Budget 2013: 9 Taxing Tweaks Every Individual Tax Payer Will Dislike

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budget_2003The Budget 2013 has many proposals which affect the individual tax payers rather badly. These proposals are little tweaks in words or phrases of Income tax Act, which although looks small amendments, yet create big changes in taxation of individuals. This Budget 2013 , after going through fine prints, it is clear that government is going to take away more from taxpayers through proposals hidden in small prints of Finance Bill 2013

Budget 2013 :Tax Tweaks For More Tax from Individuals

1. New Deduction on home loan , but so a many conditions !

Individuals are given  a new deduction u/s 80EE for interest on home loan under  following conditions

  • Home loan is sanctioned by financial institutions.
  • Loan is sanction during FY 2013-14.
  • Loan amount does not exceed RS 25 lakhs.
  • Value of property for which loan was sanction does not exceed Rs 40 Lakhs
  • Individual taking loan should not have any residential house at the time of sanction of loan.
  • No other deduction can be claimed for interest on loan

2. Keyman Insurance policy remains keyman foreever !

Section 10(10D) has been tweaked to stop the misuse of keyman insurance . The amendment has been done to make sure that keyman insurance policy remains keyman insurance only, even if employer assigns it to keyman.

3. Insurance premium limit increased but only for disabled !

Now insurance premium up to 15 % of the total sum assured can be given exemption . But this is for only individuals who are disable within meaning of section 80U or suffering from disease within meaning of 80DDB.

Further deduction u/s 80C for payment of premium upto 15 % of sum assured will be available to such disable persons.

4. TDS of 1 % on Purchase of Immovable Property

Every person including individual buying an immovable property (other than agriculture land) shall deduct tax at source @ 1 % of value of property as per new section 194-1A . This provision is applicable only if the value of immovable property os more than RS 50 Lakhs.

The amendment is effective from 01/06/2013.

5. Stamp Duty Value of land or building or both is Sales Consideration for Stock-in Trade 

A new section 43A is added to provide that now even if land or building is shown as Stock-in-Trade, the gain or loss shall be computed by taking the stamp duty value. This is similar to section 50C for capital gains.

6. Got immovable property for less than stamp duty??Pay tax on difference

If one buys immovable property , which is less than stamp duty value, the difference shall be charged to tax u/s 56(2)(vii). Readers should remember, it was introduced during Sri Pranab Mukherjee, but was later withdrawn.

7. More & More Agriculture Land sale now under Tax net

More and more agriculture land will be  under the tax net now as the definition of capital asset has been tweaked  to provide that in following cases , the agriculture land will be capital asset

  • The agriculture land is situated with a municipal corporation or cantonment board having population of more than 10,000. or
  • The agriculture land is situated in any area within 2 Kms  from the local limit of a municipal area or cantonment board ( measured aerially ) and which has population between 10,000 and 1,00,000. Or
  • The agriculture land is situated in any area which is within 6 Kms  from the local limit of a municipal area or cantonment board ( measured aerially ) and which has population between 10,000 and 1,00,000. Or
  • The agriculture land is situated in any area which is within 8 Kms away from the local limit of a municipal area or cantonment board ( measured aerially ) and which has population exceeding 10,00,000.

8. No Advance Tax Adjustment with Seized Asset. 

Seized asset u/s 132 cannot be utilized for paying advance tax. The amendment is effective from 01/06/2013

9. Return is Defective if filed without payment of self assessment tax

If anyone files return of income without payment of self assessment tax , the return shall be treated as defective.

I feel for long time people will not forget the Budget 2013 .

3 COMMENTS

  1. I think for the ninth point there is an error in the heading. The heading might be “Return is Defective if filed without payment of self assessment tax”. The word with is present instead of without.

  2. Further to my previous point even in 7th point, there is no variation between 2 kms and 6 kms, i thought that population count was wrong. Please correct me if i was wrong.

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