Posted by- Neelam Mathews
Feb 28, 2013
As part of the Union Budget for the fiscal year 2013-14, which was presented in the Parliament of India earlier in the day today, the budgetary allocation towards capital expenditure, which caters mostly towards fresh procurement programs of military hardware and platforms, has been kept at US$16.06 billion. The capital allocation has increased by 9 percentage points as compared to original planned capital expenditure of US$14.74 billion for the last fiscal year 2012-13. Against all expectations the defense budget was increased (though smaller) as compared to the previous year.
Overall, the budgetary allocation for India's defense forces has been raised to US$ 37.72 billion as compared to last fiscal year figure of US$35.82 billion, an increase of 5.31 percentage points.
Feb 28, 2013
As part of the Union Budget for the fiscal year 2013-14, which was presented in the Parliament of India earlier in the day today, the budgetary allocation towards capital expenditure, which caters mostly towards fresh procurement programs of military hardware and platforms, has been kept at US$16.06 billion. The capital allocation has increased by 9 percentage points as compared to original planned capital expenditure of US$14.74 billion for the last fiscal year 2012-13. Against all expectations the defense budget was increased (though smaller) as compared to the previous year.
Overall, the budgetary allocation for India's defense forces has been raised to US$ 37.72 billion as compared to last fiscal year figure of US$35.82 billion, an increase of 5.31 percentage points.
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UNION BUDGET IMPACT
2013
Direct tax impact:
►
Base rate of corporate tax to
remain unchanged at 30% for domestic companies and 40% for foreign companies
►
For
domestic Companies - Surcharge increased from 5% to 10% for Companies having
total income exceeding INR 10 crores (USD 2 million appx). Effective tax rate is now as under:
►
Total
income upto INR 1 crore - 30.90%
►
Total
income between INR 1 crore to INR 10 crores - 32.445%
►
Total
income exceeding INR 10 crores - 33.99%
►
For Foreign
Companies - Surcharge increased from 2.5% to 5% for Companies having total
income exceeding INR 10 crores (USD 2 million appx). Effective tax rate is now as under:
►
Total
income upto INR 1 crore - 41.20%
►
Total
income between INR 1 crore to INR 10 crores - 42.024%
►
Total
income exceeding INR 10 crores - 43.26%
►
Increase
in surcharge from 5% to 10% in all other cases such as dividend distribution
tax or tax on distributed income
►
Withholding
tax on Royalty & FTS rate payable to Non-residents increased from 10% to
25%, subject to DTAA provisions
►
Additional
tax of 22.66% introduced on buy back of shares by unlisted Indian Companies
from its shareholders. Such tax will be
payable by Indian Company on amount payable on buy back less amount received on
such shares. Gain on buy back of shares
will be exempt from tax in the hands of shareholders (domestic or non
resident). This provision is applicable
from 1 June 2013 i.e. additional tax will be applicable for buy back undertaken
on or after 1 June 2013
►
Investment
allowance at the rate of 15% to manufacturing companies that invest more than
Rs. 100 crore in plant and machinery during the period 1 April 2013 to 31 March
2015
► General Anti Avoidance Rules (GAAR) to be effective from 1
April 2016. It is proposed to incorporate
government acceptance of Shome committee recommendations on GAAR
► It is proposed that Transfer pricing Safe harbour rules will
be issued soon
► Sec 194LC amended to extend concessional rate of 5% of
withholding tax in a case where a non-resident deposits foreign currency in a
designated bank account and such money is converted in rupees and is utilized
for subscription to a long term infrastructure bond issue of an Indian company
► Government of India intends to provide more clarity on FDI/
FII investments. It has been provided that Tax Residency Certificate (TRC) is a
necessary proof but not sufficient proof for claim of Tax treaty benefits
► Work in relation to Direct Tax Code (DTC) is in progress and
DTC is intended to be a new code in line with International best practices
Indirect tax impact:
Customs duty
► Standard customs duty rates
remain unchanged i.e. 10%
Changes effective
from 1 March 2013
► Exemption from 3% Cesses has been withdrawn
on import of aeroplanes and parts of aeroplanes and helicopters.
► Parts and testing equipment
imported by a third party for maintenance, repair and overhauling of aircraft
were exempt from payment of Customs duty vide Union Budget 2012. Following
changes have been notified in this exemption:
►
The above exemption has been extended for
maintenance, repair and overhauling of (i) aircraft parts, and (ii) private
aircrafts;
►
One
of the conditions to avail the benefit was that such parts and equipment were
to be used/ installed within three months from date of importation. This period
has been extended to one year
Excise duty
► Standard
Excise duty rates remain unchanged i.e. 12%
Changes
effective from 1 April 2013
►
The facility of obtaining an
Advance Ruling is extended to resident public limited companies. Such provision is also applicable to Service
Tax
Changes
effective from date of enactment of Finance Bill 2013
►
Maximum ceiling for extension of stay by Tribunal has
been extended from 180 days to 365 days from the date of order beyond which the
stay order will stand vacated. Such provision
is also applicable to Service Tax.
►
Amendment in provisions
governing offences:
►
Imprisonment
extending upto 7 years and fine in cases involving evasion of duty exceeding
INR 50 lakhs as against earlier INR 30 lakhs
►
Imprisonment
extending upto 3 years and fine in cases involving evasion of duty not
exceeding INR 50 lakhs as against earlier INR 30 lakhs
Service Tax
► Standard Service Tax rates remain
unchanged i.e. 12%
Changes effective
from 1 April 2013
► Exemption to services provided to
government, local authority or governmental authority by way of repair or
maintenance of aircraft has been withdrawn
► Transportation of defence or
military equipments by a goods transport agency would be exempt from payment of
Service Tax. This would reduce the input
cost of defence and military equipments
Changes
effective from date of enactment of Finance Bill 2013
►
Notice
for an extended period of limitation (i.e. 5 years) cannot be sustained (on
charges of fraud, collusion, wilful misstatement or suppression on facts etc.),
a shorter period of limitation of 18 months will apply
►
Penalty
for not obtaining registration has been restricted to INR 10,000. Maximum
penalty of INR 1 lakh on directors and officials of the Company for specified
offences in case of wilful actions to be imposed.
►
Commissioner
given the power to authorize an arrest of a person convicted of the above
mentioned offences
►
Voluntary
compliance encouragement scheme, 2013 introduced which would provide one-time
amnesty by way of waiver of interest and penalty and immunity from prosecution
to tax payers who have been non compliant towards filing of returns and payment
of service tax
Hmm, good job! This is really something!
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