The Finance Bill – 2013

CA. GOPAL KRISHNA RAJUFCA, AICWA, ACS, PGDOR, PGDFM, DISA, M.Phil

Partner: M/s. K. Gopal Rao & Co., Chartered Accountants, Chennai

The Finance Bill – 2013

The Finance Bill, 2013 – Budget Proposals – Direct Taxes 2 CA. GOPAL KRISHNA RAJU

Agenda

INCOME TAX Proposals

1. Amendments

2. New Provisions

3. Impact

WEALTH TAX Proposals


Section 87A - Tax Rebate for Resident Individuals

Rebate u/s. 87A(I am back in new form)

Max RebateRs: 2000

Applicable Slab isbelow 5 Lakh

New


Section 87A - Tax Rebate for Resident Individuals

• Applicability: A tax relief of Rs.2,000/- to the individual tax

payers whose total income does not exceed Rs.5 Lakhs in a

year.

• Consequently any individual having income up to Rs.2,20,000

will not be required to pay any tax and every individual having

total income Rs.2,20,000 to Rs.5,00,000 shall get a tax relief

of Rs.2,000

• FM’s Statistics: On account of this relief, 1.80 crore tax payers

are expected to benefit to the value of Rs.3,600 crore.


Change in Surcharge – Super Rich to pay extra

To Whom? Income Surcharge

Individuals, HUF, Firms, LLPs,

Co-operative Societies &

Local Authorities

More than 1 Crore 10% (New)

Domestic Company More than 10 Crore 10% (New)

Domestic Company More than 1 Crore to 10

Crore

5% (Existing)

Foreign Company More than 10 Crore 5% (New)

Foreign Company More than 1 Crore to 10

Crore

2% (Existing)


Section 80EE - Deduction in respect of interest on loan taken for residential House Property

New

Interest on Residential HouseProperty

Additionaldeduction upto

Rs:100,000

4 conditions tobe satisfied

Let-out or Self-Occupied

(is immaterial)


Section 80EE - Interest on Housing Loan

• Applicability: A new section 80EE is inserted in the IT Act, 1961 to provide an

additional deduction upto Rs. 1 lakh in respect of interest on loan taken for

residential house property to individuals.

• The deduction shall be subject to the following conditions:-

1. The loan is sanctioned by the financial institution during the period beginning

on 1st April,2013 and ending on 31st March,2014.

2. The amount of loan sanctioned for acquisition of the residential house

property does not exceed Rs.25 lakhs.

3. The value of the residential house property does not exceed Rs.40 Lakhs.

4. The assesses does not own any residential house property on the date of

sanction of the loan.

• The above deduction is over and above the deduction of Rs.1.50 lakhs allowed for

self occupied properties under Section 24 of the Income-tax Act.

• If the limit is not exhausted, the balance may be claimed in AY 2015-16. (Carried

forward of unexhausted claim)

New


Section 32AC – Investment in New Plant & Machinery

• As per new Section 32AC an investment allowance

@ 15% to manufacturing company that invests

more than Rs.100 crore in Plant and Machinery

during the period from 1st April,2013 to 31st

March,2015.

• There is a restriction to transfer the Plant and

Machinery for a period of 5 years.

New

Section 32AC - Investment in New Plant & Machinery


Conditions Applicable only to a company

Cost of New Assets > Rs: 100 crore

New Assets does not include used machinery, office equipments/appliances,

vehicle and 100% depreciated assets in previous years

Deduction for Two years

Deduction = 15% of Actual Cost of assets installed between (1.4.2013 to

31.3.2015)

Available even if the company is amalgamated or demerged within 5 years

If sold/transferred (other than amalgamation or demerger) within 5 years

allowance will be withdrawn and taxed.

New Assets means any plant or machinery (other than ship or aircraft)

Investment Allowance: “I am Back – this time only for 2 years”


Section 142(2A) - Special Audit

• When: Special audit can be directed if the nature and complexity

of accounts, volume of accounts, doubts about the

correctness of the accounts, multiplicity of transactions in

accounts or specialized nature of activity of the assessee with

the previous approval of Chief Commissioner or Commissioner.

