INVESTMENTS & SAVINGS:
Investment allowance for new high value investments: A company investing Rs 100 crore or more in plant and machinery during the period April’13 to March’15 will be entitled to deduct an investment allowance of 15 per cent of the investment. This will be in addition to the current rates of depreciation.
Incentives to semiconductor wafer fab manufacturing facilities, including zero customs duty for plant and machinery.
Rajiv Gandhi Equity Savings Scheme will be liberalised to enable the first time investor to invest in mutual funds as well as listed shares.
Inflation indexed bonds or inflation indexed national security certificates to be introduced.
SMEs:
Benefits starting with non-tax benefits enjoyed by micro, small and medium enterprises (MSME) will be extended for up to three years after they grow out of the category in which they obtained the benefit.
SIDBI’s refinancing capability to be enhanced from the current level of Rs 5,000 crore to Rs 10,000 crore per year to support MSMEs.
Additional support of Rs 100 crore to SIDBI’s India Microfinance Equity Fund to provide equity and quasi-equity to Micro Finance Institutions (MFI).
Provide a corpus of Rs 500 crore to SIDBI to set up a Credit Guarantee Fund for factoring.
Companies funding support to technology incubators located within academic institutions and approved by the Ministry of Science and Technology or Ministry of MSME will qualify as CSR expenditure which is part of mandatory CSR expense under the new Companies Bill.
CAPITAL MARKETS & FINANCIAL SERVICES SECTOR:
Govt to pump in additional Rs 14,000 crore to recapitalise PSU banks in FY14.
To set up India’s first Women’s Bank which largely lends to women entrepreneurs and employs mostly women. Government to provide Rs 1,000 crore as initial capital and hope to obtain the necessary approvals and the banking licence by October, 2013.
Government considering proposal to amend the SEBI Act to strengthen the securities regulator.
SEBI to simplify the procedures and prescribe uniform registration and other norms for entry of foreign portfolio investors. SEBI will converge the different KYC norms and adopt a risk-based approach to KYC to make it easier for foreign investors such as central banks, sovereign wealth funds, university funds, pension funds etc. to invest in India.
Proposal to follow the international classification for foreign investments wherein an investor having a stake of 10 per cent or less in a company will be treated as FII and an investor with a stake of more than 10 per cent will be treated as FDI.
FIIs will be allowed to participate in the exchange-traded currency derivative segment to the extent of their Indian rupee exposure in India.
FIIs will also be permitted to use their investment in corporate bonds and government securities as collateral to meet their margin requirements.
SEBI will prescribe requirements for 'angel investor pools' by which they can be recognised as Category I AIF venture capital funds.
Startups and SMEs will be permitted to list on the SME exchange without being required to make an initial public offer (IPO), but the issue will be restricted to informed investors. This will be in addition to the existing SME platform in which listing can be done through an IPO and with wider investor participation.
The list of eligible securities in which Pension Funds and Provident Funds may invest will be enlarged to include exchange traded funds, debt mutual funds and asset-backed securities.
Post offices will become part of the core banking solution and offer real time banking services.
CLEANTECH:
Support municipalities that will implement waste-to-energy projects through different instruments such as viability gap funding, repayable grant and low cost capital.
Government will provide low interest bearing funds from the National Clean Energy Fund (NCEF) to IREDA to on-lend to viable renewable energy projects. The scheme will have a life span of five years.
Reintroduce ‘generation-based incentive’ for wind energy projects and provide Rs 800 crore to the Ministry of Non Renewable Energy for the purpose.
DIRECT TAXES:
No change in income tax slabs but tax credit of Rs 2,000 for those earning between Rs 2-5 lakh.
Those with taxable income of over Rs 1 crore a year to pay a surcharge of 10 per cent; surcharge only for 2013-14.
Additional tax deduction on interest payment of as much as Rs 1 lakh for first time home loan borrower for loans up to Rs 25 lakh during 2013-14.
Increase surcharge from 5 per cent to 10 per cent on domestic companies whose taxable income exceeds Rs 10 crore per year. In the case of foreign companies, who pay the higher rate of corporate tax, the surcharge will increase from 2 per cent to 5 per cent.
Increase the current surcharge on dividend distribution tax or tax on distributed income from five per cent to 10 per cent.
Extend eligible date for tax benefit for power sector projects by one year to March 2014.
