Budget 2013: Govt proposes compliance scheme for service tax defaulters. and Changes proposed in service Tax in budget 2013

The Finance Minister proposed a one-time scheme called 'Voluntary Compliance Encouragement Scheme' for service tax defaulters. With this scheme finance minister is aiming to "entice" a large number of assesses to return to the tax fold.

A defaulter may avail of the scheme on the condition that he files a truthful declaration of service tax dues since October 1, 2007 and makes the payment in one or two instalments before the prescribed dates.

"In such a case, interest, penalty and other consequences will be waived. Government hope to entice a large number of assesses to return to the tax fold.

Finance minister highlighted that only 7,00,000 out of the nearly 17,00,000 registered service tax assesses are filing returns, and said: "We cannot go after each of them. I have to motivate them to file returns and pay the tax dues."

Rate of service tax is proposed to be same i.e 12%

Emphasising on the importance of a stable tax regime, Chidambaram added only two more services into the negative list including vocational courses offered by institutes affiliated to the State Council of Vocational Training and testing activities in relation to agriculture and agricultural produce.

However, the Finance Minister brought all air Conditioned (AC) restaurants, including those that do not serve liquor which were till now exempt, under the ambit of service tax.

He also reduced rate of abatement for homes and flats with a carpet area of 2,000 sq.ft. or more or of a value of Rs 1 crore or more from 75 per cent till now to 70 per cent, categorising them as high-end constructions where the component of ‘service is greater.

However, existing exemptions from service tax for low cost housing and single residential units will continue.

Moreover, Chidambaram also limited the benefit of full exemption of service tax to films exhibited in cinema halls.

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Best tax saving fixed income investments under section 80C

With the closer of financial year investor are looking forward to park their saving on saving instrument.

Due to highly volatile market investors especially who are risk averse in nature search for Fixed Income instruments. We shall be taking our reader on a ride to a few best fixed Income Taxes Saving option under section 80C with a decent return on investment available in market.

PPF: Public Provident Fund, or popularly called PPF, is the most attractive tax-saving fixed income option giving a tax-free return of 8.25% per annum compounded annually. This scheme seems to be very attractive due to its tax-free interest income status. The maximum you can invest in PPF is Rs. 1 lakhs per financial year.

You can get a PPF account opened in post offices, bank branches of SBI and its associate banks and select private banks such as ICICI Bank. PPF carries a term of 15 years but it can be extended for additional 5 years. A loan facility of up to 25% can be availed from the 3rd financial year till the 5th financial year while a withdrawal of up to 50% is allowed from 6th financial year onwards.

Senior Citizen Savings Scheme (SCSS): Meant for senior citizens aged 60 years or more, SCSS offers 9.30% per annum. The interest payable quarterly is taxable and subject to TDS if the interest amount crosses Rs. 10,000 in a financial year. It has a maturity period of 5 years which can be extended for a further period of 3 years. The maximum you can invest in SCSS is Rs. 15 lakhs but the exemption u/s. 80C would be limited to Rs. 1 lakh only.

5-year Bank FDs: A faster life these days makes the investors opt for simpler investments and fixed deposits are the most simple to invest option. Different banks offer different interest rates on their tax-saving FDs and you can visit this link to check out the rates offered. These FDs have a lock-in period of 5 years and the interest is taxable.

5-year NSCs: National Saving Certificates (NSCs), offered by the post offices, give an interest rate of 8.60% per annum compounded half-yearly. The interest is paid at maturity but it is taxable annually. With these NSCs, the amount invested as well as the interest earned every year qualify for a deduction under section 80C. Post offices do not deduct any tax at source though.

10-year NSCs: During the last financial year, the government introduced NSCs with a maturity period of 10 years. These certificates currently offer 8.90% per annum compounded half-yearly. Rest of their features are the same as that of 5-year NSCs.

Post Office Time Deposit Scheme: Post offices also offer tax-saving time deposit with a maturity period of 5 years carrying 8.50% per annum interest rate. The interest is payable annually but compounded quarterly. Also, though the interest paid is taxable but TDS is not deducted by the post offices.

Term Deposit Schemes from Government Companies: A few government companies or financial institutions like National Housing Bank (NHB), HUDCO, NABARD etc. also offer tax-saving term deposits with a lock-in period of 5 years. The interest payable is taxable and subject to TDS if the interest amount crosses Rs. 5,000 in a financial year.

NHB offers 9.25% per annum compounded quarterly to the general investors and 9.85% to the senior citizens. NHB is wholly owned by the RBI and hence the deposits are considered as risk-free. It has also been assigned a rating of ‘FAAA’ by CRISIL.

 It is important to note that except PPF, the interest rates offered currently on these investments will remain fixed throughout their respective tenures even if the government announces new rates starting April 1, 2013 and in the subsequent years.

