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  • Service: Tax, International Corporate Tax, Global Indirect Tax, International Executive Services, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 3/1/2013

India - Union Budget 2013 and tax provisions 

March 1:   India’s Union Budget 2013 was presented on 28 February 2013 by the Finance Minister.

Summaries of certain tax provisions included in the Union Budget 2013 are provided below.


The proposed amendments relating to direct taxes will apply from Assessment Year 2014-15, and the changes in the rates of central excise and customs duties are effective immediately. Further, changes in service tax provisions will be effective either on the day of enactment of the Finance Bill, 2013 or from 1 April 2013 or from a date to be subsequently established.

Direct tax - Overview of provisions

  • No change to individual and corporate income tax rates
  • Tax rebate for certain individual taxpayers, and a tax surcharge for individual taxpayers (both depending on income amounts)
  • Tax surcharge for domestic companies increased to 10% (up from 5%), and for foreign companies increased to 5% (up from 2%)
  • Tax holiday for electricity generating, distributing or transmitting companies extended by one year, to 31 March 2014
  • Investment allowance of 15% on investments made by a manufacturing company in new plant and machinery acquired and installed between 1 April 2013 and 31 March 2015 if exceeding INR 1 billion threshold
  • New tax on commodities derivatives, other than agricultural commodities
  • Income of securitisation trusts be tax-exempt
  • General anti-avoidance rule (GAAR) provisions to be effective from FY 2015-16
  • Tax rate income of royalty and fees for technical services of non-residents increased to 25%
  • Unlisted domestic company buying back the shares from shareholders subject to additional income tax at a rate of 20% on distributed income

Indirect tax – Overview of provisions

  • No announcement on likely timeline for implementation of goods and services tax (GST)
  • Rates for customs, excise, and service tax remain unchanged
  • Increased rates of duty/ taxes on luxury products

Read a March 2013 report [PDF 1 MB] prepared by the KPMG member firm in India: India Budget 2013




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