Extend concessional rate of tax of 15 per cent on dividend received by an Indian company from its foreign subsidiary. Further, the Indian company shall not be liable to pay dividend distribution tax on the distribution to its shareholders of that portion of the income received from its foreign subsidiary.
To facilitate financial institutions to securitise their assets through a special purpose vehicle and tax exemption to the Securitisation Trust. Tax shall be levied only at the time of distribution of income by the Securitisation Trust at the rate of 30 per cent in the case of companies and at the rate of 25 per cent in the case of an individual or HUF.
Bring parity in taxation between an IDF-Mutual Fund that distributes income and an IDF-NBFC that pays interest, when the payment is made to a non-resident. The rate of tax on such distributed income or interest will be five per cent.
Extend pass through status to category I Alternative Investment Funds registered with SEBI as venture capital funds. Angel investors who are recognised as category I AIF venture capital funds will also get pass-through status.
TDS of one per cent on transactions related to immovable properties where the consideration exceeds Rs 50 lakh. However, agricultural land will be exempt.
To plug loopholes of tax avoidance by unlisted companies by skipping dividend distribution tax by arrangements involving buyback of shares. A final withholding tax at the rate of 20 per cent to be levied on profits distributed by unlisted companies to shareholders through buyback of shares.
Increase rate of tax on payments by way of royalty and fees for technical services to non-residents from 10 per cent to 25 per cent.
Securities Transaction Tax (STT) cut on equity futures from 0.017 to 0.01 per cent; on MF/ETF redemptions at fund counters from 0.25 to 0.001 per cent and on MF/ETF purchase/sale on exchanges from 0.1 to 0.001 per cent.
Levy Commodities Transaction Tax (CTT) on non-agricultural commodities futures contracts at the same rate as on equity futures, that is at 0.01 per cent of the price of the trade.
Propose to bring the modified provisions of GAAR into effect from April 1, 2016.
INDIRECT TAXES:
Extends tax concession for specified parts of electric and hybrid vehicles up to March 2015.
Reduces duty on specified machinery for manufacture of leather and leather goods, including footwear, from 7.5 per cent to 5 per cent.
Cut duty on import of pre-forms of precious and semi-precious stones from 10 per cent to 2 per cent to boost exports of processed gems & jewellery sector.
Concessions for aircraft manufacture, repair and overhaul (MRO) industry.
Increase duty on imported set top boxes from 5 per cent to 10 per cent to encourage domestic production of set top boxes.
Increase duty on raw silk from 5 per cent to 15 per cent.
Bring parity for steam coal and bituminous coal with levy of 2 per cent customs duty and 2 per cent CVD.
Import duty on motor vehicles from 75 per cent to 100 per cent; on motorcycles with engine capacity of 800cc or more from 60 per cent to 75 per cent; and on yachts and similar vessels from 10 per cent to 25 per cent.
Duty free import of jewellery raised to Rs 50,000 for male passengers and to Rs 1 lakh for a female passenger.
Restores ‘zero excise duty route’ for cotton and manmade textiles sector (spun yarn) at the yarn, fabric and garment stages.
Exempt handmade carpets and textile floor coverings of coir or jute from excise duty.
Exempt ships and vessels from excise duty and consequently, there will be no CVD on imported ships and vessels.
Higher specific excise duty on cigarettes besides cigars, cheroots and cigarillos.
Excise duty on SUVs increased from 27 per cent to 30 per cent, but exempted such increase to SUVs registered as taxis.
Increase excise duty rate on marble.
Mobile phones priced above Rs 2,000 to attract higher excise duty of 6 per cent.
Provide for MRP based assessment in respect of branded medicaments of Ayurveda, Unani, Siddha, Homeopathy and bio-chemic systems of medicine with abatement of 35 per cent.
Only two services retained in the negative service tax list: vocational courses offered by institutes affiliated to the State Council of Vocational Training and testing activities in relation to agriculture and agricultural produce.
Extension of service tax on all air conditioned restaurants, even those not serving liquor.
Cut in abatement and thereby higher cost of purchasing homes and flats with a carpet area of 2,000 sq.ft. or more or of a value of Rs 1 crore or more; existing exemptions from service tax for low cost housing and single residential units will continue.
Introduction of a one-time scheme called ‘Voluntary Compliance Encouragement Scheme’ for service tax defaulters.
(Edited by Prem Udayabhanu)