FINANCE ACT 2013

Finance Act 2013 - Highlights
► Tax Rates & Slab Rates kept unchanged.

► Basic I.T. exemption limit retained at Rs. 2 Lacs (for both Male and Female)

► For all Senior Citizens (for Men/Women of age 60 and under 80) : Exemption limit retained at Rs.2,50,000/-.

► For Very Senior Citizens (for Men/Women of age 80 and above) : Exemption limit retained at Rs.5,00,000/-.

► Surcharge @ 10% if total income exceeds Rs.1,00,00,000/-.

► Tax rebate in the form of Rs.2,000/- tax credit has been given to individuals with income between Rs.2,00,000/- to Rs.5,00,000/-. For the mentioned tax bracket, the threshold exemption limit has been raised from Rs.2,00,000/- to Rs.2,20,000/-.

► For persons suffering from a disability or certain ailments, the permissible premium rate increased to 15% of the Sum Assured for the policies issued on or after 1.04.2013.

► Contributions made to the Central and State Government Schemes similar to the Central Government Health Scheme are eligible for deduction under section 80D of the Income Tax Act.

► First time home loan takers have been given an additional deduction of interest to the tune of Rs. 1 lakh loan for amounts not exceeding Rs.25 lakh, with spill over allowed for one year on unconsumed amount. This deduction would be over and above Rs.1,50,000 allowed for self occupied properties, thus taking the total amount to Rs.2,50,000/-.

► There would be 1% Tax Deduction at Source (TDS) on transfer of immovable property worth over Rs.50 lakh. However, agricultural land will be exempt.

► Tax on payments by way of Royalty and Fees for Technical Services to non-residents have been increased from 10% to 25%.

► Securities Transaction Tax (STT) has been reduced on
• Equity futures from 0.017 to 0.010 percent.
• Mutual Fund / Exchange-Traded Fund redemptions at fund counters : from 0.0250 to 0.001%
• Mutual Fund / Exchange-Traded Fund purchase/sale on exchanges : from 0.1 to 0.001%, only on the seller

► Commodities Transaction Tax (CTT) has been introduced in a limited way and would apply to non-agricultural commodities futures contracts at 0.01% of the price of the trade. Trading in commodity derivatives will not be considered as a 'speculative transaction' and CTT shall be allowed as a deduction if the income from such transaction forms part of business income.

► Rajiv Gandhi Equity Savings Scheme (RGES) - deduction u/s. 80CCG extended from 1 year to 3 consecutive assessment years up to Rs.25,000/- each year. This enables the first time investor to invest in mutual funds as well as listed shares. The eligibility income limit has been increased from the current Rs.10,00,000/- to Rs.12,00,000/-.

► Transfer of the house under the Reverse Mortgage does not face Capital Gain Tax. Loan received will be Income Tax exempt.

► Short Term Capital Gain Tax increased from 10% to 15% on the sale of the Shares or units of equity oriented mutual funds.

► Benefit of deduction u/s. 80E to the individual in respect of interest on educational loan is also extended to the loan taken for the Higher Education for the spouse or children. In other words, if parents take a loan for their children they can claim deduction from total income in respect of interest paid.

► 80E benefits of interest on loan for Higher Education after class 10th to cover all specified fields, including vocational studies.

► Fixed Deposits for a period of 5 years or more in Scheduled Banks by individuals and HUFs qualify for Tax deduction up to the maximum capital of Rs.1 lakh u/s. 80C.

► The Basic exemption limit for Wealth Tax raised from 15 lakh to 30 lakh.

►Limit for making payments for purchases / expenditure, otherwise than by an account payee check/draft, raised to Rs.35,000 only in case of payments for plying, hiring or leasing goods carriages.

► Interest for Non-Deduction of taxes shall be at 1% & that for delay in depositing taxes deducted shall be 1.5% per month.

► The threshold limit for TDS for rental income has been increased from Rs.1,20,000/- to Rs.1,80,000/-.

► Senior Citizen age limit reduced to 60 years from 65 years.

► New bracket for those above 80 years of age with an exemption limit of Rs.5,00,000/- introduced.

► A category of salaried tax payers whose salary is 5 lakh or less will not be required to file their income tax returns if their tax liability has been discharged by their employer through deduction at source.

► For F.Y. 2012-13, Senior Citizens for the purpose of Exemption limit u/s. 80D, 80DDB & Form 15H (Non deduction of Tax) is 60 years.

► The annual premium payable on Life Insurance Policy restricted to 10% of the Actual Sum Assured u/s. 80C.

► The Exemption limit for mandatory tax audit increased to Rs.1 crore for SME's & to Rs.25 Lakh for professionals.

► Tax deduction on savings account interest income up to Rs.10,000 allowed u/s. 80TTA.

► TDS for interest from Debentures if the amount exceeds Rs.5,000/-.

► Alternate Minimum Tax now on limited liability Partnerships.

► Individuals and HUFs can invest their gains from selling residential property in startups to save on tax.

► Levy of Minimum Alternate Tax is extended to all persons (HUF, AOP, BOI) other than companies, who claim profit linked deductions if adjusted income exceeds Rs.20 lakh. (The Rate of Tax 18.50% +3.00%)

► Service Tax hiked to 12%.

► Baggage allowance for eligible Indian passengers raised from Rs.25,000/- to Rs.35,000/-. For children up to 10 years, it has been increased from Rs.12,000/- to Rs.15,000/-.

► Section 80DDB allows a deduction for medical treatment of specified diseases up to Rs.60,000/- for Senior Citizens (60 years and above) and Rs.40,000/- for others.

► Securities Transaction Tax reduced from 0.125% to 0.1%.

► No advance tax for Senior Citizens if they are not running a business / profession.

► Deduction of expenses for preventive checkups up to Rs.5,000/- u/s. 80D.

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