKING MEN		WORKING WOMEN		SENIOR CITIZENS
	Old Tax	New Tax	Old Tax	New Tax	Old Tax	New Tax
2 Lakh	0	0	0	0	0	0
5 Lakh	30900	28840	30900	28840	25750	23690
8 Lakh	92700	92700	92700	92700	87550	87550
10 Lakh	133900	133900	133900	133900	128750	128750
25 Lakh	597400	597400	597400	597400	592250	592250
50 Lakh	1369900	1369900	1369900	1369900	1364750	1364750
100 Lakh	2914900	2914900	2914900	2914900	2909750	2909750
110 Lakh	3223900	3546290	3223900	3546290	3218750	3540625

Surcharge of 10 percent on persons with taxable income exceeding 1 crore rupees 

The Union Budget 2013-14 proposed a surcharge of 10 percent on persons whose taxable income exceeded 1 crore Rupees every year. This tax proposal would be applicable to individuals, HUFs (Hindu Undivided Families), firms and entities with the same tax status. The Finance Minister also proposed to increase the surcharge from 5 percent to 10 percent on the domestic companies whose taxable income exceeded 10 crore Rupees every year. In case of the foreign companies, there would be an increase of surcharge from 2 percent to 5 percent.

In other cases like tax on distributed income or dividend distribution tax, the present surcharge of 5 percent was increased to 10 percent. This additional surcharge would be imposed only for 2013-14 fiscal year.

Additional deduction of interest up to 1 lakh rupees on home loan for first home buyer

In the Union Budget 2013-14, it was proposed that the additional tax benefit would be facilitated to first- home buyers who would take the loan for an amount that does not exceed 25 lakh Rupees. There would be an additional deduction interest of 1 lakh Rupees.

TDS at the rate of 1 percent applied on the value of transfer of immovable property exceeding 50 lakh Rupees
The Union Budget 2013-14 proposed levying TDS at the rate of 1 percent on the value of the transfer of immovable property where the consideration exceeded 50 lakh Rupees. Agricultural land was exempted.

Securities Transaction Tax (STT) reduced

The Union Budget 2013-14 proposed reducing rates of Securities Transaction Tax (STT) in respect of certain transactions. P. Chidambaram proposed the following reductions in the rates of STT:

• Equity futures: From 0.017 to 0.01 per cent
• MF/ETF redemptions at fund counters: From 0.25 to 0.001 percent
• MF/ETF purchase/sale on exchanges: From 0.1 to 0.001 percent, only on the seller

Commodities Transaction Tax (CTT) introduced in a limited way; agricultural commodities will be exempted

In the Union Budget 2013-14, Commodities Transaction Tax (CTT) was introduced in a limited way. The Finance Minister announced levying CTT on non-agricultural commodities future contracts at the same rate as on equity futures that is at 0.01 percent of the price of the trade. Agricultural commodities were exempted.

Tax administration reforms commission to be set up

In the Union Finance 2013-14, setting up Tax Administration Reforms Commission (TARC) was proposed. The proposed commission shall be responsible for reviewing the application of tax policies and tax laws. Periodic reports will be submitted by TARC and the suggestions will be implemented for strengthening the capacity of the tax system.

Clarity in tax laws, stable tax regime, non-adversarial tax administration, dispute resolution and independent judiciary – the theme of tax proposals

The major theme of the tax proposals was based on following parameters:

• Clarity in tax laws
• Stable tax regime
• Non-Adversarial tax administration
• Fair mechanism for dispute resolution
• An independent judiciary

Securitisation trust to be exempted from income tax

The Union Budget 2013-14 proposed to exempt the Securitisation Trust from Income Tax. This will help the financial institutions to securitise their assets through a special purpose vehicle. The tax will be levied at the time of distribution of income by the Securitisation Trust at the rate of 30 percent in case of companies and 25 percent in the case of an individual or HUF. No tax shall be levied on the income received by the investors from the Securitisation Trust.