• Applicable: This amendment will take effect from 1st June, 2013.

Amendment


• Past: The existing provisions contained in sub-section (2A)

of section 142 of the Income-tax Act, inter alia, provide

that if at any stage of the proceeding, the Assessing

Officer having regard to the nature and complexity of

the accounts of the assessee and the interests of the

revenue, is of the opinion that it is necessary so to do, he

may, with the approval of the Chief Commissioner or

Commissioner, direct the assessee to get his accounts

audited by an accountant and to furnish a report of such

audit.

• Restricted Access: The expression “nature and

complexity of the accounts” has been interpreted in a very

restrictive manner by various courts.


• Change: It is, therefore, proposed to amend the aforesaid sub-

section so as to provide that if at any stage of the proceedings

before him, the Assessing Officer, having regard to the nature and

complexity of the accounts, volume of the accounts, doubts about the correctness of

the accounts, multiplicity of transactions in the accounts or specialized nature of

business activity of the assessee, and the interests of the revenue, is of

the opinion that it is necessary so to do, he may, with the previous

approval of the Chief Commissioner or the Commissioner, direct the

assessee to get his accounts audited by an accountant and to

furnish a report of such audit.

• May Overrule the case reported in (2012) 6 TaxCorp (DT)

52339 (DELHI) held, Irregularities can be examined and verified by

the Assessing Officer and for this purpose, special audit is not

required. Amendment


139(9): Defective Return

• Fact: A large number of assesses are filing their return of income

without payment of self assessment tax under section 140A.

• A Return of income filed without payment of self assessment tax

including interest to be treated as defective return.

• Effective: This amendment will take effect from 1st June, 2013.

Amendment


Section 90 & 90A: Tax Residency Certificate

• Tax Residency Certificate is a necessary for

claiming benefits under DTAA but not a

sufficient condition for claiming benefits under the

agreements referred to in Section 90 and 90A.

Amendment


• Backdrop: Section 90 of the Income Tax Act empowers

the Central Government to enter into an agreement

with the Government of any foreign country or specified

territory outside India for the purpose of –

granting relief in respect of avoidance of double taxation,

exchange of information and

recovery of taxes.


• Further section 90A of the Income-tax Act empowers the Central

Government to adopt any agreement between specified associations for

above mentioned purposes.

• In exercise of this power, the Central Government has entered into

various Double Taxation Avoidance Agreements (DTAAs) with different

countries and has adopted agreements between specified associations

for relief of double taxation.

• The scheme of interplay between DTAA and domestic legislation ensures

that a taxpayer, who is resident of one of the contracting country

to the DTAA, is entitled to claim applicability of beneficial

provisions either of DTAA or of the domestic law.

• Sub-section (4) of sections 90 and 90A of the Income-tax Act inserted by

Finance Act, 2012 makes submission of Tax Residency Certificate

containing prescribed particulars, as a condition for availing benefits of

the agreements referred to in these sections.


• Proposal: It is proposed to amend sections 90 and 90A in order to

provide that submission of a tax residency certificate is a necessary

but not a sufficient condition for claiming benefits under the

agreements referred to in sections 90 and 90A. This position was

earlier mentioned in the memorandum explaining the provisions in

Finance Bill, 2012, in the context of insertion of sub-section (4) in

sections 90 & 90A.

• These amendments will take effect from 1st April, 2016 and

will, accordingly, apply in relation to the assessment year

2016-17 and subsequent assessment years.

• May Overrule the case reported in (2003) TaxCorp (INTL)

1732 (SC) held that FIIs based in Mauritius are entitled to

exemption from capital gains tax; CBDT Circular dated April 13,

2000 upheld legal and valid


Section 56(2) – Gift of Immovable Property

• Where any immovable property is received for a consideration which is

less than the stamp duty value of the property by an amount

exceeding Rs.50,000, the stamp duty value of such property as

exceeds such consideration, shall be chargeable to take in the hands

of the individual or HUF as income from other sources.