Quick Reference Guide

80 C Tax Saving Fixed Income Instruments
Instrument	Interest Rate     ( p.a.)	Interest Payable/Compounded	Maturity in Years	Taxability/TDS
PPF	8.25%	Annually	15	Interest Tax Free, TDS not Applicable
SCSS	9.30%	Quarterly	5	Interest Taxable, TDS Deducted
Bank FDs	Varies from Bank to Bank	Varies from Bank to Bank	5	Interest Taxable, TDS Deducted
NSC (VIII Issue)	8.60%	Quarterly	5	Interest Taxable, TDS Not Deducted
NSC (IX Issue)	8.90%	Quarterly	10	Interest Taxable, TDS Not Deducted
Post Office Time Deposit	8.50%	Quarterly	5	Interest Taxable, TDS Not Deducted
Term Deposit of Govt. Companies	Varies from company to Company	Varies from company to Company	5	Interest Taxable, TDS Deducted

 

 

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INCOME TAX SLAB FOR FY 2013-14 OR AY 2014-15 – Budget 2013

▪      No change in the basic exemption limit, slab or rate of tax in respect of individuals and HUF. However, it is proposed to provide a rebate up to Rs. 2,000 to individuals having income up to Rs. 5 lacs. Effectively, there will be no tax liability on income up to Rs. 2,20,000.

▪      Surcharge @ 10% is proposed to be levied on “super rich” category of tax payers i.e. individuals having income of more than Rs 1 crore.

Taxable Income Male (Below 60 Years) Female (Below 60 years)     Senior Citizen     (60-80 years ) Senior Citizen (Above 80 years) Basic Exemption Rs. 2,20,000 Rs. 2,20,000 Rs. 2,50,000 Rs. 5,00,000 Rs. 2,20,001 to Rs. 5,00,000 10% over  Rs. 2,20,000 10% over  Rs. 2,20,000 10 % over  Rs. 2.5 lacs NIL Rs. 5,00,001 to Rs. 10,00,000 Rs. 28000 +  20 % over Rs. 5lacs Rs. 28000 + 20 % over Rs. 5lacs Rs. 25,000 +  20% over Rs. 5 lacs 20 % over Rs. 5 lacs Over Rs. 10,00,000 Rs. 1,28,000 + 30 % over Rs. 10 lacs Rs. 1,28,000 + 30 % over Rs. 10 lacs Rs. 1,25,000 + 30 % over Rs. 10 lacs Rs. 1,00,000 + 30%    over Rs. 10 Lacs.   Education cess @ 2 % and Higher Education cess 1% will be in addition to above.

§  No change in tax rate has been proposed for companies. The tax rate will remain at 30% for domestic companies and 40% in case of other companies. No change in the basic rate of tax under MAT.

§  There is no change in the surcharge on the companies up to income of Rs. 10 crores. In case of income above Rs. 10 crores, the surcharge is proposed to be revised to 10% (existing 5%) in case of domestic companies and 5% (existing 2%) in case of other companies.

§  In case of dividend distribution tax, the surcharge is proposed @ 10%.

§  Tax rate in case of non resident tax payers in respect of income by way of royalty or fees for technical services under an agreement entered after 31.03.1976 is proposed to be increased to 25% w.e.f. A Y 2014-15.

§  15% tax rate on dividends received from foreign companies, where the shareholding is 26% or more, is proposed to be extended for one more year.

§  With effect from 1^st June 2013, tax is proposed to be deducted at source @ 1% by the buyer of immovable property (other than agricultural land) if the consideration payable to resident seller exceeds Rs 50 lacs

INCOME TAX SLAB FOR FY 2012-13 OR AY 2013-14

 

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LIC Launch new plan ‘JEEVAN SUGAM’ on 25.02.2013 (UIN: 512N273V01)

The Life Insurance Corporation of India (LIC) launched ‘Jeevan Sugam’, a new non- linked single premium plan on 25.02.13. The plan will be open for sale for a maximum period of 45 days from the date of launch.

BENEFITS:

The plan provides a risk cover of 10 times the single premium paid for a fixed term of 10 years.

a.      Death Benefit:

§  During first 5 years – Basic Sum Assured i.e. 10 times the single premium (net of service tax).

§  After completion of 5 years – Basic Sum assured i.e. 10 times the single premium (net of service tax) + loyalty addition, if any.

 

b.      Maturity Benefit:

§  Maturity Sum Assured along with Loyalty addition, if any.

 

c.       Tax Benefit:

§  The latest policy is also eligible for tax benefit u/s 80 C as per existing provisions of income tax.

Note: The amount of loyalty addition will depend on LIC’s claim experience.

ELIGIBILITY CONDITIONS AND OTHER RESTRICTIONS:

a.      Minimum Entry Age : 8 years (Completed)

b.      Maximum Entry Age: 45 years

c.       Minimum Sum to be invested: Rs. 60,000/-

d.      Maximum Sum to be invested: No upper limit.

e.      Minimum Maturity Sum Assured : Rs. 60,000/-

f.        Maximum Maturity Sum Assured : No Limit

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