India: Budget Highlights

Last Updated: 8 April 2013
Article by Megha Kapoor

Most Read Contributor in India, September 2016

The Union Finance Minister Mr. P Chidambaram presented the Union Budget 2013-14 in the Lok Sabha on 28th February, 2013. The segment herein below highlights the proposals made in the Budget.


1. Slab rates

There is no change in the slabs or the rates of Personal Income tax. However, there is a relief of INR 2000/- to the individuals having total income upto INR 5,00,000/-. The relief is therefore given to the tax payers in the first Income bracket of INR 2,00,000/- to INR 5,00,000/.

2. Surcharge

  • Surcharge of 10% will be applicable for individuals having taxable incomes above INR 1,00,00,000/-.
  • The rate of surcharge is increased from 5% to 10% for domestic companies having taxable income above INR 10,00,00,000/-.
  • The rate of surcharge is increased from 2% to 5% for the foreign companies having taxable income above INR 10,00,00,000/-.
  • The rate of surcharge for all the other cases viz. Dividend Distribution Tax [DDT] or Tax on Distribution Income will increase from 5% to 10%.

3. Deductions

  • Akin to the Central Government Health Scheme, the contributions made to schemes of Central and State Governments will be eligible for deduction under Section 80D of the Income Tax Act, 1961.
  • The donations made to National Children Fund will be eligible for 100% deduction under Section 80G of Income Tax Act.

4. Relaxation of premium rate for disabled

The Relaxation in the eligibility conditions of Life Insurance Policies for persons suffering from disability or certain ailment has been proposed by increasing the premium rate from 10% to 15%

5. Investment allowance to Manufacturing Companies

An investment allowance at the rate of 15% has been proposed for the manufacturing companies who invest more than INR 100 Crore in plant and machinery during the period 1.4.2013 to 31.3.2015.

6. Concessional Tax

The concessional tax on dividend received by an Indian company from its foreign subsidiary shall continue at the rate of 15 per cent for one more year.

7. Exemption of Securitisation Trust from Income Tax

The Securitisation Trust will be exempted from the purview of Income Tax. The tax, at the specified rates) will be levied only at the time of distribution of income for companies or individual or HUF as the case may be. The tax rates shall be 30% in the case of companies and 25% in the case of individual or HUF.

8. Extension of date for power sector projects

For the purpose of availing benefit under Section 80-IA, the Eligible Date for the projects in the power sector has been extended from 31.3.2013 to 31.3.2014.

9. Tax Deductible at Source

The levy of Tax Deductible at Source has been proposed at the rate of 1 % on the value of the transfer of immovable property where the consideration exceeds INR 50,00,000/-. However, for this purpose, the agricultural land will be exempt.

10. Withholding Tax

It has been proposed to levy final withholding tax at the rate of 20% on profits distributed by unlisted companies to shareholders through buy-back of shares. The whole motive behind this is to eliminate the practice adopted by the unlisted companies who avoid dividend distribution tax by arrangements involving buyback of shares.

11. Increase in Royalty and Fee for Technical Services

Proposal has been made for increase in the rate of tax on payments by way of royalty and fees for technical services to non-residents from 10 percent to 25 percent.

12. Commodity Transaction Tax

Union Budget 2013-14 has introduced the Commodity Transaction Tax [CTT]. This new levy proposed in the Finance Bill, 2013 aims at augmenting the financial resources. The finance minister in his budget speech said that there is no distinction between derivative trading in the securities market and derivative trading in the commodities market as only the underlying asset is different. Accordingly, it has been proposed to levy CTT on non-agricultural commodities futures contracts at the rate of 0.01% of the price of the trade.

13. Service Tax

  • The activities relating to training and testing in relation to agricultural produce will be included in the negative list for service tax thereby exempted from the levy of service tax.
  • The courses in designated trades offered by the Industrial Training Institute or Industrial Training Center being affiliated to State Council of Vocational Training will be covered under the negative list.
  • The copyright on cinematography limited to films exhibited in cinema halls will be exempted from the purview of Service Tax.
  • The Voluntary Compliance Encouragement Scheme, 2013 (VCES) has been introduced in order to encourage the voluntary compliance and broaden the tax base. Under this scheme, one time reprieve will be given by way of (i) waiver of interest and penalty and (ii) immunity from prosecution to the stop filers, non-filers or non-registrants or service providers.
  • All the restaurants with air-conditioning/ central air heating (including restaurants not serving liquor as well) in any part of the establishment at any time during the year been covered within the purview of service tax.
  • Any person collecting service tax exceeding INR 50 lakh, but fails to deposit the same to the Central Government within 6 months, shall be punishable with imprisonment for a term which may extend to 7 years but not less than 6 months.
  • The exemption limit of INR 25 lakh will not be available in case of charitable organizations
  • The below mentioned exemptions are withdrawn:
    • The services which are provided by an educational institution by way of renting of immovable property or education auxiliary service.
    • Earlier, the temporary transfer or permitting the use or enjoyment of a copyright relating to cinematographic films was fully exempt. This will now be restricted to exhibition of cinematograph films in a cinema hall or a cinema theatre.
    • Services by way of parking of vehicle to general public.
    • Services provided to Government, a local authority or a governmental authority, by way of repair or maintenance of aircraft

14. Customs

  • Duty free gold limit increased to Rs 50,000 in case of male passenger and Rs 1,00,000 in case of a female passenger subject to conditions.
  • The period of concession available for specified part of electric and hybrid vehicles will be extended upto 31.03.2015.
  • Basic customs duty will be enhanced on the following goods:-
    • Yachts and motor vehicles
    • Raw silk from 5% to 15%.
    • Set top boxes from 5% to10%.
    • Luxury cars (duty enhanced from 75% to 100%)
    • pre-forms precious and semi-precious stones will be reduced from 10% to 2%.
  • The speed post with proof of delivery or courier approved by the Central Board of Excise & Customs would also be the prescribed modes of delivery for any decision or order or any summons or notices

15. Excise duty

  • Excise duty on following goods enhanced:-
    • Mobile phones of retail sale price exceeding Rs 2000/-.
    • Cigarettes
    • Marble tiles and slabs
  • Full exemption has been granted on ships and other vessels. Thus there will be no CVD on import of the same.
  • In respect of branded readymade garments and made ups, Zero excise duty route has been restored
  • Specific excise duty has been increased on cigarettes by 18 percent.
  • The Excise duty has been increased from 27% to 30% on SUVs. This will however be, not applicable for SUVs registered as taxies.
  • The Duty on mobile phones priced more than INR 2000/- increased to 6%.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.