• This amended section is applicable from the Assessment Year 2014-15.

Amendment


Section 56(2) – Gift of Immovable Property

Amendment

Situation Taxable Income Without consideration the stamp duty value of which exceeds Rs:

50,000, the stamp duty value of such

property;

For consideration > Rs:

50,000 but < stamp duty

value

the stamp duty value of such property as

exceeds such consideration:

The date of the agreement

and the date of registration

are not the same,

the stamp duty value on the date of the agreement

may be taken


• Present: The existing provisions of 56(2)(vii) sub clause (b)

of the Income-tax Act, inter alia, provide that where any

immovable property is received by an individual or HUF

without consideration, the stamp duty value of which

exceeds Rs: 50,000, the stamp duty value of such property

would be charged to tax in the hands of the individual or

HUF as income from other sources.

• Catch me if you can: The existing provision does not

cover a situation where the immovable property has been

received by an individual or HUF for inadequate

consideration.


• Proposal: It is proposed to amend the provisions of 56(2)(vii)

so as to provide that where any immovable property is

received for a consideration which is less than the stamp duty

value of the property by an amount exceeding Rs: 50,000, the

stamp duty value of such property as exceeds such

consideration, shall be chargeable to tax in the hands of

the individual or HUF as income from other sources.


• Differing Dates: Considering the fact that there may be a

time gap between the date of agreement and the date of

registration, it is proposed to provide that where the date

of the agreement fixing the amount of consideration

for the transfer of the immovable property and the

date of registration are not the same, the stamp duty

value may be taken as on the date of the agreement,

instead of that on the date of registration.

• Caution: This exception shall, however, apply only in a

case where the amount of consideration, or a part

thereof, has been paid by any mode other than cash on or

before the date of the agreement fixing the amount of

consideration for the transfer of such immovable property.


• This amendment will take effect from 1st April, 2014 and

will, accordingly, apply in relation to the assessment year



53279 (DELHI) , Section 50C enabling the revenue to treat the

value declared by an assessee for payment of stamp duty, ipso

facto, cannot be a legitimate ground for concluding that there

was undervaluation, in the acquisition of immovable property.


Section 43CA – Special provision for full value of consideration for transfer of assets other than capital assets in certain cases

New


Section 43CA

• Background: The provisions of Section 50C do not apply to transfer

of immovable property, held by the transferor as stock-in-trade.

• Younger Brother of Section 50C: A new Section 43CA is inserted

in the Act, that where the consideration for transfer of an asset

(other than capital asset), being land or building or both, is less than

the stamp duty value, the value so adopted or assessed or

assessable shall be deemed to be full value of consideration for the

purposes of computing income under the head “Profits and Gains of

Business or Profession”.

• Stamp duty value may be taken as on the date of agreement of

transfer and not as on the date of registration of such transfer

where consideration is received by any mode other than cash.

New


Section 43CA New

Situation Taxable Income

For consideration paid <

stamp duty value

the stamp duty value of such property

as exceeds such consideration paid;

The date of the

agreement and the date

of registration are not

the same,

the stamp duty value on the date of the

agreement may be taken


• 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.


51567 (ALLAHABAD) held that section 50C has no application

as it was a case of transfer of plots which was stock in trade.

Since, an income earned from such transaction is liable to be

taxed as income from business activity.


Computation of income under the head “PGBP” for transfer of immovable property in certain cases

• Currently, when a capital asset, being immovable property,

is transferred for a consideration which is less than the

value adopted, assessed or assessable by any authority of a

State Government for the purpose of payment of stamp

duty in respect of such transfer, then such value (stamp

duty value) is taken as full value of consideration under

Section 50C of the Income-tax Act. These provisions do

not apply to transfer of immovable property, held by

the transferor as stock-in-trade.


• It is proposed to provide by inserting a new section 43CA that where

the consideration for the transfer of an asset (other than capital

asset), being land or building or both, is less than the stamp duty

value, the value so adopted or assessed or assessable shall be

deemed to be the full value of the consideration for the purposes of

computing income under the head “Profits and gains of business of

profession”.

• It is also proposed to provide that where the date of an agreement

fixing the value of consideration for the transfer of the asset and the

date of registration of the transfer of the asset are not same, the

stamp duty value may be taken as on the date of the agreement for

transfer and not as on the date of registration for such transfer.

However, this exception shall apply only in those cases where amount

of consideration or a part thereof for the transfer has been received

by any mode other than cash on or before the date of the agreement.


Application of Seized Assets Section 132 B

• Seized assets may be adjusted against any existing liability

under the Income-tax Act.

• It is clarified that the existing Liability does not

include advance tax payable in accordance with Act.

• It is applicable from 1st June, 2013.

Amendment


• Background: The existing provisions contained in section 132B of the

Income-tax Act, inter alia, provide that seized assets may be adjusted

against any existing liability under the Income-tax Act, Wealth-

tax Act, the Expenditure-tax Act, the Gift-tax Act and the

Interest-tax Act and the amount of liability determined on completion of

assessments pursuant to search, including penalty levied or interest

payable and in respect of which such person is in default or deemed to be

in default.

• Adverse Decisions: Various courts have taken a view that the

term “existing liability” includes advance tax liability of the assessee,

which is not in consonance with the intention of the legislature. The

legislative intent behind this provision is to ensure the recovery of

outstanding tax/interest/penalty and also to provide for recovery of

taxes/interest/penalty, which may arise subsequent to the assessment

pursuant to search.


• Accordingly, it is proposed to amend the aforesaid section so as to

clarify that the existing liability does not include advance tax payable

in accordance with the provisions of Part C of Chapter XVII of the Act.

• This amendment will take effect from 1st June, 2013.

• May Overrule an Bombay High court ruling in the case of Shri

Jyotindra B. Mody, Whether the ITAT was justified in holding that the

seized cash amounting to Rs. 18,00,000 and the amount of Rs.1.98

Crores deposited by the Assessee on 31st January, 2007 could be

adjusted against the Advance Tax liability while computing the

interest under sections 234B and 234C of the Income Tax Act,

1961? Held, yes


Deduction under Section 80GGB & Section 80GGC

• No deduction shall be allowed under section 80GGB

(Political party donations) and Section 80GGC in respect of

any sum contributed by way of CASH.

• This amendment will take effect from the assessment year

2014-15.

Amendment


Section 179: Tax due includes penalty, interest or any other sum payable under the act

• Proposed Amendment in Clarification of the phrase “tax due” for the

purposes of recovery in certain cases

• Backdrop: Section 179 of the Income-tax Act provides that where the tax due

from a private company cannot be recovered from such company, then the

director (who was the director of such company during the previous year to which non-recovery relates)

shall be jointly and severally liable for payment of such tax unless he proves

that the non-recovery of tax cannot be attributed to any gross neglect,

misfeasance or breach of duty on his part.

• This provision is intended to recover outstanding demand under the Act of a

private company from the directors of such company in certain cases.

However, some courts have interpreted the phrase ‘tax due’ used in section

179 to hold that it does not include penalty, interest and other sum payable

under the Act.Amendm

ent


• Change: In view of the above, it is proposed to clarify that for the purposes of

this section, the expression “tax due” includes penalty, interest or any other

sum payable under the Act. Amendments on the similar lines for clarifying the

expression ‘tax due’ is proposed to be made to the provisions of section 167C.

• These amendments will take effect from 1st June, 2013.

• May Overrule the case reported in (2012) 6 TaxCorp (DT) 53191

(DELHI) the Court is of the opinion that the structure and construct of the Act

has consciously used different words to create constructive liability on third

parties, in the case of default in payment of taxes by an assessee. The

treatment of the same subject matter by using different terms - in some

instances expansive and in others, restrictive, mean that the Court has to adopt

a circumspect approach and limit itself to the words used in the given case (in

the present case, "tax due" under Section 179) and not "travel outside them on

a voyage of discovery" (Magor & St. Mellons RDC v. Newport Corporation 1951

(2) All ER 839). Therefore, the petitioner cannot be made liable for anything

more than the tax (defined under Section 2(43)). The respondent is

consequently directed to determine the liability of the Petitioner, in the light of

the finding.


Amendment


Section 10(10D) - Keyman Insurance Policy - KIP

• Keyman Insurance Policy which has been assigned to any

person during its term with or without consideration shall

continue to be treated as a keyman insurance policy.

• No benefit of exemption under section 10(10D) shall

be claimed on such policies.

Amendment


• Existing provisions: of section 10(10D), inter alia, exempt any sum

received under a life insurance policy other than a KIP. Explanation 1

to the said clause (10D) defines a KIP to mean a life insurance policy

taken by a person on the life of another person who is or was the

employee of the first-mentioned person or is or was connected in

any manner whatsoever with the business of the first-mentioned

person.

• By-pass: It has been noticed that the policies taken as KIP are being

assigned to the keyman before its maturity. The keyman pays the

remaining premium on the policy and claims the sum received under

the policy as exempt on the ground that the policy is no longer a

keyman insurance policy. Thus, the exemption under section 10(10D)

is being claimed for policies which were originally keyman insurance

policies but during the term these were assigned to some other

person. The Courts have also noticed this loophole in law.


• With a view to plug the loophole and check such practices to

avoid payment of taxes, it is proposed to amend the

provisions of clause (10D) of section 10 to provide that a

keyman insurance policy which has been assigned to

any person during its term, with or without

consideration, shall continue to be treated as a

keyman insurance policy.

• The above amendment will take effect from 1st April,

2014 and will, accordingly, apply in relation to

assessment year 2014-15 and subsequent assessments

years.


• May Overrule the case reported in (2012) 6 TaxCorp (DT) 51593 (DELHI)

Held that, The insurance company has itself clarified that on assignment, it

does not remain a keyman policy and gets converted into an ordinary policy.

It is not open to the Revenue to still allege that the policy in question

is keyman policy and when it matures, the advantage drawn there from is

taxable; no doubt, the parties here, viz., the company as well as the

individual taken huge benefit of these provisions, but it cannot be treated as

the case of tax evasion. It is a case of arranging the affairs in such a manner

as to avail the state exemption as provided in Section 10(10D); law is clear.

Every assessee has right to plan its affairs in such a manner which may result

in payment of least tax possible, albeit, in conformity with the provisions of

Act. It is also permissible to the assessee to take advantage of the gaping

holes in the provisions of the Act. The job of the Court is to simply look at the

provisions of the Act and to see whether these provisions allow the assessee

to arrange their affairs to ensure lesser payment of tax. If that is permissible,

no further scrutiny is required and this would not amount to tax evasion.


Section 115QA – Tax on distributed income to shareholders

• Proposed Amendment: Additional Income-tax on

distributed income by company for buy-back of unlisted

shares

• Present: Existing provisions of Section 2(22)(e) provide the

definition of dividends for the purposes of the Income-tax Act.

Section 115-O provides for levy of Dividend Distribution Tax (DDT)

on the company at the time when company distributes, declares or

pays any dividend to its shareholders. Consequent to the levy of

DDT the amount of dividend received by the shareholders is not

included in the total income of the shareholder.

New


• Capital Gains: The consideration received by a shareholder

on buy-back of shares by the company is not treated as

dividend but is taxable as capital gains under section 46A of

the Act.

• Scenario illustrated: A company, having distributable

reserves, has two options to distribute the same to its

shareholders either by declaration and payment of dividends to

the shareholders, or by way of purchase of its own shares (i.e.

buy back of shares) at a consideration fixed by it. In the first

case, the payment by company is subject to DDT and income

in the hands of shareholders is exempt. In the second case the

income is taxed in the hands of shareholder as capital gains.


• Loss to Revenue: Unlisted Companies, as part of tax avoidance scheme, are

resorting to buy back of shares instead of payment of dividends in order to avoid

payment of tax by way of DDT particularly where the capital gains arising to the

shareholders are either not chargeable to tax or are taxable at a lower rate.

• New section 115QA: In order to curb such practice it is proposed to amend the

Act, by insertion of new Chapter XII-DA, to provide that the consideration paid by

the company for purchase of its own unlisted shares which is in excess of the sum

received by the company at the time of issue of such shares (distributed income)

will be charged to tax and the company would be liable to pay additional income-

tax @ 20% of the distributed income paid to the shareholder. The additional

income-tax payable by the company shall be the final tax on similar lines as

dividend distribution tax. The income arising to the shareholders in respect of

such buy back by the company would be exempt where the company is liable to

pay the additional income-tax on the buy-back of shares – Section 10(34A)


• These amendments will take effect from 1stJune,

2013.

• May Overrule the case reported in (2012) TaxCorp

(INTL) 4300 (AAR) Held that the capital gains arising out

of the proposed buyback of shares is not taxable in India in

view of paragraph 4 of Article 13 of the DTAA between India

and Mauritius.


Wealth-Tax Returns

• Wealth-tax return can be electronically filed similar to e-IT

Returns.

• This facility shall come into force from 1st June, 2013.

Amendment


Section 115TA: Income distributed by Securitisation Trust

• 10(23DA): Securitisation Trust exempted from income tax

• Financial institutions to securitize their assets through

special purpose vehicles.

• Tax shall be levied only at the time of distribution of income

by the Securitisation Trust at the rate of 30% in the case of

companies and @ 25% in the case of an individual or HUF.

• No further tax will be levied on the income received by the

investors from the Securitisation Trust – Section 10(35A)

New


• 10(23DA): In case of securitisation vehicles which are set up as a trust and the activities of which are

regulated by either SEBI or RBI, the income from the activity of securitisation of such trusts will be

exempt from taxation.

• 115TA: The securitisation trust will be liable to pay additional income-tax on income distributed to its

investors on the line of distribution tax levied in the case of mutual funds. The additional income-tax

shall be levied @ 25% in case of distribution being made to investors who are individual and HUF and

@ 30% in other cases. No additional income tax shall be payable if the income distributed by the

securitisation trust is received by a person who is exempt from tax under the Act.

• 10(35A): Consequent to the levy of distribution tax, the distributed income received by the investor will

be exempt from tax.

• 115TB: The securitisation trust will be liable to pay interest at the rate of 1% for every month or part of

the month on the amount of additional income-tax not paid within the specified time .

• The person responsible for payment of income or the securitisation trust will be deemed to be an

assessee in default in respect of amount of tax payable by him or it in case the additional income-tax

is not paid to the credit of Central Government.


Eligible Limit- U/s 10(10D) & 80C

• Eligibility limit for claiming deduction u/s 80 C and claiming

exemption u/s 10(10D) in the case of certain disability or ailment

increased from 10% to 15% on actual capital sum assured.

• This relaxation shall be available in respect of insurance policies

issued on or after 1st April, 2013.

Amendment


Additional Tax on Buy back of Shares

• The consideration paid by the company for purchase of its own unlisted shares (buy back of shares) which is in excess of the sum received by the company at the time of issue of such shares (distributed income) will be charged to tax and the company would be liable to pay additional income-tax @20% of the distributed income paid to the shareholders.

• The additional income-tax payable by the company shall be the final tax on similar lines as distributed dividend tax.

• The income arising to the shareholders in respect of such buy back by the Company would be exempt where the company is liable to pay the additional income tax on the buy back of shares.

• This amendment shall come into force from 1st June, 2013.

New


TDS on transfer of Immovable Properties

• A new section 194-IA is inserted to provide that every

transferee (buyer), at the time of making payment or crediting

of any sum as consideration for transfer of immovable property

(other than agricultural land) to a resident transferor (resident

buyer), shall deduct tax, @1% of such sum.

• No deduction of tax shall be made where the total amount of

consideration for the transfer of an immovable property is less

than Rs. 50 Lakhs.

New


80 CCG: Rajiv Gandhi Equity Savings Scheme

• The first time investors will now be allowed to invest in

mutual funds as well as listed shares.

• This investment can be done not in one year alone, but in

three successive years.

• The income limit is also being proposed to be raised from

Rs.10 lakhs to Rs.12 lakhs.

New


Dividend from Foreign Subsidiary Companies

• The concessional rate of tax @ 15% as per Section 115BBD

on dividend received by an Indian Company from its foreign

subsidiary company shall be continued for one more year

(2013-14)

• The Indian Company shall not be liable to pay Dividend

Distribution Tax (Section 115-O) on the distribution to its

shareholders of that portion of the income received from its

foreign subsidiary.

New






(2013-14)




foreign subsidiary.

New






(2013-14)




foreign subsidiary.

New


Deduction u/s 80JJAA

• As per Section 80JJAA deduction for additional wages is

allowed in certain cases.

New


• Existing provisions: contained in section 80JJAA of the

Income-tax Act provide for a deduction of an amount equal to

thirty per cent of additional wages paid to the new regular

workmen employed in any previous year by an Indian

company in its industrial undertaking engaged in

manufacture or production of article or thing.

• The deduction is available for 3 assessment years including

the assessment year relevant to the previous year in which

such employment is provided.

• Caution: No deduction under this section is allowed if the

industrial undertaking is formed by splitting up or

reconstruction of an existing undertaking or amalgamation

with another industrial undertaking.


• Abuse: The tax incentive under section 80JJAA was intended

for employment of blue collared employees in the

manufacturing sector whereas in practice, it is being claimed

for other employees in other sectors also.

• It is, therefore, proposed to amend the provisions of section

80JJAA so as to provide that the deduction shall be available to

an Indian Company deriving profits from manufacture of goods

in its factory.

• The deduction shall be of an amount equal to 30% of

additional wages paid to the new regular workmen

employed by the assessee in such factory, in the previous

year, for three assessment years including the

assessment year relevant to the previous year in which such

employment is provided.


• It is also proposed to provide that the deduction under this section

shall not be available if the factory is hived off or transferred from

another existing entity or acquired by the assessee company as a

result of amalgamation with another company.

• Effect: This amendment will take effect from 1st April, 2014

and will, accordingly, apply in relation to assessment year


• May overrule the case reported in (2008) 115 TTJ 976

(BANGALORE)


In any area within the distance, measured aerially


In any area within the distance, measured aerially

In any area within the distance not more

than

Population is more than

2 KMS 10K but not exceeding 1 Lakh

6 KMS 1 Lakh but not exceeding 10

Lakh

8 KMS 10 Lakh


New Exemptions

New Exemption Sections

10(23ED) 10(35A)10(34A)10(23DA) 10(49)


New Exemption Sections

10(23ED) 10(35A)10(34A)10(23DA) 10(49)


New Exemptions

Section What type of Income?

10(23DA

)

Income of a Securitization Trust

10(23ED

)

Contributions received from a depository of such Investor

Protection Fund

10(34A) Income arising on account of Buy-back of shares as referred in

115QA

10(35A) Distributed income received from a Securitization Trust

10(49) Income of NFHCL – National Financial Holdings Company Limited


Commodities Transaction Tax (CTT)

• A new CTT shall be levied on non-agricultural commodities

future contracts at the rate of 0.01% of the price of goods.

• CTT shall be paid by the seller.

• The trading in commodity derivatives will not be considered

as “speculative transaction”.

• CTT shall be allowed as deduction as per section 36 of the IT

Act.

New


Disclaimer

• These are my personal views and cannot be construed to be the views of the SIRC of ICAI

or my firm M/s. K. GOPAL RAO & Co., CAs

• No representation or warranties are made by the SIRC or its branches with regard to this

presentation

• These views do not and shall not be considered as professional advice

• This presentation should not be reproduced in part or in whole, in any manner or form,

without my written permission

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The Finance Bill – 2013

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